The Geometric Young Formula for Elementary Aggregate Producer Price Indexes

Robert Martin, Sadler Andy (), Stanley Sara (), Thompson William () and Weinhagen Jonathan ()
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Sadler Andy: U.S. Bureau of Labor Statistics, 2 Massachusetts Ave., NE, Washington, DC 20212, U.S.A.
Stanley Sara: U.S. Bureau of Labor Statistics, 2 Massachusetts Ave., NE, Washington, DC 20212, U.S.A.
Thompson William: U.S. Bureau of Labor Statistics, 2 Massachusetts Ave., NE, Washington, DC 20212, U.S.A.
Weinhagen Jonathan: U.S. Bureau of Labor Statistics, 2 Massachusetts Ave., NE, Washington, DC 20212, U.S.A.

Journal of Official Statistics, 2022, vol. 38, issue 1, 239-253

Abstract: We re-estimate historical U.S. Producer Price Indexes (PPI) using the geometric Young formula at the elementary level. The geometric Young has better axiomatic properties than the modified Laspeyres, and may better approximate a feasible economic target. We find in most cases, indexes that use the geometric Young escalate between 0.1 and 0.3 percentage points less each year than those that use the modified Laspeyres. However, for wholesale and retail trade, as well as some other services, the differences are much larger. As a result, using the geometric Young at the elementary level lowers the U.S. PPI for Final Demand by 0.55 percentage points per year during the study period, a magnitude larger than what has been previously found for the U.S. Consumer Price Index.

Keywords: Inflation; Aggregation; geometric Young index; Jevons index (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:offsta:v:38:y:2022:i:1:p:239-253:n:7

DOI: 10.2478/jos-2022-0011

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