The elasticity of substitution of superlative price indices
AbstractThe paper presents a method for computing the curvature implicit in the use of superlative price indices. It extends the quadratic lemma and allows us to compute the elasticity of substitution of the underlying preferences in the direction of the observed price change for the Törnqvist and the quadratic mean of order r indices. It derives the expressions for the directional shadow elasticity of substitution and applies the results to the Norwegian CPI data base.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 407.
Date of creation: Feb 2005
Date of revision:
elasticity of substitution; superlative index; consumer price index (CPI).;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
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- Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
- E. T. McPHEE., 1928. "Notes," The Economic Record, The Economic Society of Australia, vol. 4(1), pages 92-95, 05.
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