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An Empirical Illustration of Index Construction using Israeli Data on Vegetables

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  • Diewert, Erwin

Abstract

The paper illustrates how various commonly used index number formulae perform using monthly data on seasonal commodities (seven types of vegetable) that was collected by the Israeli Consumer Price Index program. The paper calculates standard Laspeyres, Paasche and Fisher indexes (fixed base and chained) for the years 1998-2002 and then compares these indexes with the types of index used by statistical agencies that make use of lagged expenditure data instead of current expenditure data. Rolling year annual Mudgett-Stone indexes are also calculated. Month to month Lowe, Young and Geometric Young indexes that make use of lagged annual baskets are calculated and found to have small amounts of substitution bias. The monthly chained Fisher index is found to have substantial downward chain drift bias but the month to month Rolling Year GEKS index performs well.

Suggested Citation

  • , & Diewert, Erwin, 2014. "An Empirical Illustration of Index Construction using Israeli Data on Vegetables," Economics working papers erwin_diewert-2014-11, Vancouver School of Economics, revised 11 Mar 2014.
  • Handle: RePEc:ubc:bricol:erwin_diewert-2014-11
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    File URL: http://www.economics.ubc.ca/files/2014/03/pdf_paper_erwin-diewert_14-04-israeli.pdf
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    References listed on IDEAS

    as
    1. Ivancic, Lorraine & Erwin Diewert, W. & Fox, Kevin J., 2011. "Scanner data, time aggregation and the construction of price indexes," Journal of Econometrics, Elsevier, vol. 161(1), pages 24-35, March.
    2. de Haan, Jan & van der Grient, Heymerik A., 2011. "Eliminating chain drift in price indexes based on scanner data," Journal of Econometrics, Elsevier, vol. 161(1), pages 36-46, March.
    3. Diewert, W. Erwin, 1999. "Index Number Approaches To Seasonal Adjustment," Macroeconomic Dynamics, Cambridge University Press, vol. 3(1), pages 48-68, March.
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    More about this item

    Keywords

    Laspeyres; Paasche; Fisher; Lowe; Young and Mudgett-Stone price indexes; Consumer Price Indexes; seasonal commodities; substitution bias; chain drift.;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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