Plutocratic and Democratic Consumer Price Indexes: an Estimation of a Democratic Index for Italy 1995-2005

Francesco Chelli () and Elvio Mattioli ()
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Francesco Chelli: Universita' Politecnica delle Marche, Dipartimento di Economia
Elvio Mattioli: Universita' Politecnica delle Marche, Dipartimento di Economia

No 285, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: The consumer price indexes for the entire country and those for individual households are weighted arithmetic averages of relative prices, and they differ essentially in terms of their weighting systems. Whereas the former use the proportions of total expenditure on goods and services, the latter use the proportions of expenditure by each household. In the usual calculation of the index for the entire country, each household contributes to determining the national index with a weight proportional to its expenditure. In other words, the households that spend more - that is, the wealthier ones - are represented in calculation of the national index to a greater extent, and this explains why the latter is termed the 'plutocratic index'. In contraposition to plutocratic indexes are the 'democratic' ones in which the same weight is assigned to each household.;The paper presents a first estimation of the democratic price indexes for Italy in the period 1995-2002. The results show significant differences between the two calculation methods.

Keywords: consumer price indexes; inflation; plutocratic and democratic indexes; price policy (search for similar items in EconPapers)
JEL-codes: C43 E31 E64 (search for similar items in EconPapers)
Pages: 16
Date: 2007-05
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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