1. bookVolume 38 (2022): Issue 1 (March 2022)
    Special Issue on Price Indices in Official Statistics
Journal Details
License
Format
Journal
eISSN
2001-7367
First Published
01 Oct 2013
Publication timeframe
4 times per year
Languages
English
access type Open Access

Measuring Inflation under Pandemic Conditions

Published Online: 29 Mar 2022
Volume & Issue: Volume 38 (2022) - Issue 1 (March 2022)<br/>Special Issue on Price Indices in Official Statistics
Page range: 255 - 285
Received: 01 Jul 2020
Accepted: 01 Nov 2021
Journal Details
License
Format
Journal
eISSN
2001-7367
First Published
01 Oct 2013
Publication timeframe
4 times per year
Languages
English
Abstract

National statistical offices have faced unprecedented circumstances in the modern history of economic measurement. There were dramatically changing consumer expenditure patterns due to pandemic conditions, with lockdowns and fear of infection making many goods and services unavailable. We examine the implications of changing relative expenditures for the construction of Consumer Price Indexes, with special reference to the treatment of prices for unavailable products. We conclude that for many purposes, it would be useful for statistical agencies to establish a continuous consumer expenditure survey. We also examine various other practical pandemic induced CPI measurement problems.

Keywords

Aizcorbe, A., C. Corrado, and M. Doms. 2000. “Constructing Price and Quantity Indexes for High Technology Goods”, Industrial Output Section, Division of Research and Statistics, Board of Governors of the Federal Reserve System, Washington DC. Available at: https://users.nber.org/~confer/2000/si2000/doms.pdf. Search in Google Scholar

Allen, R.C., and W.E. Diewert. 1981. “Direct versus Implicit Superlative Index Number Formulae”, Review of Economics and Statistics 63: 430–435. DOI: https://doi.org/10.2307/1924361.10.2307/1924361 Search in Google Scholar

Aten, B., and A. Heston. 2009. “Chaining Methods for International Real Product and Purchasing Power Comparisons: Issues and Alternatives”: 245–273 in Purchasing Power Parities of Currencies: Recent Advances in Methods and Applications, edited by D.S. Prasada Rao. Cheltenham UK: Edward Elgar. Search in Google Scholar

Balk, B.M. 1980. “A Method for Constructing Price Indices for Seasonal Commodities”, Journal of the Royal Statistical Society, Series A 143: 68–75. DOI: https://doi.org/10.2307/2981770.10.2307/2981770 Search in Google Scholar

Carvalho, V.M., J.R. Garcia, S. Hansen,Á. Ortiz, T. Rodrigo, J.V. Rodriguez Mora, and J. Ruiz. 2020. “Tracking the COVID-19 Crisis with High-Resolution Transaction Data”, Cambridge-INET Working Paper Series No: 2020/16, University of Cambridge. Available at: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe2030.pdf.10.1098/rsos.210218 Search in Google Scholar

Cavallo, A. 2013. “Online and Official Price Indexes: Measuring Argentina’s Inflation”, Journal of Monetary Economics 60(2): 152–165. DOI: https://doi.org/10.1016/i.imoneco.2012.10.002. Search in Google Scholar

Cavallo, A. 2017. “Are Online and Offline Prices Similar? Evidence from Large Multi-Channel Retailers”, American Economic Review 107(1): 283–303. DOI: https://doi.org/10.1257/aer.2016Q542. Search in Google Scholar

Cavallo, A. 2020. “Inflation with Covid Consumption Baskets,” NBER Working Paper 27352, Cambridge, MA. Available at: https://www.nber.org/papers/w27352. Search in Google Scholar

Cavallo, A., and R. Rigobon. 2016. “The Billion Prices Project: Using Online Prices for Inflation Measurement and Research”, Journal of Economic Perspectives 30(2): 151–178. DOI: https://doi.org/10.1257/iep.30.2.15. Search in Google Scholar

Court, A.T. 1939. “Hedonic Price Indexes with Automotive Examples”: 99–117 in The Dynamics of Automobile Demand, New York: General Motors Corporation. Search in Google Scholar

Dalen, J. 2001. “Statistical Targets for Price Indexes in Dynamic Universes,” Paper presented at the Sixth meeting of the Ottawa Group, April 2–6, Canberra, Canada. Search in Google Scholar

Deaton, A., and W.E. Diewert. 2002. “Conceptual Foundations for Price and Cost of Living Indexes”, Chapter 2: 38–93 in At What Price? Conceptualizing and Measuring Cost of Living and Price Indexes, edited by C.L. Schultzc, and C. Mackie, Washington D.C., National Academy Press. Search in Google Scholar

