A study on the influencing factors of CPI bias in different groups in Canada
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Date
2019
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University of New Brunswick
Abstract
The official CPI may mismeasure the cost of living for different groups of people. This paper investigates the factors that might explain the size of the CPI bias measured by Emery and Guo (2019) for the years 1999 to 2015. We apply the partial least squares method (PLS) estimates of CPI bias for 10 provinces and 14 sub-groups to determine which subcomponents of the CPI are influential on the CPI bias. The result shows that gasoline, fuel and clothing are important factors affecting the CPI bias of each group. However, when we group the samples in 2010 as the cutoff point, this effect is more significant in the later stage, while the influence factors of each group in the early stage have a large inter-group difference and the exchange rate has an important impact on the CPI bias of each group, especially in the later stage.