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Consistency in Aggregation / Aggregationskonsistenz

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  • Auer Ludwig von

    (Otto-von-Guericke-Universität Magdeburg, Fakultät für Wirtschaftswissenschaft, Lehrstuhl für Internationale Wirtschaft, Universitätsplatz 2, D-39106 Magdeburg, Germany)

Abstract

In empirical economic research, individual prices are often aggregated into average prices of subaggregates. Then, these average prices are aggregated to produce the average price of the total aggregate. Often, such two stage procedures help to illuminate the underlying forces driving the overall result. Since price data are usually published as price changes, this two stage aggregation is typically based on some price index formula. In this paper, various screening devices are introduced which help to differentiate between suitable and unsuitable formulas. It is argued that testing for weak consistency in aggregation is a particularly important screening device. If a price index formula fails the weak consistency test and, nevertheless, this formula is used for a multi stage price index computation, then the measured overall price change depends on the number of computational stages and also on the precise manner in which the elementary items are partitioned into subaggregates. In other words, the findings are not robust and cannot be considered as particularly reliable. Based on these screening devices, it is examined which price index formulas can be expected to produce consistent results.

Suggested Citation

  • Auer Ludwig von, 2004. "Consistency in Aggregation / Aggregationskonsistenz," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 224(4), pages 383-398, August.
    • Handle: RePEc:jns:jbstat:v:224:y:2004:i:4:p:383-398
    DOI: 10.1515/jbnst-2004-0401
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    References listed on IDEAS

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    1. Balk, Bert M, 1996. "Consistency-in-Aggregation and Stuvel Indices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(3), pages 353-363, September.
    2. Vartia, Yrjö O., . "Relative Changes and Index Numbers," ETLA A, The Research Institute of the Finnish Economy, number 4.
    3. Blackorby, Charles & Primont, Daniel, 1980. "Index numbers and consistency in aggregation," Journal of Economic Theory, Elsevier, vol. 22(1), pages 87-98, February.
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    Cited by:

    1. Auer Ludwig von, 2005. "Potenziale und Grenzen eines nutzenbasierten ökonomischen Leitbildes für die amtliche Inflationsmessung / What Role Should Economic Reasoning Play in the Compilation of the Official Consumer Price Ind," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 225(3), pages 283-302, June.
    2. Utz-Peter Reich, 2011. "Additive Zerlegung der Bewegung der Bruttowertschöpfung – ein Vergleich zweier Wachstumsperioden," AStA Wirtschafts- und Sozialstatistisches Archiv, Springer;Deutsche Statistische Gesellschaft - German Statistical Society, vol. 4(4), pages 317-346, January.

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