Title: Substitution bias of the consumer price index in Poland
Authors: Aleksandra Halka - Narodowy Bank Polski (Poland) [presenting]
Agnieszka Leszczynska-Paczesna - Narodowy Bank Polski (Poland)
Abstract: The focus is on the problem of bias in the measure of inflation as provided by the price index of consumer goods and services (CPI) in Poland. We estimate the size of the bias resulting from substitution effect and the application of plutocratic weights in index calculation. The results show a downward substitution bias of Polish CPI index which is rather unusual, and may stem form frequent adjustments in the weights used for CPI calculation as well as to a faster-than-CPI rise in the prices of those goods and services the demand for which is relatively inelastic. It was found that the CPI (plutocratic) index for Poland was lower than the democratic one.