O'Neill / Ralph / Smith Inflation

History and Measurement
1. Auflage 2017
ISBN: 978-3-319-64125-6
Verlag: Springer Nature Switzerland
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 390 Seiten

Reihe: Progress in Mathematics

This book is an introduction to the history of - and current measurement practice of - inflation for the United Kingdom. The authors describe the historical development of inflation measures in a global context, and do so without using formal mathematical language and related jargon that relates only to a few specialist scholars. Although inflation is a widely used and quoted statistic, and despite the important role inflation plays in real people's lives - through pension uprating, train tickets, interest rates and the work of economists - few people understand how it is created. O'Neill, Ralph and Smith mix historical data with a description of practices inside the UK statistical system and abroad, which will aid understanding of how this important economic statistic is produced, and the important and controversial choices that statisticians have made over time.

Robert O'Neill is Lecturer at the University of Huddersfield, UK, where he has been since 2013. Previously he worked at the Office for National Statistics working primarily in the area of index numbers methodology. His current role includes both research and teaching related to quantitative economics, which includes teaching students at various levels.Jeff Ralph has worked for the Office for National Statistics, UK, for 13 years. Much of that time has been spent working on price statistics and the measurement of inflation; this has included research and teaching. Jeff has been joint author on a number of research papers and lead author on a recent student textbook on index numbers. Paul A. Smith is Associate Professor in Official Statistics, University of Southampton, UK. He worked for 25 years in the Office for National Statistics, UK, where he gained extensive experience in the theory and practice of sample surveys applied to businesses, households and the population census. He undertakes consultancy and research in topics related to official statistics, and coordinates the MSc in Official Statistics.

Autoren/Hrsg.

O'Neill, Robert

Ralph, Jeff

Smith, Paul A.

