The 1995/1996 Household Income, Expenditure - (PDF, 101 mb ...

V.E Dissemination and Publication
V.13
It is possible to apply remedies in CAPMAS's price measurement
measure-for-measure which will avoid the political controversies of wholesale
changes in the price index itself. Many of the criticisms end-users will have
about methodological changes in index construction can be dampened by the
proper outreach from publications. A special CPI Bulletin should be devoted
to the link month with a full explanation of how and why component indices
are being changed for special commodity groups, how the new index can be
conveniently compared with the old one, perhaps a recalculation of back
indices using the new methods and index deflation factors ("splice ratios").
Other, less volatile, versions of the overall index (excluding items needing
imputation or housing, for example) can be presented as workable alternatives.
There is a clear need for a "gradualist" representation of the impact of the
changes. Any reader, monitor, evaluator of Egyptian economic conditions will
appreciate the additional information, and will begin to respect CAPMAS for its
newfound commitment to customer satisfaction.
V.F Conclusion
The main recommendation regarding price measurement in Egypt is a
very simple one: the weights from the 1995/1996 HIECS should be incorporated
into CAPMAS's index immediately! There is no reason or excuse for delaying
to use these weights. Caution is no longer a reason, as expenditure bounds
and critical estimates have been shown to be asymptotically precise at given
levels of statistical significance. This one recommendation, if properly
implemented, entails changes to many other aspects of inflation measurement:
the choice of items and weights, the pricing forms and how enumerators will
adapt to new pricing techniques such as imputation, the use of simple
spreadsheet technology to link the monthly index, and how all the changes will
be presented to ultimate data users. The Laspeyres estimator CAPMAS uses is
a common, acceptable one, but it should be linked.
A secondary recommendation is for further study and research,
ultimately for the purpose of improving CAPMAS's ability to measure inflation.
Alternate estimators (such as the Geometric. above) should be calculated to see
how they track the official index. This would be a very simple point of
departure; CAPMAS has all of the resources and there are plenty of good
economists more than willing to undertake applied research into the CPI.
Alternate price indices would be published, preferably, for the scrutiny of the
wider statistical community.
Unfortunately, because the present index is grossly mismeasured, the
prescriptions for making the situation better call for starting over. Even the
proposed temporary remedies appear overly ambitious to be accomplished in
the time period which the IMF has suggested. A full-time, on-the-spot
technical assistance team would require at least six months to make the proper
and necessary changes detailed above, and to transform the index into a
state-of-the-art measure of representative changes in the cost of living would
"+J50/J$44" which means that the computer will divide the number in cell J50
by the number in cell J44. The denominator will not change; the dollar sign
makes it a constant divisor.