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The Plutocratic Bias in the CPI: Evidence from Spain
Author:
Mr. Javier Ruiz Castillo null

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Mr. Eduardo Ley
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Mr. Mario Izquierdo null

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Series:
IMF Working Papers
Volume/Issue:
Volume 2000: Issue 167
Language:
English
Publication Date:
01 Oct 2000
DOI:
https://doi.org/10.5089/9781451858174.001
ISBN:
9781451858174
ISSN:
1018-5941
Pages:
25
Keywords:
WP; least squares; luxury good; Consumer price index; cost-of-living index; aggregation; plutocratic bias; United States CPI; commodity space; Laspeyres price indexes representative; CPI system; household expenditure; Consumer price indexes; Inflation; Price indexes; Household consumption; Total expenditures
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We define the plutocratic bias as the difference between inflation measured according to the current official CPI and a democratic index in which all households receive the same weight. We estimate that during the 1990s the plutocratic bias in Spain amounts to 0.055 percent per year. However, positive and negative biases cancel off when averaging over the whole period. The mean absolute bias is significantly larger, 0.090. We can explain most of the oscillations experimented by the plutocratic bias by the price behavior of three goods: a luxury good and two necessities.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund