Working Paper: NBER ID: w28902
Authors: Alexis Antoniades; Robert C. Feenstra; Mingzhi Xu
Abstract: Many price indices must be constructed without quantity data at the elementary level. We show that for some consumer goods in the United States and other countries, one can approximate expenditure shares using weights derived from the retail distribution of sellers. These weights are based on the share of outlets selling an item, or the share of outlets adjusted by the total number of items sold in each. Relative to using no weights, we find that using such imputed weights substantially reduces bias in the frequency of price changes, in annual inflation, and in price comparisons across countries.\n
Keywords: price indices; expenditure shares; retail distribution; inflation measurement; international price comparisons
JEL Codes: C81; E01; E31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Using imputed weights derived from the retail distribution of sellers (D39) | Reduction in bias in measuring inflation and price changes (E31) |
| High-sales items (D44) | More frequent price changes (D49) |
| Excluding expenditure information (P44) | Downward bias in inflation rates (E31) |
| Using imputed market shares derived from retail distribution metrics (D39) | Reduction in measurement error in international price comparisons (C82) |