The Fisher BCPI: The Bank of Canada’s New Commodity Price Index

Ilan Kolet and Ryan Macdonald ()

Discussion Papers from Bank of Canada

Abstract: The prices of commodities produced in Canada have important implications for the performance of the Canadian economy and the conduct of monetary policy. The authors explain an important change to the methodology used to construct the Bank of Canada commodity price index (BCPI). Since its inception, the BCPI has been a fixed-weight index of commodity prices, with weights that were updated roughly once a decade. Such indexes are subject to bias, because output shares change over time. In this paper, the authors use the chain Fisher index method to update the production weights on an annual basis, and expand the BCPI to include a broader set of commodities. They find that the new index, called the Fisher BCPI, is more comprehensive, flexible, and accurate than the fixed-weight index.

Keywords: Inflation and prices; Econometric and statistical methods (search for similar items in EconPapers)
JEL-codes: C1 E3 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010
New Economics Papers: this item is included in nep-cba and nep-mac
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Citations: View citations in EconPapers (2)

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