A Misunderstanding in Index-Number Theory: The True Konus Condition on Cost-of-Living Index Numbers and Its Limitations

Econometrica ◽  
1939 ◽  
Vol 7 (1) ◽  
pp. 1 ◽  
Author(s):  
Henry Schultz
Keyword(s):  
Number Theory ◽  
Index Number ◽  
Cost Of Living ◽  
Index Numbers ◽  
Index Number Theory ◽  
Cost Of Living Index

HIGH INFLATION, SEASONAL COMMODITIES, AND ANNUAL INDEX NUMBERS

1998 ◽  
Vol 2 (4) ◽  
pp. 456-471 ◽  
Author(s):  
W. Erwin Diewert
Keyword(s):  
Economic Growth ◽  
Number Theory ◽  
Index Number ◽  
Economic Approach ◽  
Index Numbers ◽  
Index Number Theory ◽  
Intertemporal Preferences ◽  
High Inflation ◽  
Annual Index ◽  
Accounting Period

This paper studies the problems of measuring economic growth under conditions of high inflation. Traditional bilateral index number theory implicitly assumes that variations in the price of a commodity within a period can be ignored. To justify this assumption under conditions of high inflation, the accounting period must be shortened to a quarter, a month, or possibly a week. However, once the accounting period is less than a year, the problem of seasonal commodities is encountered; i.e., in some subannual periods, many seasonal commodities will be unavailable and hence the usual bilateral index number theory cannot be applied. The paper systematically reviews the problems of index number construction when there are seasonal commodities and high inflation. Various index number formulas are justified from the viewpoint of the economic approach to index number theory by making separability assumptions on consumers' intertemporal preferences. We find that accurate economic measurement under conditions of high inflation is very complex.

IRVING FISHER AND INDEX NUMBER THEORY

2013 ◽  
Vol 35 (2) ◽  
pp. 199-232 ◽  
Author(s):  
ERWIN DIEWERT
Keyword(s):  
Number Theory ◽  
Early History ◽  
Index Number ◽  
Index Numbers ◽  
Index Number Theory ◽  
History Of ◽  
Insight Into

There are four main approaches to bilateral index number theory: the fixed basket, stochastic, test, and economic approaches. The paper reviews the contributions of Irving Fisher to these approaches to index number theory, which are still in use today. The paper also reviews Fisher’s contributions to multilateral index number theory. The main themes of the paper are developed in the context of a review of the early history of index number theory: a history that conveys a wealth of information and insight into the making and use of index numbers today.

Cost of Living Index Numbers; Practice, Precision and Theory

1977 ◽  
Vol 45 (2) ◽  
pp. 201
Author(s):  
J. B. D. Derksen ◽  
Kali S. Banerjee
Keyword(s):  
Cost Of Living ◽  
Index Numbers ◽  
Cost Of Living Index

The Economic Theory of Cost of Living Index Numbers.

Economica ◽  
1950 ◽  
Vol 17 (67) ◽  
pp. 334 ◽  
Author(s):  
R. G. D. Allen ◽  
Melville J. Ulmer
Keyword(s):  
Economic Theory ◽  
Cost Of Living ◽  
Index Numbers ◽  
Cost Of Living Index

scholarly journals Index Number Issues in the Consumer Price Index

1998 ◽  
Vol 12 (1) ◽  
pp. 47-58 ◽  
Author(s):  
W. Erwin Diewert
Keyword(s):  
Price Index ◽  
Inflation Rate ◽  
Consumer Price Index ◽  
Index Number ◽  
Cost Of Living ◽  
Fixed Base ◽  
Statistical Agencies ◽  
Cost Of Living Index ◽  
Theoretical Cost

This paper addresses the following issues: what is an appropriate theoretical consumer price index that statistical agencies should attempt to measure; what are some of the possible sources of biases between the fixed base Laspeyres price index that statistical agencies produce and the theoretical cost-of-living index; and what factors will make the biases larger or smaller and how will the biases change as the general inflation rate changes? This paper addresses all of the issues mentioned above and discusses what statistical agencies can do to reduce the biases.

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