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Abstract

Vol. 62, No. 4, pp. 356-371 (2011)

“An Investigation of Price Level Dynamics at Household Level Based on Homescan Data”
Naohito Abe (Institute of Economic Research, Hitotsubashi University), Kyosuke Shiotani (Nagoya Branch, Bank of Japan)

We investigate several measures for the rates of change in price levels at the household level based on daily scanner data. The major findings are as follows: (1) when the data frequency is annual, the price index based on the actual transaction prices is more accurate than the traditional index based on information on some representative commodities only; (2) large heterogeneity in the rate of changes of price level across households are observed regardless of the differences in data construction procedure; (3) heterogeneity in the rate of price level changes across different age groups is negligible, while rich households tend to face higher rate of price change; (4) finally, about one percent difference between Laspeyres and Paasche indices at annual level is observed, indicating significantly lower substitution across commodities within each category.