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The Marshall-Edgeworth index, credited to Marshall (1887) and Edgeworth (1925), [11] is a weighted relative of current period to base period sets of prices. This index uses the arithmetic average of the current and based period quantities for weighting. It is considered a pseudo-superlative formula and is symmetric. [12]
Index numbers are used especially to compare business activity, the cost of living, and employment. They enable economists to reduce unwieldy business data into easily understood terms. In contrast to a cost-of-living index based on the true but unknown utility function, a superlative index number is an index number that can be calculated. [1]
For example, a Törnqvist index summarizing labor input may weigh the growth rate of the hours of each group of workers by the share of labor compensation they receive. [7] The Törnqvist index is a superlative index, meaning it can approximate any smooth production or cost function. "Smooth" here means that small changes in relative prices for ...
The new measure, called a "superlative" index, is designed to be a closer approximation to a "cost-of-living" index than the other measures. The use of expenditure data for both a base period and the current period in order to average price change across item categories distinguishes the C-CPI-U from the existing CPI measures, which use only a ...
Consumer price index (CPI) and purchasing power parity (PPP) conversion factors share conceptual similarities. [30] The CPI measures differences in levels of prices of goods and services over time within a country, whereas PPPs measure the change in levels of prices across regions within a country.
Substitution bias describes a possible bias in economic index numbers if they do not incorporate data on consumer expenditures switching from relatively more expensive products to cheaper ones as prices changed. Substitution bias occurs when prices for items change relative to one another.
The Malmquist Index (MI) is a bilateral index [a] that can be used to compare the production technology of two economies. It is named after Professor Sten Malmquist, on whose ideas it is based. It is also called the Malmquist Productivity Index. The MI is based on the concept of the production function. This is a function of maximum possible ...
The World Bank has used the Atlas method [1] since 1993 to estimate the economic size of countries based on their gross national income (GNI) in U.S. dollars.. To convert a country's GNI from its local currency to U.S. dollars, the Atlas method uses a conversion factor that averages exchange rates over three years.