An Index Number Formula Problem; The Aggregation of Broadly Comparable items
Index number theory informs us that if data on matched prices and quantities are available, a superlative index number formula is best to aggregate heterogeneous items, and a unit value index to aggregate homogeneous ones. The formulas can give very different results. Neglected is the practical case of broadly comparable items. This paper provides a formal analysis as to why such formulas differ and proposes a solution to this index number problem.
|Date of creation:||01 Jan 2009|
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References listed on IDEAS
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- Mick Silver, 2007. "Do Unit Value Export, Import, and Terms of Trade Indices Represent or Misrepresent Price Indices?," IMF Working Papers 07/121, International Monetary Fund.
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- Mick Silver & Saeed Heravi, 2006. "Why Elementary Price Index Number Formulas Differ; Price Dispersion and Product Heterogeneity," IMF Working Papers 06/174, International Monetary Fund.
- Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
- Jerry Hausman & Ephraim Leibtag, 2009.
"CPI Bias from Supercenters: Does the BLS Know that Wal-Mart Exists?,"
in: Price Index Concepts and Measurement, pages 203-231
National Bureau of Economic Research, Inc.
- Jerry Hausman & Ephraim Leibtag, 2004. "CPI Bias from Supercenters: Does the BLS Know that Wal-Mart Exists?," NBER Working Papers 10712, National Bureau of Economic Research, Inc.
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