Lowe and Cobb-Douglas Consumer Price Indices and their Substitution Bias

2010 ◽  
Vol 230 (6) ◽  
Author(s):  
Bert M. Balk
Keyword(s):  
Price Index ◽  
Consumer Price Index ◽  
Price Indices ◽  
Clear Cut ◽  
Target Cost ◽  
The World ◽  
Substitution Bias ◽  
Statistical Agencies ◽  
The Difference ◽  
Cost Of Living Index

SummaryCatching the effect of substitution behaviour in a Consumer Price Index (CPI) as good as possible is a goal pursued by statistical agencies throughout the world. The difference between a CPI and a certain target cost-of-living index is called substitution bias. Balk and Diewert (2003) considered the substitution bias of a Lowe Consumer Price Index; see also CPI Manual (2004: Chapter 17). The present paper considers the substitution bias of a Cobb-Douglas (or Geometric Young) CPI, and compares the two price indices with respect to their substitution bias. It appears difficult to draw a clear-cut conclusion.

scholarly journals Index Number Issues in the Consumer Price Index

1998 ◽  
Vol 12 (1) ◽  
pp. 47-58 ◽  
Author(s):  
W. Erwin Diewert
Keyword(s):  
Price Index ◽  
Inflation Rate ◽  
Consumer Price Index ◽  
Index Number ◽  
Cost Of Living ◽  
Fixed Base ◽  
Statistical Agencies ◽  
Cost Of Living Index ◽  
Theoretical Cost

This paper addresses the following issues: what is an appropriate theoretical consumer price index that statistical agencies should attempt to measure; what are some of the possible sources of biases between the fixed base Laspeyres price index that statistical agencies produce and the theoretical cost-of-living index; and what factors will make the biases larger or smaller and how will the biases change as the general inflation rate changes? This paper addresses all of the issues mentioned above and discusses what statistical agencies can do to reduce the biases.

scholarly journals Tests for Price Indices in a Dynamic Item Universe

2019 ◽  
Vol 35 (3) ◽  
pp. 683-697
Author(s):  
Li-Chun Zhang ◽  
Ingvild Johansen ◽  
Ragnhild Nygaard
Keyword(s):  
Price Index ◽  
Consumer Price Index ◽  
Scanner Data ◽  
Price Indices ◽  
Cost Of Living ◽  
Quality Change ◽  
Large Index ◽  
New Goods ◽  
Cost Of Living Index ◽  
Index Family

Abstract There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally axiomatic tests are defined for a fixed universe. We propose five tests explicitly formulated for a dynamic item universe, and motivate them both from the perspectives of a cost-of-goods index and a cost-of-living index. None of the indices that are currently available for making use of scanner data satisfies all the tests at the same time. The set of tests provides a rigorous diagnostic for whether an index is completely appropriate in a dynamic item universe, as well as pointing towards the directions of possible remedies. We thus outline a large index family that potentially can satisfy all the tests.

scholarly journals Sources of Bias and Solutions to Bias in the Consumer Price Index

2003 ◽  
Vol 17 (1) ◽  
pp. 23-44 ◽  
Author(s):  
Jerry Hausman
Keyword(s):  
Price Index ◽  
Consumer Price Index ◽  
Second Order ◽  
Order Effects ◽  
Scanner Data ◽  
Cost Of Living ◽  
First Order ◽  
Consumer Prices ◽  
Substitution Bias ◽  
Cost Of Living Index

Four sources of bias in the Consumer Prices Index (CPI) have been identified. The most discussed is substitution bias, which creates a second order bias in the CPI. Three other changes besides prices changes create first order effects on a correctly measured cost of living index (COLI). I explain in this paper that a “pure price” based approach of surveying prices to estimate a COLI cannot succeed in solving the 3 problems of first order bias. I discuss economic and econometric approaches to measuring the first order bias effects as well as the availability of scanner data that would permit implementation of the techniques.

scholarly journals A RESEARCH PAPER ON A STUDY ON PRICE INDICES METHODS IN INDIA

2018 ◽  
Vol 1 (2) ◽  
pp. 15-25
Keyword(s):  
Price Index ◽  
Economic Conditions ◽  
Price Indices ◽  
Index Numbers ◽  
Price Changes ◽  
Price Fluctuations ◽  
The Real ◽  
The World ◽  
True Position ◽  
Scientific Tool

