Post-Laspeyres: The Case for a New Formula for Compiling Consumer Price Indexes
IMF Working Papers, April 1, 2012
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- Post-Laspeyres: The Case for a New Formula for Compiling Consumer Price Indexes
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Bibliographic details
- Authors: Paul A. Armknecht, Mick Silver
- Published: April 1, 2012
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475502954.001
Overview and purpose
- Questions the suitability of Laspeyres-type arithmetic averaging formulas used to compile consumer price indexes (CPIs) at the higher (weighted) level.
- Considers two geometric-averaging counterpart alternatives:
- Geometric Young
- (Price-updated) Geometric Lowe
Formal analysis and decomposition
- Provides a formal decomposition and understanding of the differences between the Geometric Young and the (price-updated) Geometric Lowe.
- Analyzes how geometric averaging counterparts compare structurally with Laspeyres-type arithmetic averages.
Empirical results
- Empirical results are provided using United States CPI data.
- Findings support advocacy of variants of a hybrid formula suggested by Lent and Dorfman (2009) that substantially reduces bias from Laspeyres-type indexes.
Subjects and keywords
- Subject: Consumer price indexes, Expenditure, Inflation, Labor, Price indexes, Prices
- Keywords: Consumer Price Index, Consumer price indexes, Geometric Young, Geometric Young price index, Index Numbers, Inflation, Laspeyres, Lowe formula, Lowe index, Lowe index Formula, Lowe price index, number formula, price index, Price indexes, Superlative, Törnqvist index, WP, Young
IMF Working Papers — Post-Laspeyres: The Case for a New Formula for Compiling Consumer Price Indexes (Armknecht and Silver, April 1, 2012)