Inhaltsverzeichnis

1;Inflation;2
1.1;Preface;5
1.2;Acknowledgements;12
1.3;Contents;14
1.4;List of Figures;20
1.5;List of Tables;21
2;1 Introduction;23
2.1;1.1Price Levels and the Value of Money;25
2.1.1;1.1.1Inflation as an Economic Indicator;26
2.1.2;1.1.2Inflation as Affecting Businesses;26
2.1.3;1.1.3Inflation as Affecting Individuals;27
2.1.4;1.1.4The Development of Inflation Adjustment;30
2.2;1.2Measuring Inflation;32
2.2.1;1.2.1The Early Development of Inflation Measures;33
2.2.2;1.2.2The First Half of the Twentieth Century;33
2.2.3;1.2.3Towards a Modern Measure of Inflation;34
2.2.4;1.2.4Changes in the Methodology;36
2.2.5;1.2.5Reviews and Housing;37
2.3;1.3The Future of Inflation Measurement;39
2.4;1.4The Long Road to the Current State;39
2.5;References;40
3;2 What Is Inflation?;43
3.1;2.1Why Does Inflation Matter?;44
3.2;2.2The Language of Inflation;44
3.3;2.3The Role of Inflation in Monetary Economics;46
3.4;2.4Is Inflation Bad?;48
3.4.1;2.4.1The Rise of Monetarism;51
3.4.2;2.4.2Hyperinflation;54
3.5;2.5Some Questions About Inflation;56
3.6;2.6The Common Uses of Inflation;58
3.7;2.7Why Is an Accurate Measure of Inflation Important?;60
3.8;2.8Perceptions of Inflation;60
3.8.1;2.8.1Investigating Perceptions of Inflation;61
3.8.2;2.8.2Personal Inflation Calculators;62
3.8.3;2.8.3German Index of Perceived Inflation;62
3.8.4;2.8.4Official vs. Perceived;62
3.8.5;2.8.5Variations of Inflation Across Households;63
3.9;References;63
4;3 The Origins of Inflation Measurement: 1700–1879;66
4.1;3.1Overview;67
4.2;3.2Measuring Price Changes;68
4.3;3.3The Origins of the Basket;69
4.4;3.4Early Price Index Formulae—Dutot and Carli;72
4.5;3.5Indexation in 1780—The American War of Independence;73
4.6;3.6An Early Attempt at Measuring Price Levels Over Time;74
4.7;3.7The Quality of Price Information and the Use of Weights;76
4.8;3.8Towards a Solid Foundation;77
4.9;3.9A Geometric Approach;80
4.10;3.10Laspeyres, Paasche and Drobisch;81
4.11;3.11Early Price Data;83
4.12;3.12The Development of Official Bodies for Price Statistics;84
4.13;3.13The Pace of Development;85
4.14;References;86
5;4 What Is a Price Index?;89
5.1;4.1Defining a Price Index, Inflation and Index Numbers;89
5.2;4.2The Potential Inputs to Index Numbers Calculation;92
5.3;4.3Some Popular Index Numbers Formulae;93
5.3.1;4.3.1The Index Number problem;93
5.3.2;4.3.2Unweighted Index Numbers;95
5.3.3;4.3.3Weighted Index Numbers;97
5.3.4;4.3.4Symmetrically Weighted Index Number Formulae;101
5.3.5;4.3.5Returning to the Index Number Problem;104
5.4;4.4Differences in the Estimation of Inflation;106
5.5;4.5Conclusions;108
5.6;References;109
6;5 The Development of the Cost of Living Index: 1880 to 1946;111
6.1;5.1Price and Expenditure Series Before 1880;113
6.1.1;5.1.1Price Information;113
6.1.2;5.1.2Early Official and Private Inquiries into Household Expenditure;114
6.2;5.2The Political Imperative;116
6.3;5.3The Board of Trade Enquiries of 1903;117
6.3.1;5.3.1Report 1: Wholesale and Retail Prices;117
6.3.2;5.3.2Report 2: British and Foreign Trade and Industrial Conditions (Cd 1761);118
6.3.2.1;5.3.2.1 Expenditure on Food;119
6.3.2.2;5.3.2.2 Clothing and Rent;121
6.3.3;5.3.3An Early Cost of Living Index Series;121
6.4;5.4The 1904 Household Expenditure Survey;123
6.4.1;5.4.1The Sample and the Data Collection;124
6.4.2;5.4.2Items of Food;125
6.4.3;5.4.3Rent, Clothing, Fuel and Light;126
6.4.4;5.4.4Cost of Living Index Numbers;129
6.5;5.5The 1908 Report—Report of an Enquiry into Working-Class Rents, Housing and Retail Prices;130
6.5.1;5.5.1Rents;132
6.5.2;5.5.2Prices for Food and Fuel;132
6.5.3;5.5.3Creation of Index Numbers;132
6.6;5.6The 1913 Report—Report of an Enquiry into Working-Class Rents and Retail Prices;133
6.6.1;5.6.1Changes in Prices Across Regions;134
6.6.2;5.6.2Extended Price Index Numbers;135
6.7;5.7First World War;138
6.7.1;5.7.1Cost of Living During the War;138
