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Post-Laspeyres The Case for a New Formula for Compiling Consumer Price Indexes

Consumer price indexes (CPIs) are 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 Low...

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Bibliographic Details
Main Author: Armknecht Jr., Paul
Other Authors: Silver, Mick
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2012
Series:IMF Working Papers
Subjects:
Price Indexes
Inflation
Labour; Income Economics
Public Finance & Taxation
Index Numbers And Aggregation
Deflation
Consumer Price Indexes
Methodology For Collecting, Estimating, And Organizing Microeconomic Data
Labor
National Government Expenditures And Related Policies: General
Expenditure
Price Level
Leading Indicators
Labor Economics: General
Expenditures, Public
Prices
Macroeconomics
Public Finance
Labor Economics
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Consumer price indexes (CPIs) are 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 variants of a hybrid formula suggested by Lent and Dorfman (2009) that substantially reduces bias from Laspeyres-type indexes
Physical Description:28 pages
ISBN:9781475502954

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