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Decomposing the Changes of the Divisia Price Index: Application to Inflation in the Philippines

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  • Tomoki Fujii

    () (School of Economics, Singapore Management University)

Abstract

We propose a method to decompose the logarithmic change of the Divisia price index into the pure price effect, the prefernce effect and the substitution effect. Our empirical results in the Philippines shows the effects of preference change on the Divisia price index are heterogeneous but positive across all regions and income deciles. However, they are dominated by the pure price effect.

Suggested Citation

  • Tomoki Fujii, 2011. "Decomposing the Changes of the Divisia Price Index: Application to Inflation in the Philippines," Working Papers 06-2011, Singapore Management University, School of Economics.
  • Handle: RePEc:siu:wpaper:06-2011
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    File URL: https://mercury.smu.edu.sg/rsrchpubupload/18652/divisia_06-2011.pdf
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    References listed on IDEAS

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    Cited by:

    1. Fujii, Tomoki, 2013. "Impact of food inflation on poverty in the Philippines," Food Policy, Elsevier, vol. 39(C), pages 13-27.

    More about this item

    Keywords

    Divisia price index; preference change; decomposition; Philippines;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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