An Empirical Study of the Relationship between Macrovariables and the Sub-prices of CPI
Date Issued
2010
Date
2010
Author(s)
Huang, Wen-Chieh
Abstract
In recent years, inflation has been a major problem in Taiwan. The upsurge of the prices are mainly from following reasons : (i) The variability of the crude oil, (ii) The rising of the metal prices (iii) The surge of the wholesale- prices. It becomes even worse during the years through 2004 to 2007 due to the prices of the crude oil and the wholesale prices.
In calculating CPI, the Directorate-General of Budget, Accounting & Statistics use the basket of the commodity people usually consume and sum them up with different weights. But using CPI as the indicator of the standard of living could cause bias, because it can only present the average prices. As for people who really cares about aren’t the CPI but respect prices. Depending on these reasons, we divide CPI into two categories: food prices and clothes prices. Using this two prices could be more accurate for measuring the standard of living of the society.
We use Vector Autocorrelation and OLS method to discuss how macro-varibles affect the sub-prices of the CPI.
The empirical results show that the food price variability mainly comes from self-inertia. The wholesale prices and the weather are two important reasons as well. As for the clothes prices, there is no macro-variables could affect them. It merely comes from its periodical reasons.
Subjects
Inflation
VAR
Unitroot test
Ols
Type
thesis
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