New methods for tracking inflation seem to be supporting the CPI
from Slate:
“The first comes from the Massachusetts Institute of Technology. In 2007, economists Roberto Rigobon and Alberto Cavallo started tracking prices online and inputting them into a massive database. Then, last month, they unveiled the Billion Prices Project, an inflation measure based on 5 million items sold by 300 online retailers in 70 countries. (For the United States, the BPP collects about 500,000 prices.)
The BPP’s inflation measure is markedly different from the government’s. The economists just average all the prices culled online, meaning the basket of goods is whatever you can buy on the Web. (Some things, like books, are most often bought online. Some items, like cats, are not.) Plus, the researchers do not weight certain items’ prices, even if they tend to make up a bigger proportion of household spending.
Still, thus far, the BPP has tracked the CPI closely.
A second inflation measure comes from Web behemoth Google and is a pet project of the company’s chief economist, Hal Varian. As reported by the Financial Times, earlier this year, Varian decided to use Google’s vast database of Web prices to construct the “Google Price Index,” a constantly updated measure of price changes and inflation. (The idea came to him when he was searching for a pepper grinder online.) Google has not yet decided whether it will publish the price index, and has not released its methodology. But Varian said that his preliminary index tracked CPI closely, though it did show periods of deflation—the worrisome incidence of prices actually falling—where the CPI did not.
….somewhat remarkably, the Google and Billion Prices Project indices actually seem to confirm the accuracy of the old-fashioned CPI, tracking it closely rather than showing it to be off-base.”
No comments:
Post a Comment