A Modified Consumer Price Index

DOI: 10.4236/me.2010.12011   PDF   HTML     5,269 Downloads   9,014 Views   Citations


It is well known that the Consumer Price Index (CPI), as a Laspeyrestype index, attempts to measure the average change in the prices paid by urban consumers for a fixed market of goods and services, and new samples for most item categories are routinely introduced over time to keep the CPI sample representative of consumer spending patterns. The CPI normally overstates the true rate of increase of the cost of living. In this paper, our main objective is to propose a new measurement in the CPI which combines with the Gross Domestic Product (GDP). This new method will make the bias effectively decreased.

Share and Cite:

G. Yuan and X. Li, "A Modified Consumer Price Index," Modern Economy, Vol. 1 No. 2, 2010, pp. 112-117. doi: 10.4236/me.2010.12011.

Conflicts of Interest

The authors declare no conflicts of interest.


[1] A. M. Aizcorbe and P. Jackman, “The Commodity Subs-titution Effect in CPI Data, 19821991,” Monthly Labor Review, Vol. 116, No. 12, December 1993, pp. 2533.
[2] L. E. Bolton, L. Warlop and J. W. Alba, “Consumer Perc eptions of Price (Un)Fairness,” Journal of consumer Re-search, Vol. 29, No. 4, 2003, pp. 474491.
[3] E. D’Elia, “Actual and Perceived Inflation,” Working pa-per, ISAE and Statistical Office of the municipality of Rome, 2005.
[4] S. Kemp, “Estimation of Past Prices,” Journal of Eco-nomic Psychology, Vol. 8, No. 2, 1987, pp. 181189.
[5] A. Tversky and D. Kahneman, “Judgment under Uncer-tainty: Heuristics and Biases,” Science, Vol. 185, No. 4157, 1974, pp. 11241131.
[6] S. Kemp, “Remembering and Dating Past Prices,” Journal of Economic Psychology, Vol. 12, No. 3, 1991, pp. 431445.
[7] H. W. Brachinger, “Measuring Perceived Inflation: A New Prospect Theory Based Index,” Journal of Economic Psychology, Vol. 29, No. 4, 2008, pp. 433457.
[8] R. Ranyard, F. Del Missier, N. Bonini, D. Duxbury and B. Summers, “Perceptions and Expectations of Price Chan ges and Inflation: A Review and Conceptual Frame work,” Journal of Economic Psychology, Vol. 29, No. 4, 2008, pp. 378400.
[9] J. Hoffmann, H. A. Leifer and A. Lorenz, “Index of Per-ceived Inflation or EU Consumer surveys?” Intereco nomics, Vol. 41, No. 3, 2006, pp. 142250.
[10] C. Hamilton, “The Genuine Progress Indicator Methodo-logical Developments and Results from Australia,” Eco-logical Economics, Vol. 30, No. 1, 1999, pp. 1328.
[11] P. A. Lawn, “A theoretical foundation to support the Index of Sustainable Economic Welfare (ISEW), Genuine Progress Indicator (GPI), and other Related Indexes,” Ecological Economics, Vol. 44, No. 1, 2003, pp. 105 118.
[12] Z. G. Wen, K. W. Zhang and B. Du, “Defedts of the GDP Accounts System and the Amendatory ApproachesMeth Odology and Case Study (in Chinese, with English Ab-stract),” Journal of China University of Geosciences (So-cial Sciences Edition), Vol. 14, No. 13, 2004, pp. 4346.
[13] C. Covv, T. Halstead and J. Rowe, “If the GDP is Up, why is America Down?” The Atlantic Monthly, Vol. 276, No. 4, October 1995, pp. 5978.
[14] D. W. Caves, L. R. Christensen and W. E. Diewert, “The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity,” Econometrical, Vol. 50, No. 6, 1982, pp. 13931414.
[15] E. C. Prescott, “Prosperity and Depression,” American Economic Review, papers and Proceedings, Vol. 92, No. 2, 2002, pp. 115.
[16] K. Ulrich, “Real GDP, Real Domestic Income, and Terms ofTrade Changes,” Journal of International Economics, Vol. 62, No. 1, 2004, pp. 83106.
[17] N. G. Mankiw, “Macroeconomics,”5th Edition, Worth Publishers, New York and Basingstoke, 2003.
[18] A. A. Paul, R. M. Brent and J. S. Kenneth, “Improvem ents to the Food at Home, Shelter, and Prescription Drug Indexes in the U.S. Consumer Price Index,” Bureau of Labor Statistics, Working Paper 263, February 1995.
[19] D. S. Matthew and W. W. David, “Mismeasurement in the Consumer price Index: An evaluation,” NBER Chapter, in NBER Macroeconomics Annual, National Bureau of Economic Research, Inc, Vol. 11, 1996, pp. 93154.
[20] J. Dalén, “Computing Elementary Aggregates in the Sw edish Consumer Price Index,” Journal of Official Statistics, Vol. 8, No. 1, 1992, pp. 129147.
[21] B. Moulton, “Basic Components of the CPI: Estimation of Price Changes,” Monthly Labor Review, Vol. 116, No. 12, December 1993, pp. 1324.
[22] B. J. Szulc, “Price Indices below the Basic Aggregation Level,” In: R. L. Turvey, et al., Eds., Consumer Price Indexes: AnILO Manual, International Labour office, Geneva, 1989, pp. 167178.
[23] R. Turvey, “Consumer Price Indices: An ILO Manual,” International Labour Office, Geneva, 1989.

comments powered by Disqus

Copyright © 2020 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.