De Haan, J. 2004. “Estimating Quality-Adjusted Unit Value Indices: Evidence from Scanner Data,” Paper presented at the Seventh EMG Workshop, December 12–14, Sydney, Australia. Available at: http://www.ipeer.ca/papers/De%20Haan,%20Oct.%2018,2004%20(3).pdf. Search in Google Scholar

De Haan, J. 2010. “Hedonic Price Indexes: A Comparison of Imputation, Time Dummy and Repricing Methods”, Jahrbücher für Nationökonomie und Statistik 230: 772–791. DOI: https://doi.org/10.1515/ibnst-2010-Q611. Search in Google Scholar

De Haan, J., and F. Krsinich. 2012. “The Treatment of Unmatched Items in Rolling Year GEKS Price Indexes: Evidence from New Zealand Scanner Data”, paper presented at the Economic Measurement Workshop 2012, November 23, University of New South Wales. Available at: https://statsnz.contentdm.oclc.org/digital/collection/p20045coll4/id/340/ Search in Google Scholar

De Haan, J., and F. Krsinich. 2014. “Scanner Data and the Treatment of Quality Change in Nonrevisable Price Indexes”, Journal of Business and Economic Statistics 32(3): 341–358. DOI: https://doi.org/10.1080/07350015.2014.880Q59. Search in Google Scholar

De Haan, J., and F. Krsinich. 2018. “Time Dummy Hedonic and Quality Adjusted Unit Value Indexes: Do They Really Differ?”, Review of Income and Wealth 64(4): 757–776. DOI: https://doi.org/10.1111/roiw.12304.10.1111/roiw.12304 Search in Google Scholar

De Haan, J., and H.A. van der Grient. 2011. “Eliminating Chain drift in Price Indexes Based on Scanner Data”, Journal of Econometrics 161: 36–46. DOI: https://doi.Org/10.1016/i.ieconom.2010.09.004. Search in Google Scholar

Diewert, W.E. 1976. “Exact and Superlative Index Numbers”, Journal of Econometrics 4: 114–145. DOI: https://doi.org/10.1016/0304-4076(76)90009-9.10.1016/0304-4076(76)90009-9 Search in Google Scholar

Diewert, W.E. 1978. “Superlative Index Numbers and Consistency in Aggregation”, Econometrica 46: 883–900. DOI: https://doi.org/10.2307/1909755.10.2307/1909755 Search in Google Scholar

Diewert, W.E. 1992. “Fisher Ideal Output, Input and Productivity Indexes Revisited”, Journal of Productivity Analysis 3: 211–248. DOI: https://doi.org/10.1007/BF00158354.10.1007/BF00158354 Search in Google Scholar

Diewert, W.E. 2003. “Hedonic Regressions: A Review of Some Unresolved Issues”, Paper presented at the Seventh Meeting of the Ottawa Group, 27–29 May, Paris, France. Search in Google Scholar

Diewert, W.E. 2009. “Similarity Indexes and Criteria for Spatial Linking”: 183–216 in Purchasing Power Parities of Currencies: Recent Advances in Methods and Applications, edited by D.S. Prasada Rao, Cheltenham, UK: Edward Elgar. Search in Google Scholar

Diewert, W.E. 2021a. “The Economic Approach to Index Number Theory”, Draft Chapter 5 in Consumer Price Index Theory, Washington D.C.: International Monetary Fund. Available at: https://www.imf.ora/en/Data/Statistics/cpi-manual. (accessed April 2021). Search in Google Scholar

Diewert, W.E. 2021b. “Elementary Indexes”, Draft Chapter 6 in Consumer Price Index Theory, Washington D.C.: International Monetary Fund. Available at: https://www.imf.org/en/Data/Statistics/cpi-manual. (accessed April 2021). Search in Google Scholar

Diewert, W.E. 2021c. “The Chain Drift Problem and Multilateral Indexes”, Draft Chapter 7 in Consumer Price Index Theory, Washington D.C.: International Monetary Fund. https://www.imf.org/en/Data/Statistics/cpi-manual. (accessed April 2021). Search in Google Scholar

Diewert, W.E. 2021d. “Quality Adjustment Methods”, Draft Chapter 8 in Consumer Price Index Theory, Washington D.C.: International Monetary Fund. Available at: https://www.imf.org/en/Data/Statistics/cpi-manual. (accessed April 2021). Search in Google Scholar

Diewert, W.E., and R. Feenstra. 2019. “Estimating the Benefits of New Products: Some Approximations”, Discussion Paper 19–02, Vancouver School of Economics, University of British Columbia, Vancouver, B.C., Canada. Available at: https://econ2017.sites.olt.ubc.ca/files/2019/03/pdf_paper_Diewert_Feenstra-DP19-02-Benefits-of-New-Products-Some-Approximations-Mar2019.pdf. Search in Google Scholar

