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A Critique of International Recommendations concerning Price Index Formulas

Peter von der Lippe ()

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 1999, vol. 218, issue 3+4, pages 385-414

Abstract: The System of National Accounts (SNA) as well as the Boskin Report inconclusively discarded the idea of pure price comparison in favour of index formulas for which a meaningful interpretation is difficult to he found. The shortcomings of the "economic theory" approach followed in the Boskin Report (in addition to ideas expressly intended to simply lower inflation rates) and the various disadvantages of chain indices in view of their unsatisfactory axiomatic and deflation properties are demonstrated in detail. Implausibilities of chaining and "explaining" (as recommended in SNA) lack of additivity in deflation will drive official statistics into unnecessary difficulties.

Keywords: price indices; Boskin Commission; deflation; chain indices; official statistics; axiomatic approach in index theory (search for similar items in EconPapers)
JEL-codes: C43 C82 (search for similar items in EconPapers)
Date: 1999
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Handle: RePEc:jns:jbstat:v:218:y:1999:i:3-4:p:385-414