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The Consumer Price Index: Conceptual Issues and Practical Suggestions

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  • Charles L. Schultze

Abstract

A National Academy of Sciences Panel recently made a number of recommendations to the BLS for improving the Consumer Price Index, while also suggesting some cautions to be observed when considering the adoption of new concepts and techniques. This paper discusses the Panel's analyses in four areas: Should a cost-of-living index be the measurement objective of the CPI? Should the index attempt to capture the effect on living costs from changes in "environmental" conditions? How can hedonic techniques be best applied for measuring quality changes? Should the BLS attempt to measure the consumer surpluses accompanying the introduction of new goods?

Suggested Citation

  • Charles L. Schultze, 2003. "The Consumer Price Index: Conceptual Issues and Practical Suggestions," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 3-22, Winter.
    • Handle: RePEc:aea:jecper:v:17:y:2003:i:1:p:3-22
    Note: DOI: 10.1257/089533003321164921
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533003321164921
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    References listed on IDEAS

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    1. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1.
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    Cited by:

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    15. M. Fase, 2007. "Notes and Communications," De Economist, Springer, vol. 155(2), pages 221-238, June.
    16. Basak, Suleyman & Pavlova, Anna, 2004. "Monopoly Power and the Firm€ٳ Valuation:," Working papers 4234-01, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    17. Tilton, John E., 2013. "The terms of trade debate and the policy implications for primary product producers," Resources Policy, Elsevier, vol. 38(2), pages 196-203.
    18. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    19. R. A. Somerville, 2004. "Changes in Relative Consumer Prices and the Substitution Bias of the Laspeyres Price Index - Ireland, 1985-2001," The Economic and Social Review, Economic and Social Studies, vol. 35(1), pages 55-82.
    20. Panzone, Luca A. & Wossink, Ada & Southerton, Dale, 2013. "The design of an environmental index of sustainable food consumption: A pilot study using supermarket data," Ecological Economics, Elsevier, vol. 94(C), pages 44-55.
    21. Steve Dowrick, 2004. "Income-based Measures of Average Well-being," WIDER Working Paper Series RP2004-24, World Institute for Development Economic Research (UNU-WIDER).
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    23. Marshall Reinsdorf & Jack E. Triplett, 2009. "A Review of Reviews: Ninety Years of Professional Thinking About the Consumer Price Index," NBER Chapters, in: Price Index Concepts and Measurement, pages 17-83, National Bureau of Economic Research, Inc.
    24. Dreger Christian & Kosfeld Reinhold, 2010. "Do Regional Price Levels Converge?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(3), pages 274-286, June.

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