Persistent Link:
http://hdl.handle.net/10150/187258
Title:
AN ALTERNATIVE APPROACH TO INFLATION MEASUREMENT.
Author:
KINONEN, RICHARD EUGENE.
Issue Date:
1982
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
The major economic policy issue of the 1980s is inflation. Although economists have been writing about inflation for several decades, little work has been done on the theory of inflation measurement. There is an extensive literature dealing with the statistical aspects of price indices and the inflation phenomenon. However, statistical discussions ignore the economic theory behind inflation measures and inflation discussions fail to address the practical aspect of measurement of inflation. This dissertation develops an inflation measure that overcomes these failings. By combining the principles of price formation found in microeconomic literature with the macroeconomic theory of inflation, an economically appropriate measure of inflation is presented. The measure adopts the Marshallian view that producers fix prices and vary output in response to market conditions. Recognizing that production takes time which leads to uncertainty about the forward delivery market, the measure stresses both labor and material input costs as the prime price determinants. Contracts fix these costs. Current or spot market demand influences prices only in the service sector. This influence is measured and added to the price forming factors determined in oligopoly, monopoly and competitive sectors. The four sectors are combined with a measure of government price influence to generate the measure of inflation. A highly stylized model of this measure is tested monthly for the 1965-78 period. The theoretical measure and the model results are then compared to conventional inflation measures. The CPI, GNP deflator and WPI are discussed and their problems as measures of inflation are assessed. The measure proposed and tested here eliminates much of the sampling bias, substitution bias, and quality bias plaguing the others. Being designed as a measure of inflation in the general price level, the proposed measure actually incorporates the broad economic base necessary for a macroeconomic measure. It provides a useful policy guide for inflation management and an appropriate measure of the policy's success.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Inflation (Finance) -- Measurement.; Industrial management -- Effect of inflation on.; Pricing -- Mathematical models.; Price indexes.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Economics; Graduate College
Degree Grantor:
University of Arizona

Full metadata record

DC FieldValue Language
dc.language.isoenen_US
dc.titleAN ALTERNATIVE APPROACH TO INFLATION MEASUREMENT.en_US
dc.creatorKINONEN, RICHARD EUGENE.en_US
dc.contributor.authorKINONEN, RICHARD EUGENE.en_US
dc.date.issued1982en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThe major economic policy issue of the 1980s is inflation. Although economists have been writing about inflation for several decades, little work has been done on the theory of inflation measurement. There is an extensive literature dealing with the statistical aspects of price indices and the inflation phenomenon. However, statistical discussions ignore the economic theory behind inflation measures and inflation discussions fail to address the practical aspect of measurement of inflation. This dissertation develops an inflation measure that overcomes these failings. By combining the principles of price formation found in microeconomic literature with the macroeconomic theory of inflation, an economically appropriate measure of inflation is presented. The measure adopts the Marshallian view that producers fix prices and vary output in response to market conditions. Recognizing that production takes time which leads to uncertainty about the forward delivery market, the measure stresses both labor and material input costs as the prime price determinants. Contracts fix these costs. Current or spot market demand influences prices only in the service sector. This influence is measured and added to the price forming factors determined in oligopoly, monopoly and competitive sectors. The four sectors are combined with a measure of government price influence to generate the measure of inflation. A highly stylized model of this measure is tested monthly for the 1965-78 period. The theoretical measure and the model results are then compared to conventional inflation measures. The CPI, GNP deflator and WPI are discussed and their problems as measures of inflation are assessed. The measure proposed and tested here eliminates much of the sampling bias, substitution bias, and quality bias plaguing the others. Being designed as a measure of inflation in the general price level, the proposed measure actually incorporates the broad economic base necessary for a macroeconomic measure. It provides a useful policy guide for inflation management and an appropriate measure of the policy's success.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectInflation (Finance) -- Measurement.en_US
dc.subjectIndustrial management -- Effect of inflation on.en_US
dc.subjectPricing -- Mathematical models.en_US
dc.subjectPrice indexes.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineEconomicsen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.identifier.proquest8217428en_US
dc.identifier.oclc681757160en_US
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