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The decomposition of the chained price index rate of change: generalization and interpretative effectiveness

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  • Alessandro Brunetti

    (Italian National Institute of Statistics)

Abstract

The paper deals with the method of decomposition of the rate of change of a chained price index into the sum of the effects of the item groups covered by the index, as suggested by M.Ribe (1999). The aim is twofold: firstly, to provide a generalization of the envisaged method to the case of the decomposition of the average rates of change of the aggregate index over different time intervals (such as, for example, annual or quarterly average rates of change); secondly, to investigate the formal properties of the decomposition in order to evaluate its interpretative effectiveness as a measure of the impact of the evolution of the prices of different components on the overall inflation.

Suggested Citation

  • Alessandro Brunetti, 2010. "The decomposition of the chained price index rate of change: generalization and interpretative effectiveness," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 12(1), pages 17-34, April.
    • Handle: RePEc:isa:journl:v:12:y:2010:i:1:p:17-34
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    File URL: http://www.istat.it/it/files/2011/05/1_2010_02.pdf
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    References listed on IDEAS

    as
    1. Balk,Bert M., 2012. "Price and Quantity Index Numbers," Cambridge Books, Cambridge University Press, number 9781107404960, January.
    2. R. G. D. Allen, 1975. "Index Numbers in Theory and Practice," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-02312-7.
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    Cited by:

    1. Cristina Conflitti, 2020. "Alternative measures of underlying inflation in the euro area," Questioni di Economia e Finanza (Occasional Papers) 593, Bank of Italy, Economic Research and International Relations Area.
    2. Wolfgang Nierhaus, 2019. "Verbraucherpreisentwicklung im Euroraum," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(17), pages 42-48, September.

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    More about this item

    Keywords

    chained price index; decomposition of the price index rate of change; contribution to inflation;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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