IDEAS home Printed from https://ideas.repec.org/p/bca/bocawp/05-39.html
   My bibliography  Save this paper

Measurement Bias in the Canadian Consumer Price Index

Author

Listed:
  • James Rossiter

Abstract

The consumer price index (CPI) is the most commonly used measure of inflation in Canada. As an indicator of changes in the cost of living, however, the CPI is subject to various types of measurement bias. The author updates previous Bank of Canada estimates of the bias in the Canadian CPI by examining four different sources of potential bias. He finds that the total measurement bias has increased only slightly in recent years to 0.6 percentage points per year, and is low when compared with other countries.

Suggested Citation

  • James Rossiter, 2005. "Measurement Bias in the Canadian Consumer Price Index," Staff Working Papers 05-39, Bank of Canada.
    • Handle: RePEc:bca:bocawp:05-39
    as

    Download full text from publisher

    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/02/wp05-39.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Erwin Diewert & Denis Lawrence, 1999. "Measuring New Zealand’s Productivity," Treasury Working Paper Series 99/05, New Zealand Treasury.
    2. Timothy K.M. Beatty & Erling Røed Larsen, 2005. "Using Engel curves to estimate bias in the Canadian CPI as a cost of living index," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 482-499, May.
    3. W. Erwin Diewert, 1998. "Index Number Issues in the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 47-58, Winter.
    4. Alastair Cunningham, 1996. "Measurement Bias in Price Indices: An Application to the UK's RPI," Bank of England working papers 47, Bank of England.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kevin D. Moore & William Robson & Alexandre Laurin, 2010. "Canada’s Looming Retirement Challenge: Will Future Retirees Be Able to Maintain Their Living Standards upon Retirement?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 317, December.
    2. Oleg KITOV & Ivan KITOV, 2012. "A Win-Win Monetary Policy In Canada," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 6(6(18)/ Su), pages 160-176.
    3. Angelo Melino, 2011. "Moving Monetary Policy Forward: Why Small Steps - and a Lower Inflation Target - Make Sense for the Bank of Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 319, January.
    4. Huang Ning & Wimalaratne Waruna & Pollard Brent, 2017. "The Effects of the Frequency and Implementation Lag of Basket Updates on the Canadian CPI," Journal of Official Statistics, Sciendo, vol. 33(4), pages 979-1004, December.
    5. Oleksiy Kryvtsov, 2016. "Is there a quality bias in the Canadian CPI? Evidence from microdata," Canadian Journal of Economics, Canadian Economics Association, vol. 49(4), pages 1401-1424, November.
    6. Christopher Ragan, 2011. "Fixing Canada’s CPI: A Simple and Sensible Policy Change for Minister Flaherty," e-briefs 111, C.D. Howe Institute.
    7. Gregor W. Smith, 2009. "The Missing Links: Better Measures of Inflation and Inflation Expectations in Canada," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 287, April.
    8. Gaddis,Isis, 2016. "Prices for poverty analysis in Africa," Policy Research Working Paper Series 7652, The World Bank.
    9. Michael Parkin, 2009. "What is the Ideal Monetary Policy Regime? Improving the Bank of Canada's Inflation-targeting Program," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 279, January.
    10. Christopher Ragan, 2011. "Precision Targeting: The Economics – and Politics – of Improving Canada’s Inflation-Targeting Framework," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 321, February.
    11. Colin Bermingham & Dermot Coates & Derry O'Brien, 2016. "Estimating Commodity Substitution Bias in the Irish Inflation Rate Statistics during the Financial Crisis," The Economic and Social Review, Economic and Social Studies, vol. 47(3), pages 327-337.
    12. Robson, William, 2006. "Accounting for and Thinking about Social Security Liabilities in Canada," Discussion Paper 285, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Timothy K.M. Beatty & Erling Røed Larsen & Dag Einar Sommervoll, 2005. "Measuring the Price of Housing Consumption for Owners in the CPI," Discussion Papers 427, Statistics Norway, Research Department.
