Consistency in Aggregation / Aggregationskonsistenz

Auer Ludwig von ()
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Auer Ludwig von: Otto-von-Guericke-Universität Magdeburg, Fakultät für Wirtschaftswissenschaft, Lehrstuhl für Internationale Wirtschaft, Universitätsplatz 2, D-39106 Magdeburg, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2004, vol. 224, issue 4, 383-398

Abstract: In empirical economic research, individual prices are often aggregated into average prices of subaggregates. Then, these average prices are aggregated to produce the average price of the total aggregate. Often, such two stage procedures help to illuminate the underlying forces driving the overall result. Since price data are usually published as price changes, this two stage aggregation is typically based on some price index formula. In this paper, various screening devices are introduced which help to differentiate between suitable and unsuitable formulas. It is argued that testing for weak consistency in aggregation is a particularly important screening device. If a price index formula fails the weak consistency test and, nevertheless, this formula is used for a multi stage price index computation, then the measured overall price change depends on the number of computational stages and also on the precise manner in which the elementary items are partitioned into subaggregates. In other words, the findings are not robust and cannot be considered as particularly reliable. Based on these screening devices, it is examined which price index formulas can be expected to produce consistent results.

Keywords: Price index; aggregation; test; consistency; Preisindex; Aggregation; Test; Konsistenz (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:224:y:2004:i:4:p:383-398

DOI: 10.1515/jbnst-2004-0401

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