L'indice des prix à la consommation surestime-t-il l'inflation ? (version anglaise)

François Lequiller

Description

Les débats autour des problèmes de mesure de l'inflation ne sont pas nouveaux. Ils sont revenus récemment dans l'actualité avec la publication, par une commission du Sénat américain présidée par M.J. Boskin, d'un rapport affirmant que l'indice des prix à la consommation (IPC) américain surestimait l'inflation de 1,1 % par an. Le présent article montre que le biais qui pourrait affecter l'indice des prix en France serait d'un ordre de grandeur très nettement inférieur. Résumer l'évolution d'une multitude de prix en un seul chiffre est forcément difficile. Même dans le cas théorique le plus favorable où l'on considère un consommateur unique face à un choix budgétaire, les problèmes de traitement des substitutions entre produits existants sont importants. On sait néanmoins assez bien caractériser les propriétés des diverses approches envisageables et les procédures statistiques utilisées en France mettent notre indice largement à l'abri des critiques sur ce point. L'apparition de nouveaux produits (entendus au sens large : produits réellement nouveaux sur le marché, produits déjà vendus ailleurs mais apparaissant dans un nouveau point de vente, en remplacement ou pas d'un produit ancien) soulève des difficultés non encore complètement résolues que ce soit aux États-Unis, en France ou dans les autres pays. La commission Boskin a affirmé qu'il existerait, du fait des nouveaux produits, une surestimation de 0,6 % par an dans l'IPC des États-Unis. Cette affirmation repose sur des estimations fragiles et probablement exagérées. Cette conclusion rejoint l'avis exprimé par un certain nombre d'experts américains.