It is expected that the price index numbers which are universally used as the scientific tool of measures of price changes all over the world must reflect the real and true position of prices in economy every time since they are the only arithmetic source of measuring the price fluctuations and economic fluctuations thereby. But unfortunately, they do not seem to fulfill these expectations fully especially in India. Many times it has happened that price index numbers have failed in reflecting real economic conditions through price changes. So, this research is attempt to study all the different price indices model and try to find out the effective way out.

scholarly journals Törnqvist Formula for Сalculating a Consumer Price Index in Russia: Theory and Practice

2020 ◽  
Vol 27 (5) ◽  
pp. 87-94
Author(s):  
М. A. Kozlova
Keyword(s):  
Price Index ◽  
Empirical Studies ◽  
Consumer Price Index ◽  
Theory And Practice ◽  
Consumer Market ◽  
Country Level ◽  
Consumer Prices ◽  
Realistic Description ◽  
The Difference ◽  
Main Consumer

The article reflects the author’s position on the adjustment of the so-called substitution bias, which affects the value of the consumer price index, currently calculated using the Laspeyres formula. The author proposes a solution to the problem of the adequacy of statistical measurements of the dynamics of consumer prices in the case when, as a result of changing cost of the consumer basket, a buyer replaces a relatively expensive product with a relatively cheaper one. This solution is based on the existing index construction methodology (axiomatic, economic and stochastic approaches). The article substantiates the use of the Törnqvist formula, which has better properties in comparison with other formulae used in the construction of superlative indices. The authors calculated the Törnqvist price index for Russia based on Rosstat methodology and data using country-level quarterly group price indices and shares of consumer spending. To evaluate the results of empirical testing Laspeyres price index was compiled using the same quarterly data as the Törnqvist index. The values of the Törnqvist price index in most cases are less than the price dynamics obtained according to the Laspeyres formula. This conclusion is proved both theoretically and empirically, and it is confirmed for Russia as well. However, due to the non-observance of the conditions of smooth trends in consumer prices, the difference between the values of the Törnqvist and Laspeyres indices is significantly larger in certain quarters than that presented in empirical studies in other countries. Consumer price index, calculated using the Törnqvist formula, in the system of indicators of price statistics in Russia can be defined as an indicator that specifies the main consumer price index. Calculation of its value is necessary for a more realistic description of the processes taking place in the consumer market.

scholarly journals SARIMA Model for Forecasting Price Indices Fluctuations

2021 ◽  
Vol 2 (6) ◽  
pp. 1-6
Author(s):  
N. Sonai Muthu ◽  
K. Senthamarai Kannan ◽  
V. Deneshkumar ◽  
P. Thangasamy
Keyword(s):  
Rural Areas ◽  
Price Index ◽  
Inflation Rate ◽  
Price Level ◽  
Consumer Price Index ◽  
Demand Side ◽  
Price Indices ◽  
Sarima Model ◽  
Food And Beverages ◽  
Urban And Rural Areas

In day-to-day life, the price level fluctuations in the Consumer Price Index (CPI) goods and service. So, the retail consumers are affecting by that price level changes, who are on the demand side of the economy. The main objective of this work is to forecast such selected factors of CPI in urban and rural areas of India, like: Food and Beverages, Pan, Tobacco and Intoxicants, Fuel and Light and Education and also compute the inflation rate for those four main variables in all India.

Abstract TMP75: Average Medicare Reimbursement for Stroke Care Has Decreased From 2000-2019

Stroke ◽  
2020 ◽  
Vol 51 (Suppl_1) ◽  
Author(s):  
Andrew R Pines ◽  
Jack Haglin ◽  
Bart Demaerschalk
Keyword(s):  
United States ◽  
Price Index ◽  
Hemorrhagic Stroke ◽  
Consumer Price Index ◽  
Stroke Care ◽  
The United States ◽  
Medicare Reimbursement ◽  
Reimbursement Rate ◽  
Icd Codes ◽  
The Difference

Introduction: There is a lack of data regarding financial trends for procedural reimbursement in stroke care. An understanding of such trends is important as progress is made to advance agreeable reimbursement models in the care of stroke patients. The purpose of this study was to evaluate monetary trends in Medicare reimbursement rates for commonly utilized procedures in stroke care from 2000 to 2019. Methods: Reimbursement data for Current Procedural Terminology (CPT) codes was extracted from the Centers for Medicare & Medicaid Services. CPT codes were determined by frequency of procedures for Stroke-related ICD codes at our institution. All monetary data was adjusted for inflation to 2019 US dollars utilizing changes to the United States consumer price index. Results: After adjusting for inflation, the average reimbursement for all four included procedures within hemorrhagic stroke (ICD I60-I62) decreased by 18.4% from 2000 to 2019. The average reimbursement for two procedures within ischemic stroke (ICD I63), craniotomy and thrombectomy, increased by 3.5% (2003 -2019) and increased 3.0% (2016-2019), respectively. Data was not available for craniotomy prior to 2003, and not available for thrombectomy prior to 2016. Further, the adjusted reimbursement rate for included telestroke codes decreased by 12.1% from 2010-2019. All other included procedures decreased by 3.5% throughout this time. The difference in reimbursement rate between telestroke and other stroke-related procedures was statistically significant (p < .0001). Conclusion: To our knowledge, this is the first study to evaluate trends in Medicare reimbursement for stroke care. When adjusted for inflation, Medicare reimbursement for included procedures has steadily decreased from 2000 to 2019. Increased awareness of these trends is important to assure continued access to quality stroke care in the United States.

