Estimating Components of Variance of Price Change from a Scanner‐Based Sample

Sylvia G. Leaver and David Larsen


We present estimates of components of variance of price change for an experimental scanner-based Consumer Price Index for cereal for several publication areas. Components of variance for 1-, 6-, and 12-month lags are computed using a weighted restricted maximum likelihood estimation method. Estimates are contrasted among publication areas using two different random effects models, and findings are discussed with respect to approaches to sample design.