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Using Engel curves to estimate bias in the Canadian CPI as a cost of living index

Beatty, T.K.M. and Larsen, E.R. (2005) Using Engel curves to estimate bias in the Canadian CPI as a cost of living index. Canadian Journal of Economics, 38 (2). pp. 482-499. ISSN 0008-4085

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Abstract

Semiparametric Engel curves are used to infer bias in the Canadian CPI as a Cost of Living Index. The budget share of food has long been used as an indicator of welfare. We compare households with the same levels of CPI deflated total expenditure over the period 1978–2000. Differences in the expenditure share of food are attributed to the CPI failing to capture changes in costs of living. We employ a novel econometric approach using a single index penalized linear spline model. Over the period, we find that the CPI overstated changes in the cost of living between 1.33 and 1.86% for the four household types considered.

Item Type: Article
Academic Units: The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 06 Aug 2009 16:15
Last Modified: 06 Aug 2009 16:15
Published Version: http://dx.doi.org/10.1111/j.0008-4085.2005.00289.x
Status: Published
Publisher: Blackwell Publishing Ltd.
Identification Number: 10.1111/j.0008-4085.2005.00289.x
URI: http://eprints.whiterose.ac.uk/id/eprint/5803

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