Survey-Based Estimates of Biases in Consumer Price Indices during Transition: Evidence from Romania (original) (raw)

The Inflationary Phenomenon in Romania

2019

The inflationary phenomenon has a long history, being considered a monetary process. It has unfolded over time with uneven intensity as well as changes in meaning. The meanings, consequences and rhythms of this process at the macroeconomic level were asymmetrical and asynchronous, so historians and experts in the field described it as "the disorder of economic life." Through this paper, we intend to perform a radiography of the inflationary phenomenon in Romania. The macroeconomic indicators used in the quantification of the inflationary phenomenon as well as the differences between the CPI (Consumer Price Index) and the Harmonized Index of Consumer Prices (HICP) are presented, the first mentioned being relevant in the quantification of the inflationary phenomenon in Romania and the latter being the indicator used to make comparisons of the inflation rate between the European Union states as well as the Eurozone. From the point of view of the methodology of scientific rese...

Inflationary bias in middle to late transition Czech Republic

Economic Systems, 2003

A series of studies confirm results presented suggesting that mismeasurement of inflation during the transition is a serious problem, on the same relative order of magnitude (and greater in absolute magnitude) as in advanced market economies. Overall, inflation has been overstated by more than 4 percentage points a year during the 1990s in the Czech Republic. By far the largest portion of this bias is due to uncaptured quality changes. In effect, Czech consumers are living considerably better after the fall of communism, but this increase in living standards has manifested itself through better quality rather than greater quantities of goods consumed.

Evaluating Imperfections and Biases in Price Indexes During Transition

SSRN Electronic Journal, 2000

The rapidly changing environment of the transition may create special problems for calculation of index numbers that require a fixed basket of goods and retail outlets. Using referent-level data we find that fixed-weight Laspeyres index on average overstated cost of living increases by approximately 5 per cent a year when compared with a superlative index in the Czech Republic. This difference is smaller than might be expected given the large changes in relative prices that occurred during transition and suggests that consumer substitution impacts may have been largely offset by other factors, especially rising prices combined with increased consumption of some goods as artificial shortages under communism were removed. Indeed, in the period of greatest supply response to price liberalization, the Laspeyres index appears to understate increases in the cost of living.

Output changes and inflationary bias in transition

Economics Systems, 2000

Mismeasurement of inflation is likely to be more severe in a transition economy than in a more stable environment. Reasonable estimates of the size of the inflationary bias in the Czech Republic suggest that conventionally reported declines in real output and living standards during the transition may be a statistical artifact rather than a real phenomenon.

Substitution Biases in Price Indexes during Transition

The rapidly changing environment of the transition may create special problems for calculation of index numbers that require a fixed basket of goods and retail outlets. Using referent-level data we find that fixed- weight Laspeyres index on average overstated cost of living increases by approximately 5 per cent a year when compared with a superlative index in the Czech Republic. This difference is smaller than might be expected given the large changes in relative prices that occurred during transition and suggests that consumer substitution impacts may have been largely offset by other factors, especially rising prices combined with increased consumption of some goods as artificial shortages under communism were removed. Indeed, in the period of greatest supply response to price liberalization, the Laspeyres index appears to understate increases in the cost of living.

Ezoneplus Working Paper No . 9 August 2002 Modelling Inflation in EU Accession Countries : The Case of the Czech Republic , Hungary and Poland

2002

Inflation in Central and East European countries varied considerably over the transition phase, and econometric relationships between prices, money, wages and exchange rates are said to have been unstable during this period. In order to shed some light on the issue, this paper analyses some empirical models of the inflation process in the three earliest east European transition economies: the Czech Republic, Hungary and Poland. Since the end of the 1980s these economies have experienced high rates of inflation, although significant disinflation measures were introduced during the mid-nineties to enhance these countries’ chances of joining the EU, and they succeeded in getting inflation under control without high costs in terms of lost output. Given this, the determinants of inflation need to be empirically analysed not only in order to understand the disinflation measures, but also to assess the possible effects of future pressure on prices. Price stabilisation is an essential compl...

The Analysis of the Romanians'Knowledge on Inflation Phenomenon

Studia Universitatis Babes Bolyai-Negotia, 2009

The modern monetary policy approach sustains that increased transparency and enhanced communication are essential for the success of the central banks decisions. The National Bank of Romania is conducting a transparent monetary policy, releasing to society a considerable amount of information. The problem is that the public does not always receive correct all these information. The reasons for these inconvenient may be multiple, but in this paper we will focus firstly, on the transmission channels which may not be suitable and secondly, on the receivers, which may not have the capacity to understand the information. According to NBR, the inflation reports represent the main communication tool with the public, so our goal is to verify if they are fulfilling their role or there are other information sources which are more appropriate. Beside all the factors that influence the public capacity to understand the inflation phenomenon, we will concentrate our analysis on the impact of age, income and education. The necessary data for our analysis were collected using a questionnaire.

Alternative Measures of Core Inflation in Romania

Romanian Journal of Economic Forecasting, 2008

The paper intends to present synthetically the main approaches to computing core inflation, taking into consideration the importance of core inflation for conducting monetary policy. At the same time, the paper computes different measures of core inflation using methods based on excluding certain categories of prices from overall inflation rate and methods based on excluding from the overall inflation rate temporary movements of various prices which at different moments register extremely high volatility (using trimmed methodology). For the monetary policies it is important to select the inflation indicator with the lowest volatility. In this respect, the paper analyzes the efficiency of the computed core inflation indicators using a statistical approach. At the same time, the paper analyzes the usefulness of core indicators for monetary policy measures.