Measuring Real Consumption and CPI Bias under Lockdown Conditions
Millions of goods and services are now unavailable in many countries due to the current coronavirus pandemic, dramatically impacting on the construction of key economic statistics used for informing policy. This situation is unprecedented; hence methods to address it have not previously been developed. Current advice to national statistical offices from the IMF, Eurostat and the UN is shown to result in downward bias in the CPI and upward bias in real consumption. We conclude that the only way to produce a meaningful CPI within the lockdown period is through establishing a continuous consumer expenditure survey.
The authors thank Paul Armknecht, Corinne Becker-Vermeulen, Kate Burnett-Isaacs, Jan de Haan, François Des Rosiers, David Fenwick, Daniel Hamermesh, Niall O’Hanlon, Robert Hill, Shengyu Li, Leigh Merrington, James Poterba, Marshall Reinsdorf, Chihiro Shimizu, Dan Sichel, Mick Silver, Miriam Steurer and Michael Webster for helpful comments and discussions on earlier drafts. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.