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Measuring Real Consumption and CPI 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 IMF, Eurostat and the UN is shown to result in downward bias in the CPI and upward bias in real consumption. We conclude that the only way to produce a meaningful CPI within the lockdown period is through establishing a continuous consumer expenditure survey.

Suggested Citation

  • W. Erwin Diewert & Kevin J. Fox, 2020. "Measuring Real Consumption and CPI Bias under Lockdown Conditions," NBER Working Papers 27144, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27144
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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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