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Mismeasurement of the CPI

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  • Kenn Ariga
  • Kenji Matsui

Abstract

In this paper, we investigate several key problems in Japanese economic statistics. We use CPI mismeasurements and biases as an example to explore the roots of the problems and also to offer guidelines for improvements. We emphasize 3 major shortcomings shared by many official statistics in Japan: (1) long delays in adjustments, (2) lack of proper coordination, and 3) insufficient information disclosure. In the analysis of CPI bias, we limit our focus to potential biases due to aggregation, survey methodology and sample selection procedures. We estimate that, in recent years, the commodity CPI inflation rate is biased upward by at least 0.5% per year, even if we assume away the potential bias associated with the quality adjustment, delay in incorporating changes in consumption basket, and other important unresolved problems.

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  • Kenn Ariga & Kenji Matsui, 2003. "Mismeasurement of the CPI," NBER Working Papers 9436, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9436
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    Cited by:

    1. Satoshi Imai & Tsutomu Watanabe, 2015. "Replicating Japan's CPI Using Scanner Data," CARF F-Series CARF-F-364, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Unayama, Takashi, 2004. "Upward bias in the consumer price index under the zero-inflation economy," Economics Letters, Elsevier, vol. 85(1), pages 139-144, October.
    3. IMAI Satoshi & SHIMIZU Chihiro & WATANABE Tsutomu, 2012. "How Fast Are Prices in Japan Falling?," Discussion papers 12075, Research Institute of Economy, Trade and Industry (RIETI).
    4. Satoshi Imai & Chihiro Shimizu & Tsutomu Watanabe, 2012. "How Fast Are Prices in Japan Falling?," CARF F-Series CARF-F-298, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    5. Satoshi Imai & Tsutomu Watanabe, 2015. "Replicating Japan’s CPI Using Scanner Data," UTokyo Price Project Working Paper Series 054, University of Tokyo, Graduate School of Economics.
    6. Shiratsuka, Shigenori, 2021. "Lower-Level Substitution Bias in the Japanese Consumer Price Index: Evidence from Government Micro Data," Discussion Paper Series 722, Institute of Economic Research, Hitotsubashi University.
    7. Shimizutani, Satoshi, 2012. "Quality growth: New evidence from Japanese household-level data," Economics Letters, Elsevier, vol. 114(1), pages 76-79.
    8. Satoshi Imai & Chihiro Shimizu & Tsutomu Watanabe, 2012. "How Fast Are Prices in Japan Falling?," UTokyo Price Project Working Paper Series 001, University of Tokyo, Graduate School of Economics, revised Oct 2012.

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    More about this item

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F1 - International Economics - - Trade

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