Sujets

• INSEE
• Prix
• Employabilité, métiers et formations

Informations

• Publié par: insee
• Nombre de lectures: 96
• Langue: English

Extrait

Does the French Consumer
Price Index Overstate Inflation?*
François The debate over the issue of measuring inflation has recently been revived
Lequiller** by the publication of a report by an Advisory Commission to the U.S. Senate.
The Commission, chaired by Michael J. Boskin, found that the U.S. consumer
price index (CPI) overestimates inflation by 1.1 percentage points a year.
This article shows that the potential bias in the French CPI is on a far lower
order of magnitude.
Clearly, it is hard to summarize the changes in a multitude of prices with
a single figure. Even in the best case theoretical scenario—a single consumer
faced with a spending decision—the treatment of substitutions between existing
products raises important problems. Nevertheless, it is possible to provide a fairly
accurate description of the various possible alternatives, and the statistical
** At the time of writing,
François Lequiller was procedures used in France largely shield the country’s index from criticism
deputy head of INSEE’s on this point.
Department of Consumer
Prices, Income, and
The introduction of new products creates serious difficulties that have not beenLiving Conditions, which
is in charge of the entirely resolved in the United States, in France, or elsewhere ("new products" is
French consumer price
used here in the broad sense to denote (1) genuinely new products on the marketindex.
and (2) products already sold elsewhere but introduced in a new sales outlet,
The author wishes to
replacing existing products or not). The Boskin Commission estimates the upwardthank all those who
have taken the time to bias in the U.S. CPI due to new products at 0.6 percentage points per year.
improve this article. He
is especially grateful to The Commission’s claim rests on fragile and probably exaggerated estimates.
the unnamed referee Our conclusion converges with the opinion of several U.S. statisticians.
chosen by the editor of
Économie et Statistique
(where the original French
version is being published),
but also to his successor,
T. Lacroix, and to L. Viglino, I. Introduction report in December 1996, in which it argued
D. Temam, M. Glaude,
that the U.S. consumer price index (CPI) would
and G. Laroque. Special
be overestimated by 1.1 percentage points perthanks to J. Mandelbaum
for a magnificent translation. purred by several years’ debate over a year after 1996 and had been overestimated
This paper is available S possible overestimation of U.S. inflation, by 1.3 percentage points a year before 1996.
in the INSEE Studies
the U.S. Senate appointed a commission of In other words, the Boskin Commissionseries on INSEE’s web
site (www.insee.fr). economists chaired by Professor Michael J. claimed that "true" inflation at the
Boskin of Stanford University to examine thehousehold consumption stage would be 1.1
Names and dates issue. The commission submitted its final percentage points lower than the figure
shown in brackets refer
the reader to the
bibliography at the end
of the article * Originally published as "l’indice des prix à la consommation surestime t il l’inflation?", Économie et Statistique , No 303, 1997 3.
INSEE STUDIES No 2, September 1997 1published by the Bureau of Labor Statistics principles of French CPI determination meet
(BLS) in the years to come. For example, if the the highest international standards.
U.S. CPI rises 3.0% in 1998, the true rise,
according to the Commission, should be
reckoned at 1.9%.
II. Substitution effects
As the upward biases would add up over theand new products
years, the combined total would automatically
11. This extrapolation reach 11.5 percentage points after 10 years . In
assumes a constant the United States, the CPI is used to index s may easily be imagined, however, it is no
bias over time–an
welfare benefits and income tax brackets. AnAeasy task to determine an indicator that isassumption that has
not been fully explored. upward bias on either item would swell the supposed to summarize in a single figure the
It also supposes that federal deficit, as indexed benefits would be changes in prices of the billions of transactions
BLS will not change
exaggerated and tax revenues would be involved in household purchases. The processits methods in the
future. diminished by an over rapid rise in the raises many problems, such as the coverage,
income tax brackets. The Commission reckons representativeness, and accuracy of the index
that this mechanism alone would add abou(tsampling), and the recording of actual
$1 trillion to the public debt by 2008. Amid the transaction prices (followed by that of
present raging debates over the federal deficit,unadvertised discounts: see box 2). This article
the Commission did not hesitate to describe the addresses two very specific issues: (1) the
CPI bias as the "fourth largest federal program, coverage of households’ purchasing behavior
after social security, health care and defense".(substitution effects between existing
products), and (2) the introduction of new
Although the subject has long been discussed in products (and/or quality changes).
Europe and the U.S., the controversy over the
Boskin Commission findings offers an Both issues have long been at the heart of the
opportunity to review the French situation onCPI debate. Many economists, including the
22. Appendix 1 tabulates this issue. members of the Boskin Commission, stress that
the results of other the methods for calculating price indexes are
studies similar to the
The French CPI is unquestionably one of thebased on the hypothesis of fixed consumptionBoskin Commission’s,
for the U.S. and other most closely watched of INSEE’s economic structures and on equilibrium assumptions. As
countries. 3indicators . It serves as the main gauge of a result, it is claimed, the methods are not good
3. INSEE, the French
inflationary pressures in monetary and fiscal at describing an ever changing economy madeNational Institute of
Statistics and Economic policy, and, as such, is directly involved in thof imbalances, nee w products, and new agents.
Studies, is the French assessment of one of the convergence criteriaIn particular, as we shall see in §III, the
counterpart to BLS for
defined by the Maastricht Treaty. The detailedbalanced market hypothesis plays a central rolethe calculation of the
Consumer Price Index. price indexes that compose it are used as in the treatment of new products in the price
household consumption "deflators" in the index. This hypothesis, it is argued, does not
national accounts. As household consumption allow for possible temporary imbalances, such
represents 60% of GDP, the CPI is crucial to as a "price wthe ar" triggered by the introduction of
determination of the economic growth rate. Innew products, or the emergence of new, more
France, the CPI is used less directly and efficient producers.
systematically than in the U.S. for determining
social benefits and tax brackets. However, it is
the direct indexing instrument for the minimum
wage (called SMIC), pensions, and family 4. The official procedures automaticfor CPI indexing apply to the
minimum wage, retirement and disability pensions, and familybenefits. It is also the indirect instrument
benefits. The law no. 93 936 of July 22, 1993, provided that, for a
for indexing wages, tax brackets, selected five year period from January 1, 1994, retirement and disability
social benefits, and many types of private pensions would first be indexed on the forecast change in
4 consumer prices, then adjusted to the actual change. The law no.contracts .
94 629 of July 27, 1994, defined the same mechanism for
indexing family benefits, with effect through December 31, 1999.
For all these reasons, the determination of the In the sphere of private contracts, alimony settlements are among
the most commonly indexed to the CPI. It should also be notedCPI—in France and the U.S.—rests on the
that indexing in France is regulated by the Neiertz Law, which bans
strict application of standardized procedures, linkages to indexes that include tobacco. Note: this article does
and INSEE, like BLS, devotes substantial not discuss the actual principle of indexing, which is the subject
5 of debate both in France and the U.S. (see, especially, Grilichesresources to the task (box 1) . The harmonization
1995).
of European price indexes, in which France is5. The CPI’s suitability to its various applications is discussed by
heavily involved, has confirmed that the basic Glaude 1997.
2 INSEE STUDIES No 2, September 1997The novelty in the Boskin Commission the Boskin Commission did. Section IVIn , we
approach is that, for the first time, an officialspecifically discuss the issue of outlet
commission has ventured to produce a substitution. In Section V, we examine the
quantitative estimate of the alleged upward quantification of the potential upward bias
bias. Like our BLS colleagues, we believe the in the French CPI compared with the U.S.
6estimate is questionable. We shall see how index. Although we refuse to produce a figure
statisticians tackle these issues. for France to be set alongside the Boskin
Commission’s 1.1 percentage points for the
Section II e