Multilateral Indices: Conflicting Approaches?
AbstractThis short paper focusses on an apparent conflict between two results from different approaches to the problem of finding multilateral index numbers. The impossibility theorem of Van Veelen (2002) is an axiomatic result that rules out the existence of a multilateral index that satisfies four modest requirements. This also implies that no bilateral index can consistently be generalized to a multilateral setting. Adopting a revealed preference approach, Dowrick and Quiggin (1997) however construct a multilateral extention of Fisher's ideal index, which preserves a range of desirable properties. This note shows what it is that drives the divergence between those two results. It also gives implications for practical use of results from either approach. Copyright 2007 The Authors; Journal compilation International Association for Research in Income and Wealth 2007.
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Bibliographic InfoArticle provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.
Volume (Year): 53 (2007)
Issue (Month): 2 (06)
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- van Veelen, Matthijs, 2009. "The apples and oranges theorem for price indices," Economics Letters, Elsevier, vol. 103(1), pages 12-14, April.
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