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A new proposal for the construction of a multi-period/multilateral price index

Author

Listed:
  • Consuelo R. Nava

    (Dipartimento di Economia e Scienze Politiche, Università della Valle d'Aosta - Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore)

  • Antonio Pesce

    (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore)

  • Maria Grazia Zoia

    (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore)

Abstract

Price indexes in time and space is a most relevant topic in statistical analysis from both the methodological and the application side. In this paper a price index providing a novel and effective solution to price indexes over several periods and among several countries, that is in both a multi-period and a multilateral framework, is devised. The reference basket of the devised index is the union of the intersections of the baskets of all periods/countries in pairs. As such, it provides a broader coverage than usual indexes. Index closed-form expressions and updating formulas are provided and properties investigated. Last, applications with real and simulated data provide evidence of the performance of the index at stake.

Suggested Citation

  • Consuelo R. Nava & Antonio Pesce & Maria Grazia Zoia, 2019. "A new proposal for the construction of a multi-period/multilateral price index," DISCE - Quaderni del Dipartimento di Politica Economica dipe0007, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie5:dipe0007
    as

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    File URL: http://dipartimenti.unicatt.it/politica-economica-DIPE0007.pdf
    File Function: First version, 2019
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    References listed on IDEAS

    as
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    3. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    4. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    5. Balk,Bert M., 2012. "Price and Quantity Index Numbers," Cambridge Books, Cambridge University Press, number 9781107404960, January.
    6. Erwin Diewert, 2005. "Weighted Country Product Dummy Variable Regressions And Index Number Formulae," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(4), pages 561-570, December.
    7. Mick Silver, 2009. "The Hedonic Country Product Dummy Method and Quality Adjustments for Purchasing Power Parity Calculations," IMF Working Papers 2009/271, International Monetary Fund.
    8. Rao, D.S. Prasada & Hajargasht, Gholamreza, 2016. "Stochastic approach to computation of purchasing power parities in the International Comparison Program (ICP)," Journal of Econometrics, Elsevier, vol. 191(2), pages 414-425.
    9. Clements, Kenneth W & Izan, H Y, 1987. "The Measurement of Inflation: A Stochastic Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(3), pages 339-350, July.
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    Cited by:

    1. Giacomo Damioli & Vincent Van Roy & Daniel Vertesy & Marco Vivarelli, 2023. "AI technologies and employment: micro evidence from the supply side," Applied Economics Letters, Taylor & Francis Journals, vol. 30(6), pages 816-821, March.
    2. Luigi Campiglio, 2020. "Lo Stato Sociale: da "lusso" a necessità," DISCE - Quaderni del Dipartimento di Politica Economica dipe0008, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    3. Marco Vivarelli, 2022. "Innovation and employment: a short update," DISCE - Quaderni del Dipartimento di Politica Economica dipe0024, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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    More about this item

    Keywords

    multi-period price index; multilateral price index; stochastic approach; updating process; OLS;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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