An Empirical Illustration of Index Construction using Israeli Data on Vegetables

The paper illustrates how various commonly used index number formulae perform using monthly data on seasonal commodities (seven types of vegetable) that was collected by the Israeli Consumer Price Index program. The paper calculates standard Laspeyres, Paasche and Fisher indexes (fixed base and chained) for the years 1998-2002 and then compares these indexes with the types of index used by statistical agencies that make use of lagged expenditure data instead of current expenditure data. Rolling year annual Mudgett-Stone indexes are also calculated. Month to month Lowe, Young and Geometric Young indexes that make use of lagged annual baskets are calculated and found to have small amounts of substitution bias. The monthly chained Fisher index is found to have substantial downward chain drift bias but the month to month Rolling Year GEKS index performs well.