Journal of Official Statistics, Vol.4, No.3, 1988. pp. 203221

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Using a Consumer Price Index Database to Measure Intercity Differences in Living Costs

This paper demonstrates the use of the U.S. consumer price database for estimating interarea price indexes for four categories of food items. Construction of these indexes demonstrates methods for overcoming various difficulties encountered when using price quotes resulting from a sampling design that was created for intertemporal price comparisons rather than interspatial comparisons. Measures of the variances of the indexes are also provided.

The methodology represents an alternative to the Country Product Dummy method (Summers (1973)) and other hedonic techniques when the objective is to measure intercity differences in prices within a country. Our results indicate that interarea differences in food costs are similar to those implied by the Bureau of Labor Statistics average prices program.

Price indexes; interarea price comparisons; cost of living.

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