Quick econ question

[istewart]

Aside from hedonic adjustment issues, explain one reason why the inflation estimate might be HIGHER using a chain-weighted rather than a base-year weighted CPI index?

Macro, obviously. Any help is appreciated.

[ThaSaltCracka]

wrong message board.

[TheIrishThug]

i'm sure some one that knows the answer is somewhere on 2+2, but i doubt they r spending their time on oot stewie.

[_2000Flushes]

[ QUOTE ]
i'm sure some one that knows the answer is somewhere on 2+2, but i doubt they r spending their time on oot stewie.

[/ QUOTE ]

Nonsense.

-2kF

[TheIrishThug]

u say i'm wrong, but u didn't answer the question posted and neither has anyone else. so until someone does, i stand by my statment.

i was also just giving stewie [censored] cause he's my friend.

[_2000Flushes]

[ QUOTE ]
Aside from hedonic adjustment issues, explain one reason why the inflation estimate might be HIGHER using a chain-weighted rather than a base-year weighted CPI index?

Macro, obviously. Any help is appreciated.

[/ QUOTE ]

Okay, a chain-weighted index would lead to a higher rate of inflation if consumer preferences shift to compensate for some unexpected demand. Say the sixth plague of boils reappears and everyone suddenly needs massive amounts of ointment. The price of ointment would naturally rise, and the chain-weighted index takes that ointment price hike extra seriously because it's so highly preferred.

chain-weighted: high preference for ointment x high price of ointment

fixed-weighted: meh preference for ointment x high price of ointment


Of course, this only works for short-run estimates because the boils will subside and MSProctor & Gillette will be cranking out ointment by the vat. Sorry this example sucked so hardcore. Maybe it helps a little.

-2kF

[istewart]

Dude, thanks a lot. I was leaning toward something along these lines, but this hit it hard.

[TheIrishThug]

ok, i'll retract my statement now.

but y did u not answer the question in addition to taking offense to my comment?

[_2000Flushes]

[ QUOTE ]
ok, i'll retract my statement now.

but y did u not answer the question in addition to taking offense to my comment?

[/ QUOTE ]

I never took offense to anything. I'm just shootin' the shi[/i]t.

And really, you could still stand by your statement because my answer was so convoluted that it shouldn't count.

-2kF

[istewart]

Still good, man. You an econ major?

[_2000Flushes]

[ QUOTE ]
Still good, man. You an econ major?

[/ QUOTE ]

I was at one point. I think. There were no girls in economics, though.

-2kF