Economics and the Price Index
Routledge – 2008 – 266 pages
The price index, a pervasive long established institution for economics, is a number issued by the Statistical Office that should tell anyone the ratio of costs of maintaining a given standard of living in two periods where prices differ.
For a chain of three periods, the product of the ratios for successive pairs must coincide with the ratio for the endpoints. This is the chain consistency required of price indices. A usual supposition is that the index is determined by a formula involving price and quantity data for the two reference periods, always joined with the question of which one to choose, and the perplexity that chain consistency is not obtained with any. Hence finally they should all be abandoned. This situation reflects ‘The Index Number Problem’. This book brings together a coherent discussion of fifty years of astonishingly creative work on this subject.
"Sydney Afriat is the guru of the price index" Angus Deaton (Princeton University, USA)
"Researchers interested in price indexes, inter-area comparisons, revealed preference theory, or productivity measurement will find this book an enlightening, entertaining, and highly creative treatise on where the theory should go from here." Marshall Reinsdorf (Senior Research Economist, US Bureau of Economic Analysis)
Foreword (Angus Deaton, Princeton University, USA) PART I: Concept and method 1. The Super Price Index: Irving Fisher, and after 2. The Price-Level Computation Method 3. Price Level Computation: Illustrations PART II: Precursor 1. The system of inequalities ars > xs - xr. 2. On the constructibility of consistent price indices between several periods simultaneously 3. The Theory of Exact and Superlative Index-Numbers
S. N. Afriat, resident of Siena, intermittent adjunct at the University, Mathematics and Economics, permanent Visiting Professor.
Carlo Milana, Research Director at ISAE (Istituto di Studi e Analisi Economica), Rome, a public research institution supported by the Italian Ministry of Economy and Finance.