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Working Paper
Sourcing substitution and related price index biases
We define a class of bias problems that arise when purchasers shift their expenditures among sellers charging different prices for units of precisely defined and interchangeable product items that are nevertheless regarded as different for the purposes of price measurement. For business-to-business transactions, these shifts can cause sourcing substitution bias in the Producer Price Index (PPI) and the Import Price Index (MPI), as well as potentially in the proposed new true Input Price Index (IPI). Similarly, when consumers shift their expenditures for the same products temporally to take ...
Working Paper
Introduction to price and productivity measurement for housing
This paper provides a brief introduction to a proposed new opportunity cost treatment of owner-occupied housing in measures of inflation for the United States. In addition, the paper introduces, and provides links to, a collection of nine other papers that discuss various aspects of the treatment of owner-occupied housing in measures of inflation for a number of nations, including Canada, Germany, Iceland, and the United States.
Working Paper
Building the Innovation Union: Lessons from the 2008 Financial Crisis
The Innovation Union initiative of the European Union focuses on product and process innovation for tangible goods. The authors argue that it is essential to extend the scope of the initiative to include innovation for financial sector products, processes, and regulatory approaches. They make this argument using examples of financial sector innovations in the United States following the Great Depression and on the basis of an examination of the 2008 financial crisis.
Working Paper
The system of national accounts and alternative economic perspectives
Brent Moulton and Nicole Mayerhauser (2015) point out that, for more than 50 years, economists have featured the concept of human capital in their models of labor, growth, productivity, and distribution of income. The authors recommend the addition to the System of National Accounts (SNA) of supplemental person-level accounts: i.e., a System of Person Accounts (SPA). They see this as the best way of recognizing the processes of human capital creation as well as related issues of how income is distributed among individuals and families. The authors argue that this change would support three ...
Working Paper
Accounting for housing in a CPI
In this paper, we take stock of how statistical agencies in different nations are currently accounting for housing in their consumer price indexes (CPIs). The rental equivalence and user cost approaches have been favourites of economists. Both can be derived from the fundamental equation of capital theory. Concerns about these approaches are taken up. We go on to argue that an opportunity cost approach is the correct theoretical framework for accounting for owner-occupied housing (OOH) in a CPI. This approach, first mentioned in a 2006 OECD paper by Diewert, is developed more fully here. We ...