How to order
IMF Publications

Working Papers in full text
2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All

Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile

Why Elementary Price Index Number Formulas Differ: Price Dispersion and Product Heterogeneity

Author/Editor: Silver, Mick | Heravi, Saeed
Authorized for Distribution: July 1, 2006
Electronic Access: Free Full Text (PDF file size is 604KB)
Use the free Adobe Acrobat Reader to view this PDF file.
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: The Consumer Price Index Manual (2004) provides guidelines for aggregation formulas that are promulgated at IMF training courses and technical assistance missions. This paper develops elementary level aggregation theory to better inform users and compilers. Most countries use either the Dutot or Jevons index formula. These formulas generally give different results; advice on choice of formula matters. Using an approach based on sample estimators, and an illustration based on scanner data, the paper shows how differences in these formulas can be explained by changes in price dispersion and, in turn, by product heterogeneity. Implications for choice of formula are considered.
Order a print copy
Series: Working Paper No. 06/174
Subject(s): Consumer price indexes | Inflation
Author's keyword(s): Consumer price index | elementary aggregate index | hedonic regression | index numbers | price dispersion | scanner data
    Published:   July 1, 2006        
    ISBN/ISSN:   0 / 1934-7073   Format:   Paper
    Stock No:   WPIEA2006174   Pages:   18
    Price:   US$15.00 (Academic Rate: US$15.00 )
Please address any questions about this title to