Measuring Inflation by Internet Prices

InflationInternetIndex2010-12-08.gif

Source of graphs: online version of the WSJ article quoted and cited below.

(p. A5) Economists Roberto Rigobon and Alberto Cavallo at the Massachusetts Institute of Technology’s Sloan School of Management have come up with a method to scour the Internet for online prices on millions of items and then use them to calculate inflation statistics for a dozen countries on a daily basis. The two have been collecting data for the project for more than three years, but only made their results public this week.
. . .
In countries where the apparatus for collecting prices is limited, or where officials have manipulated inflation data, the economists’ indexes might give a clearer view. In Argentina, for example, the government has been widely accused of massaging price figures to let it pay less interest to holders of inflation-indexed bonds. President Cristina Fern├índez has defended the government data. For September, the government’s measure of prices rose 11.1% from a year earlier. The economists’ measure in that period: up 19.7%.

For the full story, see:
JUSTIN LAHART. “A Way, Day by Day, of Gauging Prices.” The Wall Street Journal (Thurs., NOVEMBER 11, 2010): A5.
(Note: ellipsis added.)
(Note: the online version of the article is dated NOVEMBER 10, 2010.)

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