Are Engel curve estimates of CPI bias biased?
By: Trevon D. Logan.
Contributors: National Bureau of Economic Research.
Series: NBER working paper series -- working paper 13870; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 13870.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "A recent literature has advanced the use of Engel curves to estimate overall CPI bias.  In this paper, I show that the methodology is sensitive to the modeling of household demography.  Existing estimates of CPI bias do not account for the changing effect of household size on budget shares, and this can lead to omitted variable bias.  Since the effect of household size on demand changes over time the drift in Engel curves attributed to CPI bias is partially explained by this effect.  My estimates of the annual rate of CPI bias from 1888 to 1935 are changed by at least 25%, and usually more than 50%, once the changing effect of household size is accounted for"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 6/16/2008.

Includes bibliographical references.

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