Should Exact Index Numbers Have Standard Errors? Theory and Application to Asian Growth
AbstractIn this paper we derive the standard error of a price index when both prices and tastes or technology are treated as stochastic. Changing tastes or technology are a reason for the weights in the price index to be treated as stochastic, which can interact with the stochastic prices themselves. We derive results for the constant elasticity of substitution expenditure function (with Sato-Vartia price index), and also the translog function (with T””rnqvist price index), which proves to be more general and easier to implement. In our application to Asian growth, we construct standard errors on the total factor productivity (TFP) estimates of Hsieh (2002) for Singapore. We find that TFP growth is insignificantly different from zero in any year, but cumulative TFP over fifteen years is indeed positive.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10197.
Date of creation: Jan 2004
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Publication status: published as Should Exact Index Numbers Have Standard Errors? Theory and Application to Asian Growth , Robert C. Feenstra, Marshall B. Reinsdorf. in Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches , Berndt and Hulten. 2007
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- Robert C. Feenstra & Marshall B. Reinsdorf, 2007. "Should Exact Index Numbers Have Standard Errors? Theory and Application to Asian Growth," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 483-513 National Bureau of Economic Research, Inc.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-08 (All new papers)
- NEP-DEV-2004-01-08 (Development)
- NEP-ECM-2004-01-25 (Econometrics)
- NEP-RMG-2004-01-08 (Risk Management)
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