IDEAS home Printed from https://ideas.repec.org/p/trr/wpaper/202608.html

Multilateral index approaches in the presence of product-specific price trends and data gaps

Author

Listed:
  • Ludwig von Auer
  • Sebastian Weinand

Abstract

The prices of some products respond more strongly to changes in the general price level than others. This study explains why such product-specific price level elasticities lead to biased time-product-dummy (TPD) estimates of price levels. Other popular multilateral index approaches such as the Gini-Éltető-Köves-Szulc (GEKS) and Geary-Khamis (GK) methods also fail to address this source of bias in inflation measurement. Therefore, this paper introduces the NLTPD regression – a nonlinear generalization of the TPD regression. By estimating product-specific price-level elasticities, the NLTPD regression effectively addresses this source of bias. A simulation study and an application to real-world scanner data compare the performance of the four multilateral index approaches. Except for the rather theoretical case of complete data, the NLTPD regression outperforms the other three approaches.

Suggested Citation

  • Ludwig von Auer & Sebastian Weinand, 2026. "Multilateral index approaches in the presence of product-specific price trends and data gaps," Research Papers in Economics 2026-08, University of Trier, Department of Economics.
    • Handle: RePEc:trr:wpaper:202608
    as

    Download full text from publisher

    File URL: https://www.uni-trier.de/fileadmin/fb4/prof/VWL/EWF/Research_Papers/2026-08.pdf
    File Function: First version, 2026
    Download Restriction: no
    ---><---

    More about this item

    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
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:trr:wpaper:202608. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Matthias Neuenkirch (email available below). General contact details of provider: https://edirc.repec.org/data/petride.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.