Evaluating Imperfections and Biases in Price Indexes during Transition

Jan Hanousek and Randall Filer

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: The rapidly changing environment of the transition may create special problems for calculation of index numbers that require a fixed basket of goods and outlets. Using referent-level data we find that using a fixed-weight Laspeyres Index may overstate inflation rates by approximately 5 per cent a year when compared with a superlative index in the Czech Republic. We find no evidence of such problems using more aggregate data for Bulgaria and Hungary. This suggests that the extent of the problems discovered might have been even greater if we had been able to use item/store level data.

Keywords: CPI Bias; Formula bias; Price Liberalization; Substitution bias; Transition Economies (search for similar items in EconPapers)
JEL-codes: C82 E31 P24 (search for similar items in EconPapers)
Date: 2001-09
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Citations: View citations in EconPapers (7)

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