Measuring inflation through stochastic approach to index numbers
This study attempts to estimate the rate of inflation in Pakistan by a stochastic approach to index numbers which provides not only point estimate but also confidence interval for inflation estimate. There are two approaches to index number theory namely: the functional economic approach and the stochastic approach. The attraction of stochastic approach is that it estimates the rate of inflation in which uncertainty and statistical ideas play a major roll of screening index numbers. We have used extended stochastic approach to index numbers for measuring the Pakistan inflation by allowing for the systematic changes in the relative prices. We use CPI data covering the period July 2001--March 2008.
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- Paul Crompton, 2000. "Extending the stochastic approach to index numbers," Applied Economics Letters, Taylor & Francis Journals, vol. 7(6), pages 367-371.
- E. A. Selvanathan, 2003. "Extending the stochastic approach to index numbers: a comment on Crompton," Applied Economics Letters, Taylor & Francis Journals, vol. 10(4), pages 213-215.
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- Kenneth Clements & E. A. Selvanathan, 2007. "More on stochastic index numbers," Applied Economics, Taylor & Francis Journals, vol. 39(5), pages 605-611.
- William Barnett & Barry E. Jones & Travis D. Nesmith, 2008. "Divisia Second Moments: An Application of Stochastic Index Number Theory," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200803, University of Kansas, Department of Economics, revised Jul 2008.
- Selvanathan, E A, 1989. "A Note on the Stochastic Approach to Index Numbers," Journal of Business & Economic Statistics, American Statistical Association, vol. 7(4), pages 471-74, October.
- Diewert, Erwin, 2007. "Index Numbers," Economics working papers diewert-07-01-03-08-17-23, Vancouver School of Economics, revised 31 Jan 2007.
- Barnett, William A. & Jones, Barry E. & Nesmith, Travis D., 2008. "Divisia Second Moments," MPRA Paper 9111, University Library of Munich, Germany.
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