    2. Oleksiy Kryvtsov, 2016. "Is there a quality bias in the Canadian CPI? Evidence from microdata," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1401-1424, November.
    3. Hoffmann, Johannes, 1998. "Problems of inflation measurement in Germany," Discussion Paper Series 1: Economic Studies 1998,01e, Deutsche Bundesbank.
    4. Herzberg, Julika & Knetsch, Thomas A. & Schwind, Patrick & Weinand, Sebastian, 2021. "Quantifying bias and inaccuracy of upper-level aggregation in HICPs for Germany and the euro area," Discussion Papers 06/2021, Deutsche Bundesbank.
    5. Matthew Brzozowski, 2006. "Does One Size Fit All? The CPI and Canadian Seniors," Canadian Public Policy, University of Toronto Press, vol. 32(4), pages 387-412, December.
    6. Aleksandra Hałka & Agnieszka Leszczyńska, 2011. "Wady i zalety wskaźnika cen towarów i usług konsumpcyjnych – szacunki obciążenia," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 9, pages 51-75.
    7. W. Erwin Diewert & Robert C. Feenstra, 2021. "Estimating the Benefits of New Products," NBER Chapters, in: Big Data for Twenty-First-Century Economic Statistics, pages 437-473, National Bureau of Economic Research, Inc.
    8. Athanasoglou, Panayiotis P. & Georgiou, Evangelia A. & Staikouras, Christos C., 2009. "Assessing output and productivity growth in the banking industry," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1317-1340, November.
    9. Diewert, W, Erwin & Feenstra, Robert, 2017. "Estimating the Benefits and Costs of New and Disappearing Products," Microeconomics.ca working papers tina_marandola-2017-12, Vancouver School of Economics, revised 19 Dec 2017.
    10. Olivier Chanel & Stéphanie Vincent, 2004. "Computing price trends in sequential auctions," Recherches économiques de Louvain, De Boeck Université, vol. 70(4), pages 443-460.
    11. Patrick Bajari & Zhihao Cen & Victor Chernozhukov & Manoj Manukonda & Jin Wang & Ramon Huerta & Junbo Li & Ling Leng & George Monokroussos & Suhas Vijaykunar & Shan Wan, 2023. "Hedonic prices and quality adjusted price indices powered by AI," CeMMAP working papers 08/23, Institute for Fiscal Studies.
    12. Alexandru Voicu & Michael L. Lahr, 2004. "Expenditure-based Interarea Cost of Living Index," Urban/Regional 0403006, University Library of Munich, Germany.
    13. Rahul Anand & Naresh Kumar & Mr. Volodymyr Tulin, 2016. "Understanding India’s Food Inflation: The Role of Demand and Supply Factors," IMF Working Papers 2016/002, International Monetary Fund.
    14. Allan Crawford, 1998. "Measurement biases in the Canadian CPI: An update," Bank of Canada Review, Bank of Canada, vol. 1998(Spring), pages 39-56.
    15. Shiratsuka, Shigenori, 2001. "Is There a Desirable Rate of Inflation? A Theoretical and Empirical Survey," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(2), pages 49-83, May.
    16. Diewert, Erwin, 2007. "The Ottawa Group after Ten Meetings: Future Priorities," Economics working papers diewert-07-11-16-12-30-23, Vancouver School of Economics, revised 16 Nov 2007.
    17. Erwin Diewert & John Greenlees & Charles R. Hulten, 2009. "Introduction: What Are the Issues?," NBER Chapters, in: Price Index Concepts and Measurement, pages 1-16, National Bureau of Economic Research, Inc.
    18. Susan Olivia & John Gibson, 2013. "Using Engel curves to measure CPI bias for Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 49(1), pages 85-101, April.
    19. Diewert, Erwin & FOX, Kevin J. Fox & SCHREYER, Paul, 2017. "The Digital Economy, New Products and Consumer Welfare," Microeconomics.ca working papers erwin_diewert-2017-12, Vancouver School of Economics, revised 14 Dec 2017.
    20. Simon Hall & Anthony Yates, 1998. "Are there downward nominal rigidities in product markets?," Bank of England working papers 80, Bank of England.

    More about this item

    Keywords

    Inflation et prix; Cibles en matière d'inflation;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bocawp:05-39. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/bocgvca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.