A cost-of-living dynamic price index, with an application to indexing retirement accounts

A cost-of-living dynamic price index, with an ...
Ricardo Reis, Ricardo Reis
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Last edited by WorkBot
December 15, 2009 | History

A cost-of-living dynamic price index, with an application to indexing retirement accounts

"If a consumer wishes to protect her retirement account from the risk of price changes in order to sustain a stable standard of living, then what price index should the account be indexed to? This paper constructs a dynamic price index (DPI) that answers this question. Unlike the existing theory on price indices (which is static and certain), the DPI measures the cost of living for a consumer who lives for many periods and faces uncertainty. The first contribution of this research is to define this price index and study its theoretical properties. The DPI: is homogeneous of degree 1 with respect to all prices, is forward-looking with respect to price shocks, responds more to permanent vis-à-vis transitory price changes, includes asset prices with a potentially large weight, and distinguishes between durable and non-durable goods prices. The second contribution of the paper is to construct a DPI for the United States from 1970 to 2004. It gives an account of the cost of living in the U.S. that is strikingly different from the one provided by the CPI. The DPI is less persistent, more volatile, and a large part of its movements are driven by changes in the prices of houses and bonds"--National Bureau of Economic Research web site.

Publish Date
Language
English
Pages
44

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Book Details


Edition Notes

"November 2005."

Includes bibliographical references (p. 41-44).

Also available in PDF from the NBER world wide web site (www.nber.org).

Published in
Cambridge, Mass
Series
NBER working paper paper series -- no. 11746., Working paper series (National Bureau of Economic Research) -- working paper no. 11746.

The Physical Object

Pagination
44 p. :
Number of pages
44

Edition Identifiers

Open Library
OL17628071M
OCLC/WorldCat
62381899

Work Identifiers

Work ID
OL5812645W

Source records

Oregon Libraries MARC record

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Download catalog record: RDF / JSON / OPDS | Wikipedia citation
December 15, 2009 Edited by WorkBot link works
April 25, 2009 Edited by ImportBot add OCLC number
September 29, 2008 Created by ImportBot Imported from Oregon Libraries MARC record