This chapter provides a description of basic price index techniques, the intuition underlying their construction, and how one interprets the results. In particular, the chapter provides instructions on how to construct fixed-based and chained indexes and discusses some of the common problems, like substitution bias, the new goods problem and chain drift. It also discusses the intuition behind two popular interpretations of price indexes: the cost of living index interpretation and the constant-quality price index interpretation. The formulas considered are: Laspeyres, Paasche, Fisher Ideal, Tornquist, Jevons.
Keywords: price indexes, Laspeyres, Paasche, Fisher Ideal, Tornquist, Jevons, chained index, substitution bias, chain drift, matched-model index, cost of living index, constant-quality price index, fixed-base index
Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.
If you think you should have access to this title, please contact your librarian.