DMCA
The plutocratic gap in the CPI: evidence from Spain (2003)
| Venue: | IMF Staff Papers |
| Citations: | 1 - 0 self |
BibTeX
@ARTICLE{Izquierdo03theplutocratic,
author = {Mario Izquierdo and Eduardo Ley and Javier Ruiz-castillo},
title = {The plutocratic gap in the CPI: evidence from Spain},
journal = {IMF Staff Papers},
year = {2003},
pages = {136--155}
}
Share
 |
 |
 |
 |
||
OpenURL
Abstract
The plutocratic gap is defined as the difference between the inflation measured according to the current official consumer price index (CPI) and a democratic index in which all households receive the same weight. During 1992–97, the pluto-cratic gap in Spain averaged 0.055 percentage points a year. Since positive and negative gaps cancel out, however, the average absolute gap is significantly larger: 0.090 percentage points a year. For the purposes of accounting for the plutocratic gap, a 53-dimensional commodity space can be conveniently reduced to two dimen-sions: a luxury index and a necessities index. [JEL C43, D31, D63] The review of the literature carried out by a U.S. Senate Commission headed byMichael Boskin (Boskin and others, 1996) identified several problems regarding the U.S. consumer price index (CPI) elaborated by the U.S. Bureau of Labor Statistics (BLS). The Boskin Commission focused on five sources of bias in the CPI and estimated that, on average, during the last few decades, the U.S. CPI has been overstating the inflation rate by 1.1 percentage points a year.1 Despite the importance *Mario Izquierdo is an Economist in the Research Department of the Banco de España. Eduardo Ley is a Senior Economist in the Asian Division of the IMF Institute. Javier Ruiz-Castillo is Professor of Economics at the Universidad Carlos III de Madrid. The authors have benefited greatly from the comments of an anonymous referee. They have also received valuable comments from Liam Ebrill, Diego Moreno, Marshall Reinsdorf, and participants in seminars at the Fundación de Estudios de Economía Aplicada, the
Keyphrases
plutocratic gap percentage point eduardo ley current official consumer price index pluto-cratic gap average absolute gap last decade bymichael boskin democratic index research department anonymous referee labor statistic boskin commission u.s. senate commission inflation rate luxury index valuable comment liam ebrill u.s. cpi 53-dimensional commodity space negative gap diego moreno u.s. bureau necessity index senior economist importance mario izquierdo asian division imf institute marshall reinsdorf jel c43 javier ruiz-castillo universidad carlos iii u.s. consumer price index several problem
