An Alternative Decomposition Of The Fisher Index
2004-02-20
Research Paper
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Aside from the aggregated information provided by price and quantity indexes, there is growing interest in index decompositions that reveal the contribution of each index component to overall index change. In this paper, we derive a “natural” decomposition of the Fisher price index that is directly implied by its linear homogeneity in price relatives. The proposed “Euler” weights not only indicate the total contribution of each component to total index change but also reveal which component had the highest or lowest marginal impact. Our results can readily be generalized to any index that satisfies the linear homogeneity property.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- M41 : Accounting
- G3 : Corporate Finance and Governance
- G39 : Corporate Finance and Governance: Other
- C43 : Index Numbers and Aggregation
- M : Business Administration and Business Economics; Marketing; Accounting
Automatically Extracted Terms
- index
- weight
- euler weights
- price
- euler
- decomposition
- component
- fisher
- fisher price index
- price relatives
- square brackets
- change
- quantity
- index change
- difference
- unity
- paasche price indexes
- management
- fisher index
- homogeneity
