 Divisia IndexNaohito Abe ()
Chapter Chapter 7 in Price Index Numbers, 2025, pp 153-165 from Springer Abstract: Abstract The Divisia index, introduced by François Divisia in 1925, is a unique economic index that treats time as a continuous variable, contrasting with standard indices which rely on discrete-time points. It defines price and quantity indices through logarithmic differentiation, enabling integration over time, which enables us to conduct various economic analysis easily. Key properties include transitivity, factor reversal, aggregation consistency, and homogeneity of degree one, making it particularly relevant for productivity analysis under continuous-time models. Despite its theoretical strengths, practical application of the Divisia index faces difficulties due to the discrete nature of real-world data, necessitating approximations that often lose desirable properties. Chain indices, such as the chain Törnqvist index, serve as discrete approximations but are less accurate with high-frequency data, often displaying unrealistic trends. The Divisia index also encounters issues with path dependency and fails to satisfy identity and monotonicity without assumptions of homothetic preferences or linear homogegneous production technology. Date: 2025 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sptchp:978-981-97-6305-4_7 Ordering information: This item can be ordered from DOI: 10.1007/978-981-97-6305-4_7 Access Statistics for this chapter More chapters in Springer Texts in Business and Economics from Springer |
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