Stochastic Index Numbers: A Review
The stochastic approach is a new way of viewing index numbers in which uncertainty and statistical ideas play a central role. Rather than just providing a single number for the rate of inflation, the stochastic approach provides the whole probability distribution of inflation. This paper reviews the key elements of the approach and then discusses some previously overlooked links with Fisher’s early work contained in his book The Making of Index Numbers. We then consider some more recent developments, including Diewert’s well-known critique of the stochastic approach, and provide responses to his criticisms. We also provide a review of Theil’s work on the stochastic approach, and present and extend Diewert’s work on this topic within the context of the Country Product Dummy method which measures price levels internationally.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/economics
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:05-08. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shane Standley)
If references are entirely missing, you can add them using this form.