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Measuring real consumption and consumer price index bias under lockdown conditions

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  • W. Erwin Diewert
  • Kevin J. Fox

Abstract

Millions of goods and services are now unavailable in many countries due to the current coronavirus pandemic, dramatically impacting on the construction of key economic statistics used for informing policy. This situation is unprecedented; hence, methods to address it have not previously been developed. Current advice to national statistical offices from the International Monetary Fund, Eurostat and the United Nations is shown to result in downward bias in the consumer price index (CPI) and upward bias in real consumption. We conclude that, to produce a meaningful CPI within the lockdown period, it is necessary to establish a continuous consumer expenditure survey. Mesure de la consommation réelle et des biais par défaut de l’indice des prix à la consommation en période de confinement. En raison de la pandémie actuelle de COVID‐19, des millions de biens et de services sont présentement indisponibles dans de nombreux pays, entravant significativement l’élaboration de statistiques économiques clés visant à éclairer les politiques. Cette situation est sans précédent, et aucune méthode n'a encore été développée pour y remédier. Les avis dispensés aux organismes nationaux de statistiques par le Fonds monétaire international, Eurostat et les Nations Unies se traduisent par des biais systématiques par défaut quant à l'indice des prix à la consommation (IPC), et par des biais par excès quant à la consommation réelle. Notre conclusion est que pour produire un IPC significatif lors d'un confinement, il est nécessaire de procéder à une enquête continue sur les dépenses de consommation.

Suggested Citation

  • W. Erwin Diewert & Kevin J. Fox, 2022. "Measuring real consumption and consumer price index bias under lockdown conditions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 55(S1), pages 480-502, February.
    • Handle: RePEc:wly:canjec:v:55:y:2022:i:s1:p:480-502
    DOI: 10.1111/caje.12545
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    References listed on IDEAS

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    2. Jung, Jinho & Kim, Yong J. & Kim, Sanghyo, 2022. "Sales-Weighted Online Agricultural Commodity Price Index: Using Sales and Price Data web-scraped from Online Grocery Stores in South Korea," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322525, Agricultural and Applied Economics Association.
    3. Knetsch, Thomas A. & Schwind, Patrick & Weinand, Sebastian, 2022. "The impact of weight shifts on inflation: Evidence for the euro area HICP," Discussion Papers 27/2022, Deutsche Bundesbank.
    4. Hongjik Kim & Chihiro Shimizu, 2022. "The Relationship between Geographic Accessibility to Neighborhood Facilities, Remote Work, and Changes in Neighborhood Satisfaction after the Emergence of the COVID-19 Pandemic," Sustainability, MDPI, vol. 14(17), pages 1-20, August.
    5. Liebman, Eli & Lawler, Emily C. & Dunn, Abe & Ridley, David B., 2023. "Consequences of a shortage and rationing: Evidence from a pediatric vaccine," Journal of Health Economics, Elsevier, vol. 92(C).
    6. Grigoli, Francesco & Pugacheva, Evgenia, 2024. "COVID-19 inflation weights in the UK and Germany," Journal of Macroeconomics, Elsevier, vol. 79(C).

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