Almås, Ingvild
[VerfasserIn]
;
Beatty, Timothy K. M.
[Sonstige Person, Familie und Körperschaft];
Crossley, Thomas F.
[Sonstige Person, Familie und Körperschaft]
Lost in Translation
: What Do Engel Curves Tell Us About the Cost of Living?
Erschienen in:CESifo Working Paper Series ; No. 6886
Umfang:
1 Online-Ressource (57 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.3156848
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 15, 2018 erstellt
Beschreibung:
The Hamilton method for estimating CPI bias is simple, intuitive, and has been widely adopted. We show that the method confiates CPI bias with variation in cost-of-living across income levels. Assuming a single price index across the income distribution is inconsistent with the downward sloping Engel curves that are necessary to implement the method. We develop and implement the Translated Engel curve (TEC) method that disentangles genuine CPI bias from differences caused by comparing changes in the cost of living across different income levels - non-homotheticity. The TEC method gives substantially different estimates of CPI bias prior to major reforms to the CPI in 1999 (post-Boskin), but both methods suggest very little CPI bias thereafter