IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v241y2021i4p477-499n3.html
   My bibliography  Save this article

Optimal Price Indexes

Author

Listed:
  • Bossert Walter

    (CIREQ, University of Montreal, Montreal, Canada)

  • Stehling Frank

    (Institut für Wirtschaftswissenschaften, Universität Ulm, Ulm, Germany)

Abstract

We examine the notion of a price index as the solution to the problem of minimizing the distance between the index values and the vector of price ratios. To do so, the choice of a suitable distance function is of crucial importance. We use a generalized least-squares criterion for this purpose and show that the generalized quasilinear functions are the only solutions to the problem of minimizing the distance thus defined. There are numerous special cases that are obtained for specific choices of the requisite functions and weights. In particular, we show that, in addition to the well-established indexes of Laspeyres, Paasche, Marshall-Edgeworth, Walsh, and Törnqvist, the arithmetic-current-period index, the arithmetic-hybrid index, the harmonic-base-period index, and the harmonic-hybrid index can be obtained with suitably chosen distance functions. Furthermore, the logarithmic least-squares criterion is employed to obtain indexes that are based on geometric means.

Suggested Citation

  • Bossert Walter & Stehling Frank, 2021. "Optimal Price Indexes," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 241(4), pages 477-499, August.
    • Handle: RePEc:jns:jbstat:v:241:y:2021:i:4:p:477-499:n:3
    DOI: 10.1515/jbnst-2020-0055
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-2020-0055
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-2020-0055?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    price indexes; optimality criteria; generalized quasilinear functions; C43;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:241:y:2021:i:4:p:477-499:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.