The Emperor Has No Clothes : Improving Deflators for Canadian GNP, 1870-1900

A new consumer price index for Canada, 1870-1913 is constructed, which includes prices for clothing and household furnishings which were missing in previous Canadian price indexes for this period. This is important because these neglected components accounted for 10 to 15 per cent of consumers' expenditures; and the retail price of cotton goods, the most important textile product used for clothing and household furnishings at this time, even in Canada, whose winters are harsh, fell by 49.6 percent between 1870 and 1900 (much faster than other components of the price level). This has ramifications for both the level and trend of Canadian GDP which shows the country to be richer and to have grown substantially faster than generally believed