A Note on the Stochastic Approach to Index Numbers
AbstractIn a recent article, Clements and Izan (1987) used the stochastic approach to index-number theory to estimate the rate of inflation and its standard error. Selvanathan (1988) extended their approach to the prices of groups of goods and to prices within groups. In this note, I apply the within-group results to the U.K. alcohol data. Simulation results show that the estimates are unbiased, but the asymptotic standard errors understate the true sampling variability of the estimates. To overcome this problem, I applied the bootstrap technique to obtain alternate standard errors.
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Bibliographic InfoArticle provided by American Statistical Association in its journal Journal of Business and Economic Statistics.
Volume (Year): 7 (1989)
Issue (Month): 4 (October)
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Web page: http://www.amstat.org/publications/jbes/index.cfm?fuseaction=main
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- Zahid, Asghar & Frahat, Tahira, 2010. "Measuring inflation through stochastic approach to index numbers," MPRA Paper 21513, University Library of Munich, Germany.
- O'Donnell, Christopher J., 2000. "Estimating The Characteristics Of Homogeneous Functionsusing Flexible Functional Forms," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123713, Australian Agricultural and Resource Economics Society.
- Ogwang, Tomson, 1995. "The stochastic approach to price index numbers: An expository note," Economics Letters, Elsevier, vol. 49(4), pages 373-379, October.
- Iqbal, Javed & Hanif, Muhammad Nadim, 2010. "Measuring Standard Error of Inflation in Pakistan: A Stochastic Approach," MPRA Paper 35422, University Library of Munich, Germany.
- Rao, D.S. Prasada & Doran, Howard E. & Selvanathan, E.A., 2003. "Estimation of General and Commodity-Specific Inflation Rates Using Linear Time-Varying Constraints," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 35.
- E. A. Selvanathan, 2003. "Extending the stochastic approach to index numbers: a comment on Crompton," Applied Economics Letters, Taylor and Francis Journals, vol. 10(4), pages 213-215.
- Christopher J. O'Donnell & Alicia N. Rambaldi & Howard E. Doran, 2001. "Estimating economic relationships subject to firm- and time-varying equality and inequality constraints," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(6), pages 709-726.
- Selvanathan, E. A. & Selvanathan, S., 2004. "Modelling the commodity prices in the OECD countries: a stochastic approach," Economic Modelling, Elsevier, vol. 21(2), pages 233-247, March.
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