Abstract
The present paper estimates upper-level substitution and new-goods bias in the Korean Consumer Price Index (CPI). It has been estimated that the upper-level substitution bias in the CPI alone increased the inflation rate by 0.51 percentage points per year over the thirteen-year period between 1990 and 2002. The new-goods bias further increased the inflation rate by 0.17 and 0.13 percentage points per year between 1990-1995 and 1995-2000 respectively. The new Chained Laspeyres index series that is based on annually-updated weights has been found to correct only less than half of the upperlevel substitution bias.
Original language | English |
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Pages (from-to) | 1-32 |
Number of pages | 32 |
Journal | Macquarie economics research papers |
Volume | 2006 |
Issue number | 2 |
Publication status | Published - 2006 |
Keywords
- substitution bias
- new-goods bias
- Consumer Price Index (CPI)