The United Kingdom Experience (II)

In chapter 4 we discussed the principal changes that have taken place in the pattern of economic activity in the United Kingdom since 1938 and particularly during the afterwar period. In this chapter we concentrate first on the changes in the level of that activity and particularly on the extent to which those changes were due to volume changes and to price changes respectively. This latter analysis is carried out with the help of index numbers of quantity and price for a number of major economic aggregates. In interpreting the results of that analysis two points should constantly be borne in mind. The first is that, as was explained in chapter 5, index numbers of quantity and price, unlike the corresponding index numbers of value, are not unique measures of the development they purport to measure. The second point is that the numerical value of these index numbers will be affected by the way in which the awkward measurement problems that have to be faced in their construction have been resolved. Thus, for instance, a statistician is unlikely to have at his disposal detailed price and quantity information for all the various component elements of the aggregates for which he wishes to construct price and quantity index numbers. Accordingly he will have to decide for which particular groups of commodities the indicators of price and of quantity movements which he has at his disposal are representative, e.g. if the price development of syrup were unknown, he would have to decide whether it should be associated with the price development of sugar or with that of jams.