TY  - JOUR
AU  - Feenstra,Robert C.
AU  - Shapiro,Matthew D.
TI  - High-Frequency Substitution and the Measurement of Price Indexes
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8176
PY  - 2001
Y2  - March 2001
UR  - http://www.nber.org/papers/w8176
L1  - http://www.nber.org/papers/w8176.pdf
N1  - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA  95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu

Matthew D. Shapiro
Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
Tel: 734/764-5419
Fax: 734 764-2769
E-Mail: shapiro@umich.edu
M1  - published as Robert C. Feenstra, Matthew D. Shapiro. "High-Frequency Substitution and the Measurement of Price Indexes," in Robert C. Feenstra and Matthew D. Shapiro, editors, "Scanner Data and Price Indexes" University of Chicago Press (2003)

AB  - This paper investigates the use of high-frequency scanner data to construct price indexes.  In the presence of inventory behavior, purchases and consumption by individuals differ over time. Cost-of-living indexes can still be constructed using data on purchases.  For weekly data on canned tuna, the paper contrast two different types of price indexes:  fixed-base and chained indexes.  Only the former are theoretically correct, and in fact, the chained indexes have a pronounced upward bias for most regions of the U.S.  This upward bias can be caused by consumers purchasing goods for inventory.  The paper presents some direct statistical support for inventory behavior being the cause of the upward bias, though advertising and special displays also have a very significant impact on shopping patterns.
ER  -