Abstract
Brent Moulton (1996) "Bias in the
Consumer Price Index: What Is the Evidence?"
Recent research has suggested that the upward bias of the
U.S. Consumer Price Index may be significant, and correcting
the biases would have important long-run effects on the
federal budget deficit. This paper describes the sampling
procedures used in constructing the CPI and gives simple
examples of formula bias and quality adjustment. The
empirical evidence on various biases is then reviewed, with
an attempt to indicate which biases are reliably estimated
and which estimates of bias are based on extrapolation and
guesswork. This paper also discuss possibilities for further
research leading to potential improvements in the CPI.
Last Modified Date: July 19, 2008
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