European Parliament Library

Post-Laspeyres :, The Case for a New Formula for Compiling Consumer Price Indexes, Paul Armknecht Jr., Mick Silver

Abstract
Consumer price indexes (CPIs) are compiled at the higher (weighted) level using Laspeyres-type arithmetic averages. This paper questions the suitability of such formulas and considers two counterpart alternatives that use geometric averaging, the Geometric Young and the (price-updated) Geometric Lowe. The paper provides a formal decomposition and understanding of the differences between the two. Empirical results are provided using United States CPI data. The findings lead to an advocacy of variants of a hybrid formula suggested by Lent and Dorfman (2009) that substantially reduces bias from Laspeyres-type indexes
Table Of Contents
Cover; Contents; I. Introduction; II. Higher-level price index number formulas used in practice; A. Arithmetic formulas; B. Geometric counterparts; C. Available empirical work; III. Why Geometric higher-level price index numbers differ; A. Geometric Young vs. Geometric Lowe; B. Comparisons with a superlative price index; IV. Empirical Results; A. The data; B. Results; C. The Geometric formulas: differences and adjustments; What factors underlie the difference between the two formulas?; Averages of formulas that better track superlative indexes; V. Concluding Remarks
Language
eng
Literary Form
non fiction
Note
Description based upon print version of record
Physical Description
1 online resource (30 p.)
Specific Material Designation
remote
Form Of Item
online
Isbn
9781475539844

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