Abstract
Owen Shoemaker (2006)
"Comparison of Chained CPI-U and Regular CPI-U
All-U.S. Indexes in the Housing Sector (2000—2004)"
In February, 2006, the BLS calculated and published its fourth annual
set of C-CPI-U indexes —- for the 12 months of 2004. The C-CPI-U
(Chained Consumer Price Index - Urban) is calculated and published
every year, with a one year lag, using a Tornqvist formula, which is
a Superlative index formula. By contrast, the regular CPI-U uses a
combination (Hybrid) of Geomeans and Laspeyres formulas as its final
estimator. For 12-month price changes, the All_US-All_Items chained
C-CPI-U index results continue to diverge (significantly lower) from
regular CPI-U index results, but in the Housing Sector (Rent plus
Owners' Equivalent Rent, or REQ) the Superlative results have begun
to track consistently higher than their Regular CPI results. We investigate
the anomalous nature of these Housing results, and discover that a
mathematical result rather than index theory is determinative.
Last Modified Date: January 9, 2007
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