TSAs and the WTTC/WEFA Methodology: Different Satellites or Different Planets?

1997 ◽  
Vol 3 (3) ◽  
pp. 249-263 ◽  
Author(s):  
Stephen L. J. Smith ◽  
David Wilton
Keyword(s):  
Price Index ◽  
Consumer Price Index ◽  
Data Sources ◽  
Inappropriate Use ◽  
The World ◽  
World Tourism Organization ◽  
Tourism Organization

Differences between real tourism satellite accounts and the WTTC/WEFA ‘simulated tourism satellite accounts’ are described. These differences are both conceptual and methodological, including the fact that the World Tourism and Travel Council (WTTC) methodology fails to conform to the World Tourism Organization/UN definitions. Some empirical problems associated with the WTTC methodology also are detailed. These include the inappropriate use of Consumer Price Index weightings and WTTC's reliance on US data sources to make inferences about other nations' economies. The paper concludes that the WTTC methodology does not represent a ‘simulated tourism satellite account’.

scholarly journals The Consumer Price Index

2014 ◽  
Vol 8 (1) ◽  
pp. 101-108
Author(s):  
James Hodgson
Keyword(s):  
Price Index ◽  
Consumer Price Index ◽  
Base Period ◽  
Cost Of Living ◽  
Modern Methods ◽  
The Cost ◽  
Cost Of Living Index ◽  
Made In

Summary A brief study of the new index called Consumer Price Index (C .P. I.) which will replace the Cost of Living Index (C. L. I.). In order to make such a change, specialists were called in to work on this for nearly three years. During the survey begun in 1948, the most modern methods of sampling were used. Instead of 1935-1939, the base period chosen was 1949. In view of the increasing importance of the index in the labour world, the author analyses briefly the changes made in the former index and emphasizes the problems involved in such a changeover.

scholarly journals APPLICATION OF THE MAIN COMPONENTS METHOD FOR DETERMINATION OF FACTORS OF LOGISTICS SERVICES MARKET DEVELOPMENT OF UKRAINE

2020 ◽  
Vol 7 (160) ◽  
pp. 40-47
Author(s):  
N. Hrynchak
Keyword(s):  
Factor Analysis ◽  
Price Index ◽  
Consumer Price Index ◽  
Hidden Variables ◽  
Retail Trade ◽  
Price Indices ◽  
Statistical Correlations ◽  
Transport Services ◽  
Logistics Services ◽  
Main Components

The study identifies and substantiates the main factors influencing the development of the market of logistics services in Ukraine through factor analysis by the method of main components. The application of the method of factor analysis to assess the development of the market of logistics services is based on the assumption that the indicators of different blocks are only indicators of certain existing market characteristics that are not directly measured. 9 indicators were selected for the study: wholesale turnover of enterprises, retail trade turnover, volume of exports of goods, volume of imports of goods, hryvnia devaluation index against the US dollar, rail freight index, consumer price index for transport, consumer price index for fuel and lubricants, consumer price index for transport services. Bartlett’s sphericity criterion and the calculation of the adequacy of the Kaiser-Mayer-Olkin sample were used for the study. It was found that the largest variance has such components as price indices for transport, fuels and lubricants, the volume of foreign and domestic (wholesale and retail) trade, which total 83.1%. The analysis of factors according to the received calculations is made.A study of factor analysis of the development of the market of logistics services showed that the segment of freight and warehousing logistics is not significantly affected by indicators combined in the component that characterized the price indices for transport, transport services, etc., is changes in domestic and foreign trade are greater impact on changes in the volume of these segments, regardless of changes in prices for services and related goods in the market of logistics services. The selection of factors according to the proposed method allows to determine their influence, but does not fully clarify the mechanism of influence, so the direction of further research should be to identify hidden variables that determine the presence of statistical correlations.

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