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The Plutocratic Gap in the CPI: Evidence from Spain Mario Izquierdo, Eduardo Ley, and Javier Ruiz-Castillo Full Text of this Article (PDF 212K) Abstract:
The plutocratic gap is defined as the difference between the inflation measured
according to the current official consumer price index (CPI) and a democratic
index in which all households receive the same weight. During 1992–97, the
plutocratic gap in Spain averaged 0.055 percentage points a year. Since positive
and negative gaps cancel out, however, the average absolute gap is significantly
larger: 0.090 percentage points a year. For the purposes of accounting for the
plutocratic gap, a 53-dimensional commodity space can be conveniently reduced
to two dimensions: a luxury index and a necessities index. [JEL C43, D31, D63] |