Abstract
Sylvia G. Leaver, Robert A. Cage, and Darin T. Solk (2006)
"Evaluating a Calibration Weighting Scheme for
Elementary Indexes for Commodities and Services
in the U.S. Consumer Price Index"
The estimate of price change for an elementary cell of the U.S. CPI is
a weighted average of quote-level price changes, where the quote-level
weight is a function of inverse selection probabilities at each stage of selection.
This paper evaluates, by means of retrospective estimation and
sample simulation, an alternative weighting scheme employing calibration.
The theory behind this approach is that the sum of the weights of
each "useable" quote in each elementary cell should yield an estimate
of the expenditure of the elementary cell. The CPI produces two distinct
estimates of elementary item-area expenditure: (i) that derived
from the sum of commodities and services quote weights, and (ii) that
derived from Consumer Expenditure Survey (CEX) biennial data. The
new formula forces quote weights in any given month to sum to biennial
expenditure estimates from the CEX.
Last Modified Date: January 9, 2007
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