Post-Laspeyres: The Case for a New Formula for Compiling Consumer Price Indexes
type="main"> <p>Consumer price indexes (CPIs) are commonly 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 quite simple variants of a hybrid formula suggested by Lent and Dorfman that use the same data as Laspeyres-type indexes but substantially reduce their bias.
Year of publication: |
2014
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Authors: | Armknecht, Paul ; Silver, Mick |
Published in: |
Review of Income and Wealth. - International Association for Research in Income and Wealth - IARIW. - Vol. 60.2014, 2, p. 225-244
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Publisher: |
International Association for Research in Income and Wealth - IARIW |
Saved in:
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