Journal of Economic and Social Measurement - Volume 28, issue 1-2

Authors: Hillinger, Claude

Article Type: Research Article

Abstract: The international movement to convert the real (deflated) components of the NIPAs to chain indexes, in order to assure timeliness, has exposed their inconsistency. Most importantly, the components do not add up to the totals. The US accounts, which employ …a Fisher chain, have additional inconsistencies. For example, the product of the price and quantity indexes does not reproduce the change in nominal expenditure. The paper presents a unified approach to the construction of price and quantity measures which can be chained while maintaining every kind of consistency. The solution is based on a combination of elements from the theories of price indexes and consumer surplus and does not require the unrealistic assumption of homothetic and identical preferences usually made in the economic theory of index numbers. Show more

Keywords: aggregation, chain indexes, consumer surplus, price indexes, quantity indexes, NIPA

DOI: 10.3233/JEM-2003-0184

Citation: Journal of Economic and Social Measurement, vol. 28, no. 1-2, pp. 1-20, 2002

Authors: Silver, Mick | Webb, Bruce

Article Type: Research Article

Abstract: The advent of bar-code, retail scanner data provides an alternative data source for the compilation of consumer price indexes. This paper outlines the nature and merits of such data for this purpose. The data allows aggregation via superlative index number …formulae at a very elementary level and provides superior coverage to conventional sources. However, it has been argued that aggregation bias may still arise if the unit values which feed into the superlative indexes are defined for product items, as opposed to product items for given outlets. We explore for six products the nature and extent of unit value bias by outlet type. For three products we found the level of aggregation did not matter. However, we also found it can matter and established the extent of its effects which were always the aggregation by model only, falling less than by model and outlet. This should help provide a basis for an understanding of the issues at stake in the use of scanner data for the compilation of consumer price indexes. Show more

Keywords: consumer price indexes, superlative, index number formulae, inflation measurement, scanner data, elementary aggregates

DOI: 10.3233/JEM-2003-0185

Citation: Journal of Economic and Social Measurement, vol. 28, no. 1-2, pp. 21-35, 2002

Authors: Ehemann, Christian | Katz, Arnold J. | Moulton, Brent R.

Article Type: Research Article

Abstract: When the US Bureau of Economic Analysis adopted chain-type quantity indexes in 1996, real gross domestic product (GDP) and its components, when measured in units of the currency of a particular reference year, were no longer additive. We discuss some …of the problems with the additive, fixed-weighted aggregates these estimates replaced, as well as problems that arise when users treat the new "chained dollar" aggregates as if they were additive. Using properties of the Fisher index formula, we describe new tools for economic analysis that traditionally relied on the additivity of fixed- weighted GDP aggregates. We also describe some tools that have been developed for the compilation and review of chain-type estimates. Finally, we discuss Claude Hillinger's proposed methods for creating an additive set of real aggregates and present empirical results that lead us to be skeptical about their usefulness. Show more

DOI: 10.3233/JEM-2003-0188

Citation: Journal of Economic and Social Measurement, vol. 28, no. 1-2, pp. 37-49, 2002

Authors: Reinsdorf, Marshall B. | Diewert, W. Erwin | Ehemann, Christian

Article Type: Research Article

Abstract: Users of a price or quantity index often want to know how much each item in the index contributes to its overall change. Consequently, statistical agencies generally publish items' contributions to changes in the indexes that they publish. For fixed …basket index formulas, calculating contributions to index change that add up to the correct total is straightforward, but for Fisher, Törnqvist and geometric mean index formulas -- which statistical agencies are beginning to use -- it is not. We use economic and axiomatic approaches to derive additive decompositions of the change in a Fisher index, and we use an axiomatic approach to derive an additive decomposition of the change in a Törnqvist or geometric mean index. Show more

DOI: 10.3233/JEM-2003-0194

Citation: Journal of Economic and Social Measurement, vol. 28, no. 1-2, pp. 51-61, 2002

Authors: Diewert, W. Erwin

Article Type: Research Article

Abstract: It was shown in 1976 that a difference in a quadratic function of N variables evaluated at two points is exactly equal to the sum of the arithmetic average of the first order partial derivatives of the function evaluated at the two points …times the differences in the independent variables. In the present paper, this result is generalized and the resulting generalized quadratic approximation lemma is used to establish all of the superlative index number formulae that were derived in Diewert [4]. In addition, some new exact decompositions of the percentage change in the Fisher and Walsh superlative indexes into N components are derived. Each component in this decomposition represents the contribution of a change in a single independent variable to the overall percentage change in the index. Finally, these components are given economic interpretations. Show more

Keywords: superlative index, quadratic approximations, percentage change decompositions, price indexes, quantity indexes, Fisher ideal index

DOI: 10.3233/JEM-2003-0200

Citation: Journal of Economic and Social Measurement, vol. 28, no. 1-2, pp. 63-88, 2002