Tests for price indices in a dynamic item universe
Tests for price indices in a dynamic item universe
There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally axiomatic tests are defined for a fixed universe. We propose five tests explicitly formulated for a dynamic item universe, and motivate them both from the perspectives of a cost-of-goods index and a cost-of-living index. None of the indices that are currently available for making use of scanner data satisfies all the tests at the same time. The set of tests provides a rigorous diagnostic for whether an index is completely appropriate in a dynamic item universe, as well as pointing towards the directions of possible remedies. We thus outline a large index family that potentially can satisfy all the tests.
Axiomatic test, cost of goods, cost of living, quality change, new goods
683-697
Zhang, Li-Chun
a5d48518-7f71-4ed9-bdcb-6585c2da3649
Johansen, Ingvild
b5a8026a-60d0-4d2c-9f34-93f573865ad9
Nygaard, Ragnhild
2d2d804a-6eec-4c0b-b802-57256a70a91a
11 September 2019
Zhang, Li-Chun
a5d48518-7f71-4ed9-bdcb-6585c2da3649
Johansen, Ingvild
b5a8026a-60d0-4d2c-9f34-93f573865ad9
Nygaard, Ragnhild
2d2d804a-6eec-4c0b-b802-57256a70a91a
Zhang, Li-Chun, Johansen, Ingvild and Nygaard, Ragnhild
(2019)
Tests for price indices in a dynamic item universe.
Journal of Official Statistics, 35 (3), .
(doi:10.2478/JOS-2019-0028).
Abstract
There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally axiomatic tests are defined for a fixed universe. We propose five tests explicitly formulated for a dynamic item universe, and motivate them both from the perspectives of a cost-of-goods index and a cost-of-living index. None of the indices that are currently available for making use of scanner data satisfies all the tests at the same time. The set of tests provides a rigorous diagnostic for whether an index is completely appropriate in a dynamic item universe, as well as pointing towards the directions of possible remedies. We thus outline a large index family that potentially can satisfy all the tests.
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Tests for price indices
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Accepted/In Press date: 12 August 2019
e-pub ahead of print date: 9 September 2019
Published date: 11 September 2019
Keywords:
Axiomatic test, cost of goods, cost of living, quality change, new goods
Identifiers
Local EPrints ID: 434085
URI: http://eprints.soton.ac.uk/id/eprint/434085
ISSN: 0282-423X
PURE UUID: 8146a4e9-204d-4054-8126-be65ac5d1384
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Date deposited: 12 Sep 2019 16:30
Last modified: 16 Mar 2024 04:13
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Author:
Ingvild Johansen
Author:
Ragnhild Nygaard
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