6.7.2;5.7.2The Sumner Committee;139
6.8;5.8The Methodology of the Cost of Living Index Numbers;141
6.8.1;5.8.1The Purpose of the Index;141
6.8.2;5.8.2The Expenditure Weights;142
6.8.3;5.8.3Price Collection;142
6.9;5.9Indexing Arrangements After the War;144
6.10;5.10The Second World War;146
6.11;5.11Conclusions;147
6.12;References;148
7;6 The Development of the Retail Prices Index: 1947–1989;151
7.1;6.1Overview;151
7.2;6.2After the War;152
7.3;6.3The Cost of Living Advisory Committee;154
7.4;6.4The Interim Index of Retail Prices;156
7.5;6.5Wider Uses of Budget Enquiries;158
7.6;6.6Report of the Technical Committee;158
7.7;6.7The 1953–54 Budget Enquiry;160
7.8;6.8The Introduction of the New Index;161
7.9;6.9Updating the Expenditure Weights;163
7.10;6.10Meals Out, Housing and Further Indices;165
7.11;6.11Mortgage Interest and Owner Occupiers;169
7.12;6.12Three-Year Weights to One-Year Weights;171
7.13;6.13Major Structural Changes in 1986;171
7.14;6.14Alternative Inflation Measures;173
7.14.1;6.14.1Pensioner Indices;173
7.14.2;6.14.2RPIX and RPIY;174
7.14.3;6.14.3Tax and Price Index;174
7.14.4;6.14.4The Rossi Index;175
7.15;6.15Responsibility for Producing the Index;175
7.16;6.16The Retail Prices Index Over the Period 1945–1989;176
7.17;6.17Final Remarks;177
7.18;References;177
8;7 What’s in the Basket?;179
8.1;7.1Why Do We Need the Basket?;180
8.2;7.2The Expansion of the Basket;183
8.3;7.3The Role of Items in the Basket of Goods and Services;183
8.4;7.4More Than One Basket?;185
8.5;7.5Updating the Basket;186
8.6;7.6Identifying Potential New Items and Reviewing Existing Items;186
8.7;7.7Examples of Changes Over Time;188
8.8;7.8Specific Changes for 2017;189
8.9;7.9The Commodity Review Process;190
8.10;7.10Concluding Remarks;190
8.11;References;191
9;8 Collecting Prices;192
9.1;8.1Introduction;192
9.2;8.2ONS Technical Manual;193
9.3;8.3Historical Methods of Price Collection;194
9.4;8.4Current Price Sampling Procedures;195
9.5;8.5Collecting from Multiple Shop Types;198
9.6;8.6Recording Discounts;198
9.7;8.7Hedonic Regression;200
9.8;8.8Index Day—When to Collect Prices;201
9.9;8.9Sampling Error in Price Measurement;203
9.10;8.10Representativeness of the Sample;204
9.11;8.11Evaluation of the Sampling Design;207
9.12;8.12Hyperinflation;210
9.13;8.13International Issues;210
9.14;8.14Summary;211
9.15;References;212
10;9 Estimating Household Expenditure Shares;214
10.1;9.1Introduction;214
10.2;9.2Private and Early Official Inquiries into Household Expenditure;215
10.3;9.3The Development of Official Expenditure Surveys;219
10.4;9.4The Uses of Household Expenditure Data;220
10.4.1;9.4.1Family Food—From DEFRA;220
10.4.2;9.4.2Family Spending;221
10.4.3;9.4.3Energy Expenditure;222
10.5;9.5The Living Costs and Food Survey;222
10.5.1;9.5.1Overview;222
10.5.2;9.5.2Sampling;223
10.5.3;9.5.3Collection instruments;223
10.5.4;9.5.4Fieldwork;224
10.5.5;9.5.5Data processing;225
10.5.5.1;9.5.5.1 Coding;225
10.5.5.2;9.5.5.2 Checking;226
10.5.5.3;9.5.5.3 Weighting;226
10.5.6;9.5.6Response;227
10.5.7;9.5.7Precision;227
10.6;9.6Challenges of Capturing Expenditure and Income;228
10.6.1;9.6.1Comparison with Other Sources;230
10.6.2;9.6.2The Johnson Review of Consumer Price Statistics;231
10.6.3;9.6.3Summary of Quality Concerns;232
10.7;9.7Quality Assessment of the LCF;232
10.7.1;9.7.1Quality Reviews of Official Statistics;232
10.7.2;9.7.2Summary of Concerns;233
10.7.3;9.7.3A Major Review of the LCF;234
10.8;9.8The Future of Expenditure Measurement;235
10.9;9.9Conclusions;235
10.10;References;236
11;10 From the RPI to the CPI: 1990–2011;239
11.1;10.1Early 1990s–Refinement of the RPI;240
11.2;10.2The Adoption of the RPIX as an Inflation Target;242
11.3;10.3Further Developments to the RPI;243
11.3.1;10.3.1Council Tax;243
11.3.2;10.3.2Owner-occupied Housing;244
11.4;10.4The Initiation of the Harmonised Index of Consumer Prices;245