Diewert, W.E., and K.J. Fox. 2018. “Substitution Bias in Multilateral Methods for CPI Construction Using Scanner Data,” UNSW Business School Research Paper No. 2018-13. Available at: https://ssrn.com/abstract=3276457.10.2139/ssrn.3276457 Search in Google Scholar

Diewert, W.E., and K.J. Fox. 2020. “Measuring Real Consumption and CPI Bias under Lockdown Conditions”, NBER Working Paper 27144, Cambridge, MA. Available at: https://www.nber.org/papers/w27144. Search in Google Scholar

Diewert, W.E., K.J. Fox and P. Schreyer. 2018. “The Digital Economy, New Products and Consumer Welfare”, Economic Statistics Centre of Excellence (ESCoE) Discussion Paper 2018-16, London, UK. Available at: https://www.escoe.ac.uk/publications/the-digital-economy-new-products-and-consumer-welfare/. Search in Google Scholar

Dunn, A., K. Hood, and A. Driessen. 2020. “Measuring the Effects of the COVID-19 Pandemic on Consumer Spending using Card Transaction Data,” U.S. Bureau of Economic Analysis Working Paper WP2020-5. Available at: https://www.bea.gov/research/papers/2020/measuring-effects-covid-19-pandemic-consumer-spending-using-card-transaction Search in Google Scholar

Dutot, Charles. 1738. Réflexionspolitiques sur les finances et le commerce, Volume 1, La Haye: Les frères Vaillant et N. Prevost. Search in Google Scholar

Eurostat 2020. “Guidance on the Compilation of the HICP in the Context of the COVID-19 Crisis”, Methodological Note, Directorate C, Unit C4, April 3. Available at: https://ec.europa.eu/eurostat/documents/10186/10693286/HICPguidance.pdf (accessed May 2020). Search in Google Scholar

Feenstra, R.C. 1994. “New Product Varieties and the Measurement of International Prices”, American Economic Review 84(1): 157–177. DOI: https://doi.org/10.1257/0002828041301524.10.1257/0002828041301524 Search in Google Scholar

Fisher, I. 1922. The Making of Index Numbers, Boston: Houghton-Mifflin. Search in Google Scholar

Hardy, G.H., J.E. Littlewood, and G. Pólya. 1934. Inequalities, Cambridge: Cambridge University Press. Search in Google Scholar

Hausman, J.A. 1996. “Valuation of New Goods under Perfect and Imperfect Competition”: 20–236 in The Economics of New Goods, edited by T.F. Bresnahan and R.J. Gordon, Chicago: University of Chicago Press. Search in Google Scholar

Hausman, J.A. 1999. “Cellular Telephone, New Products and the CPI”, Journal of Business and Economic Statistics 17(2): 188–194. DOI: https://doi.org/10.2307/1392474.10.2307/1392474 Search in Google Scholar

Hausman, J. 2003. “Sources of Bias and Solutions to Bias in the Consumer Price Index”, Journal of Economic Perspectives 17(1): 23–44. DOI: https://doi.org/10.1257/089533003321164930.10.1257/089533003321164930 Search in Google Scholar

Hicks, J.R. 1940. “The Valuation of the Social Income”, Economica 7: 105–124. DOI: https://doi.org/10.2307/2548691.10.2307/2548691 Search in Google Scholar

Hill, R.J. 1997. “A Taxonomy of Multilateral Methods for Making International Comparisons of Prices and Quantities”, Review of Income and Wealth 43(1): 49–69. DOI: https://doi.org/10.1111/i.1475-4991.1997.tb80200.x. Search in Google Scholar

Hill, R.J. 2001. “Measuring Inflation and Growth Using Spanning Trees”, International Economic Review 42: 167–185. DOI: https://doi.org/10.1111/1468-2354.00105.10.1111/1468-2354.00105 Search in Google Scholar

Hill, R.J. 2004. “Constructing Price Indexes Across Space and Time: The Case of the European Union”, American Economic Review 94: 1379–1410. DOI: https://doi.org/10.1257/0002828043052178.10.1257/0002828043052178 Search in Google Scholar

Hill, R.J. 2009. “Comparing Per Capita Income Levels Across Countries Using Spanning Trees: Robustness, Prior Restrictions, Hybrids and Hierarchies”: 217–244 in Purchasing Power Parities of Currencies: Recent Advances in Methods and Applications, edited by D.S. Prasada Rao, Cheltenham UK: Edward Elgar. Search in Google Scholar

ILO, IMF, OECD, UNECE, Eurostat, and The World Bank 2004. Consumer Price Index Manual: Theory and Practice, edites by Peter Hill, Geneva: International Labour Office. Search in Google Scholar

IMF 2020. “Consumer Price Index Continuity”, Unit C-4, Price Statistics. Available at: https://stats\viki.unece.org/displav/CCD2/Compilation+of+CPI+in+times+of+COVID-19?preview=/278037166/279773977/STA%20CPI%20Business%20Continuity.pdf (accessed April 2021). Search in Google Scholar

