Recovering Historical Inflation Data from Postage Stamps Prices

Abstract

For many developing countries, historical inflation figures are rarely available. We propose a simple method that aims to recover such figures of inflation using prices of postage stamps issued in earlier years. We illustrate our method for Suriname, where annual inflation rates are available for 1961 until 2015, and where fluctuations in inflation rates are prominent. We estimate the inflation rates for the sample 1873 to 1960. Our main finding is that high inflation periods usually last no longer than 2 or 3 years. An Exponential Generalized Autoregressive Conditional Heteroscedasticity (EGARCH) model for the recent sample and for the full sample with the recovered inflation rates shows the relevance of adding the recovered data.

Editorial for Applied Econometrics

“…The 14 papers are presented in chronological order. In the first paper of the Special Issue, Franses and Janssens (2017) observe that, for many developing countries, historical inflation figures are rarely available. The authors propose a simple method that aims to recover such figures of inflation using prices of postage stamps issued in earlier years.…”

Inflation in Africa, 1960–2015

“…As we want to study autocorrelation patterns, and predictability of one country's inflation rate to another country's rate, we seek to establish a complete data set. For that purpose, we will rely on a recent simple data imputation method that relies on the prices of a single product, that is, postage stamps (Franses and Janssens, 2017a). Correlating the available inflation data with changes in postage stamps prices often shows a close fit, and with the availability of postage stamps prices for the year with missing inflation figures, we can provide estimates for inflation.…”