An Index Number Formula Problem: The Aggregation of Broadly Comparable items

January 1, 2009

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

Index number theory informs us that if data on matched prices and quantities are available, a superlative index number formula is best to aggregate heterogeneous items, and a unit value index to aggregate homogeneous ones. The formulas can give very different results. Neglected is the practical case of broadly comparable items. This paper provides a formal analysis as to why such formulas differ and proposes a solution to this index number problem.

Subject: Export price indexes, Price indexes

Keywords: index number, price index, unit value index, WP

Pages:
22
Volume:
2009
DOI:
https://doi.org/10.5089/9781451871661.001
Issue:
019
Series:
Working Paper No. 2009/019
Stock No:
WPIEA2009019
ISBN:
9781451871661
ISSN:
1018-5941

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