Ivancic, L., W.E. Diewert, and K.J. Fox. 2011. “Scanner Data, Time Aggregation and the Construction of Price Indexes”, Journal of Econometrics 161: 24–35. DOI: https://doi.org/10.1016/i.ieconom.2010.09.003. Search in Google Scholar

IWGPS, Intersecretariat Working Group on Price Statistics 2020. “Consumer Price Index: Business Continuity Guidance”. Available at: https://statswiki.unece.org/display/CCD2/Compilation+of+CPI+in+times+of+COVID-19?preview=/278037166/279776928/IWGPS%20CPI%20Continuity%20Note.pdf (accessed April 2021). Search in Google Scholar

Jevons, W.S. 1865. “The Variation of Prices and the Value of the Currency since 1782”, Journal of the Statistical Society of London 28: 294–320; reprinted in Investigations in Currency and Finance (1884), London: Macmillan and Co.: 119–150. Search in Google Scholar

Konüs, A.A. 1924. “The Problem of the True Index of the Cost of Living”, translated in Econometrica 7, (1939): 10–29. DOI: https://doi.org/10.2307/1906997.10.2307/1906997 Search in Google Scholar

Kravis, I.B., A. Heston, and R. Summers. 1982. World Product and Income: International Comparisons of Real Gross Product, Statistical Office of the United Nations and the World Bank, Baltimore: The Johns Hopkins University Press. Search in Google Scholar

Pollak, R.A. 1983. “The Theory of the Cost-of-Living Index”: 87–161 in Price Level Measurement, edited by W.E. Diewert and C. Montmarquette, Ottawa: Statistics Canada. Search in Google Scholar

Rao, D.S.P. 1995. “On the Equivalence of the Generalized Country-Product-Dummy (CPD) Method and the Rao-System for Multilateral Comparisons”, Working Paper No. 5, Centre for International Comparisons, University of Pennsylvania, Philadelphia. Search in Google Scholar

Rao, D.S.P. 2004. “The Country-Product-Dummy Method: A Stochastic Approach to the Computation of Purchasing Power parities in the ICP”, paper presented at the SSHRC Conference on Index Numbers and Productivity Measurement, June 30–July 3, 2004, Vancouver, Canada. Available at: https://ideas.repec.org/p/qld/uqcepa/08.html. Search in Google Scholar

Rao, D.S.P. 2005. “On the Equivalence of the Weighted Country Product Dummy (CPD) Method and the Rao System for Multilateral Price Comparisons”, Review of Income and Wealth 51(4): 571–580. DOI: https://doi.org/10.1111/i.1475-4991.2005.00169.x. Search in Google Scholar

Silver, M. 2010. “The Wrong and Rights of Unit Value Indices”, Review of Income and Wealth 56:S1: 206–206. DOI: https://doi.org/10.1111/j.1475-4991.2010.00391.x.10.1111/j.1475-4991.2010.00391.x Search in Google Scholar

Silver, M. 2011. “An Index Number Formula Problem: the Aggregation of Broadly Comparable Items”, Journal of Official Statistics 27(4): 1–17. Available at: https://www.scb.se/contentassets/ca21efb41fee47d293bbee5bf7be7fb3/an-index-number-formula-problem-the-aggregation-of-broadly-comparable-items.pdf (accessed January 2022). Search in Google Scholar

Summers, R. 1973. “International Comparisons Based Upon Incomplete Data”, Review of Income and Wealth 29(1): 1–16. DOI: https://doi.org/10.1111/i.1475-4991.1973.tb00870.x. Search in Google Scholar

Theil, H. 1967. Economics and Information Theory, Amsterdam: North-Holland. Search in Google Scholar

UNECE 2020. (A. Bredt and C. Boldsen), “Compilation of CPI in Times of COVID-19”. Available at: https://statswiki.unece.org/display/CCD2/Compilation+of+CPI+in+times+of+COVID-19 (accessed April 2021). Search in Google Scholar

U.S. Bureau of Labor Statistics 2020. “Effects of COVID-19 Pandemic on BLS Price Indexes”. Available at: https://www.bls.gov/bls/effects-of-covid-19-pandemic-on-bls-price-indexes.htm (accessed April 2021). Search in Google Scholar

Von Auer, L. 2014. “The Generalized Unit Value Index Family”, Review of Income and Wealth 60: 843–861. DOI: https://doi.org/10.1111/roiw.12042.10.1111/roiw.12042 Search in Google Scholar

Von Hofsten, E. 1952. Price Indexes and Quality Change, London: George Allen and Unwin. Search in Google Scholar

Walsh, C.M. 1901. The Measurement of General Exchange Value, New York: Macmillan and Co. Search in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo