Publication Type
Journal Article
Version
publishedVersion
Publication Date
3-2013
Abstract
We decompose the logarithmic change in the Divisia price index into the pure price, substitution, and preference effects, although the latter two effects are hard to distinguish in practice. This decomposition allows us to identify the incidence and contributing factors of inflation. In the Philippines, we find that the preference effect is much smaller than the pure price effect in all provinces. We also find that rich deciles have experienced a higher inflation than poor deciles between 1988 and 2006. However, the gap in the standards of living has actually widened because poor deciles lagged behind in consumption growth.
Keywords
Divisia price index, preference change, decomposition, Philippines
Discipline
Asian Studies | Macroeconomics
Research Areas
Macroeconomics
Publication
Economics Bulletin
Volume
33
Issue
1
First Page
545
Last Page
556
ISSN
1545-2921
Publisher
Economics Bulletin
Citation
FUJII, Tomoki.
Decomposing the changes of the Divisia price index: Application to inflation in the Philippines. (2013). Economics Bulletin. 33, (1), 545-556.
Available at: https://ink.library.smu.edu.sg/soe_research/1518
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I1-P51.pdf