Dynamic cost of living index for storable goods

Kozo Ueda

Economics Letters, 2020, vol. 189, issue C

Abstract: Consumers hold inventory for future uses. This study investigates how such intertemporal decisions influence the cost-of-living index (COLI). To this end, I construct a simple dynamic model, in which goods are storable and nonresalable, and prices take either high (regular price) or low values (sales), and then introduce two types of dynamic COLIs. I find that neither index satisfies both monotonicity and the time reversal test.

Keywords: Consumer inventory; Cost-of-living index; Price index; Chain drift (search for similar items in EconPapers)
JEL-codes: C43 D15 E31 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Working Paper: Dynamic Cost of Living Index for Storable Goods (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:189:y:2020:i:c:s0165176520300409

DOI: 10.1016/j.econlet.2020.109013

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