IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/109810.html
   My bibliography  Save this paper

Measuring Inflation: Criticism and Solution

Author

Listed:
  • Laczó, Ferenc

Abstract

In this study the concept of commodities is formulated according to the utility theory; following the principle of price elasticity of demand, differences of uncompensated and compensated price changes will be clearly interpreted; as the uncompensated and compensated price changes have different averaging properties, so two different CPI formulas need to be defined; arbitrary price changes are broken down into uncompensated and compensated price change to obtain a complete, dual CPI formula.

Suggested Citation

  • Laczó, Ferenc, 2021. "Measuring Inflation: Criticism and Solution," MPRA Paper 109810, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:109810
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/109810/1/MPRA_paper_109809.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lloyd, P J, 1975. "Substitution Effects and Biases in Nontrue Price Indices," American Economic Review, American Economic Association, vol. 65(3), pages 301-313, June.
    Full references (including those not matched with items on IDEAS)

    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. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2016. "Product Turnover and Deflation: Evidence from Japan," UTokyo Price Project Working Paper Series 073, University of Tokyo, Graduate School of Economics.
    2. Robert O’Neill, 2015. "Teaching Index Numbers to economists," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1115625-111, December.
    3. Rahel Braun & Sarah M. Lein, 2021. "Sources of Bias in Inflation Rates and Implications for Inflation Dynamics," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(6), pages 1553-1572, September.
    4. Laczó, Ferenc, 2023. "Adalékok az inflációs folyamatok jobb megértéséhez [Additions to a better understanding of inflationary processes]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 613-646.
    5. Daehoon Nahm, 2004. "An Exact Index for the CES Function with Unobservable Prices," Journal of Productivity Analysis, Springer, vol. 21(3), pages 317-336, May.
    6. P. J. Lloyd, 1978. "Wage Indexation: The Treatment of Public Sector Taxes and Goods," The Economic Record, The Economic Society of Australia, vol. 54(2), pages 182-194, August.
    7. Barbosa, Fernando de Holanda, 1979. "Índice de custo de vida: avaliação do método da Fundação Getulio Vargas e nova formulação," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 33(4), October.
    8. Clements, Kenneth W & Izan, H Y, 1987. "The Measurement of Inflation: A Stochastic Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(3), pages 339-350, July.
    9. Jean‐Christophe Bureau & Luca Salvatici, 2005. "Agricultural trade restrictiveness in the European Union and the United States," Agricultural Economics, International Association of Agricultural Economists, vol. 33(s3), pages 479-490, November.
    10. Laczó, Ferenc, 2021. "Measuring Inflation: Criticism and Solution," MPRA Paper 109724, University Library of Munich, Germany.
    11. Patrick Sillard & Lionel Wilner, 2015. "Constant utility index and inter-month substitution," Economics Bulletin, AccessEcon, vol. 35(3), pages 1772-1781.
    12. Bureau Jean-Christophe & Salvatici Luca, 2004. "WTO Negotiations on Market Access in Agriculture: a Comparison of Alternative Tariff Cut Proposals for the EU and the US," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-35, March.
    13. M. Ali Khan & Edward E. Schlee, 2016. "On Lionel McKenzie's 1957 intrusion into 20th‐century demand theory," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 589-636, May.
    14. Petter Frenger, 2006. "The substitution bias of the consumer price index," Discussion Papers 451, Statistics Norway, Research Department.
    15. Adam Gorajek, 2018. "Econometric Perspectives on Economic Measurement," RBA Research Discussion Papers rdp2018-08, Reserve Bank of Australia.
    16. Kozo Ueda & Kota Watanabe & Tsutomu Watanabe, 2018. "Product Turnover and the Cost of Living Index: Quality vs. Fashion Effects," Globalization Institute Working Papers 337, Federal Reserve Bank of Dallas.
    17. 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.
    18. Brito, Ney O., 1979. "Inflação e o mercado de Letras do Tesouro Nacional," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 33(2), April.
    19. Uliyanov, Igor, 2024. "Using a price-dependent utility function to construct price indices," MPRA Paper 120304, University Library of Munich, Germany.
    20. Bart Hobijn, 2002. "On both sides of the quality bias in price indexes," Staff Reports 157, Federal Reserve Bank of New York.

    More about this item

    Keywords

    Economic Value of a Commodity; Uncompensated vs. Compensated Price Change; Common Units in Measurements; Dual CPI Formula; Supply-Driven and Demand-Driven Economy;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

    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:pra:mprapa:109810. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.