11.5;10.5Changing the Target for Inflation from the RPI to CPI;248
11.6;10.6Increased Use of the CPI;251
11.7;10.7Consultations: 2009–2011;253
11.7.1;10.7.1Mortgage Interest in the RPI;253
11.7.2;10.7.2Redesign of the Consumer Prices Statistical Bulletin (2010);254
11.7.3;10.7.3Seasonal Prices (2010);255
11.7.4;10.7.4Improving the Measurement of Car Prices;255
11.8;10.8Conclusions;256
11.9;References;257
12;11 Measuring Inflation at a Detailed Level;260
12.1;11.1The Absence of Weights;260
12.2;11.2Elementary Aggregate Formulae;260
12.2.1;11.2.1The Carli Index;261
12.2.2;11.2.2The Jevons Index;263
12.2.3;11.2.3The Dutot Index;264
12.2.4;11.2.4Which Elementary Aggregates are Used in the UK?;264
12.3;11.3Relationship Between Elementary Aggregate Formulae;265
12.3.1;11.3.1Taylor Series Approximation;266
12.3.1.1;11.3.1.1 Jevons compared with the Carli;266
12.3.1.2;11.3.1.2 Jevons Compared with the Dutot;269
12.3.1.3;11.3.1.3 Carli Compared with the Dutot;272
12.4;11.4Which is the Best Elementary Aggregate Formula?;276
12.4.1;11.4.1The Test Approach;276
12.4.2;11.4.2The Economic Approach;277
12.4.3;11.4.3The Statistical Approach;278
12.5;11.5Conclusion;278
12.6;References;279
13;12 What Should We Be Measuring?;281
13.1;12.1Cost of Living Vs. Cost of Goods;282
13.2;12.2What Is a Cost of Living Index?;284
13.3;12.3The History of Arguments Around the Cost of Living Index;290
13.4;12.4How the Cost of Living Can Change Even if Prices Stay the Same;294
13.5;12.5What Do Price Indices Measure?;295
13.5.1;12.5.1Is the CPI a Cost of Living Index?;296
13.5.2;12.5.2The Recommendations of the Boskin Commission;298
13.6;12.6Are We Close to a True Cost of Living Index?;299
13.7;References;300
14;13 Recent Developments: 2012–2016;303
14.1;13.1Overview;303
14.2;13.2Governance;304
14.3;13.3The Formula Effect and the RPI Consultation: 2012;306
14.3.1;13.3.1The Origins of the Formula Effect;306
14.3.2;13.3.2The UK Position;307
14.3.3;13.3.3ONS Research into the Choice of Elementary Aggregate Formulae;311
14.3.4;13.3.4Consultation on Improving the RPI;313
14.3.5;13.3.5Overall Conclusions;315
14.3.6;13.3.6Introducing the RPIJ;316
14.4;13.4Owner Occupiers’ Housing;317
14.4.1;13.4.1OOH Consultation;317
14.4.2;13.4.2A Recommendation;323
14.4.3;13.4.3The Public Consultation;323
14.4.4;13.4.4UK Statistics Authority Assessment of Consumer Price Statistics;325
14.4.5;13.4.5Concerns About the Rental Methodology;325
14.4.6;13.4.6UK Statistics Authority Re-Assessment;326
14.5;13.5The Johnson Review;327
14.5.1;13.5.1Background to the Review;327
14.5.2;13.5.2The Terms of Reference;328
14.5.3;13.5.3Inflation Concepts;329
14.5.3.1;13.5.3.1 Concept 1: A Price Index;330
14.5.3.2;13.5.3.2 Concept 2: A Cost of Living Index;330
14.5.3.3;13.5.3.3 Concept 3: A Household Index;331
14.5.4;13.5.4The Position of the RPI;332
14.5.5;13.5.5Improvements to the Methodology;333
14.5.5.1;13.5.5.1 Price Quotes;333
14.5.5.2;13.5.5.2 Expenditure Weights;333
14.5.6;13.5.6Other Methodological Recommendations;334
14.5.7;13.5.7Public Consultation;334
14.5.8;13.5.8Outcome of the Review and the Consultation;336
14.6;13.6Concluding Remarks;336
14.7;References;337
15;14 Other Price Indices;349
15.1;14.1The Producer Price Index;350
15.1.1;14.1.1Rebasing;355
15.1.2;14.1.2Sampling in PPIs;357
15.1.3;14.1.3PPI Price Collection;359
15.2;14.2Import and Export Prices;360
15.3;14.3Services Producer Price Index;363
15.4;14.4House Price Index;365
15.5;14.5Implied Deflators;367
15.6;14.6Purchasing Power Parity;367
15.7;References;368
16;15 A Look to the Future;371
16.1;15.1Web Scraping;372
16.2;15.2Recommendations of the Johnson Review;374
16.3;15.3Inflation by Demographic Group;377
16.4;15.4Accounting for Fashion;378
16.5;15.5Changes in the Weights Used in Index Numbers;379
16.6;15.6Who Will Determine the Future?;380
16.7;15.7Conclusions;383
16.8;References;383
17;Index;386