Measuring inflation through stochastic approach to index numbers
Zahid Asghar () and
MPRA Paper from University Library of Munich, Germany
This study attempts to estimate the rate of inflation in Pakistan by a stochastic approach to index numbers which provides not only point estimate but also confidence interval for inflation estimate. There are two approaches to index number theory namely: the functional economic approach and the stochastic approach. The attraction of stochastic approach is that it estimates the rate of inflation in which uncertainty and statistical ideas play a major roll of screening index numbers. We have used extended stochastic approach to index numbers for measuring the Pakistan inflation by allowing for the systematic changes in the relative prices. We use CPI data covering the period July 2001--March 2008.
Keywords: Stochastic Approach; Index numbers; Inflation; OLS (search for similar items in EconPapers)
JEL-codes: E31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:21513
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