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Inflationary Bias in Mid to Late Transition Czech Republic

Author

Listed:
  • Randall K. Filer

    (CUNY)

  • Jan Hanousek

    (CERGE-EI, Prague)

Abstract

A series of studies confirm results presented Filer and Hanousek (2000) suggesting that mismeasurement of inflation during the transition is a serious problem, on the same relative order of magnitude (and greater in absolute magnitude) as in advanced market economies. Overall, inflation has been overstated by more than 4 percentage points a year during the 1990s in the Czech Republic. By far the largest portion of this bias is due to uncaptured quality changes. In effect, Czech consumers are living considerably better after the fall of communism, but this increase in living standards has manifested itself through better quality rather than greater quantities of goods consumed.

Suggested Citation

  • Randall K. Filer & Jan Hanousek, 2003. "Inflationary Bias in Mid to Late Transition Czech Republic," Development and Comp Systems 0306001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpdc:0306001
    Note: Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript; pages: 345,395,4323247 ; figures: included
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/dev/papers/0306/0306001.pdf
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    References listed on IDEAS

    as
    1. Brada, Josef C. & King, Arthur E. & Kutan, Ali M., 2000. "Inflation bias and productivity shocks in transition economies: The case of the Czech Republic," ZEI Working Papers B 02-2000, University of Bonn, ZEI - Center for European Integration Studies.
    2. Allan Crawford, 1998. "Measurement biases in the Canadian CPI: An update," Bank of Canada Review, Bank of Canada, vol. 1998(Spring), pages 39-56.
    3. Jan Hanousek & Randall K. Filer, 2001. "Evaluating Imperfections and Biases in Price Indexes during Transition," CERGE-EI Working Papers wp186, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    4. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1.
    5. Hanousek, Jan & Filer, Randall K, 2004. "Consumers' Opinion of Inflation Bias Due to Quality Improvements," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 235-254, October.
    6. Shigenori Shiratsuka, 1999. "Measurement errors and quality-adjustment methodology: lessons from the Japanese CPI," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q II), pages 2-13.
    7. Jan Hanousek & Randall K. Filer, 2000. "Output Changes and Inflationary Bias in Transition," CERGE-EI Working Papers wp167, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    8. Jan Hanousek & Randall K. Filer, 2001. "Consumers' Opinion of Inflation Bias Due to Quality Improvements in Transition in the Czech Republic," CERGE-EI Working Papers wp184, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    10. 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

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    Cited by:

    1. Jan Babecký & Fabrizio Coricelli & Roman Horváth, 2009. "Assessing Inflation Persistence: Micro Evidence on an Inflation Targeting Economy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 59(2), pages 102-127, June.
    2. Mr. Mark J Flanagan & Mr. Felix Hammermann, 2007. "What Explains Persistent Inflation Differentials Across Transition Economies?," IMF Working Papers 2007/189, International Monetary Fund.

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    More about this item

    Keywords

    Inflation Bias; Transition Economies; Output Fall;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • P24 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - National Income, Product, and Expenditure; Money; Inflation

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