Robert J. Shiller
- Published in print:
- 1998
- Published Online:
- November 2003
- ISBN:
- 9780198294184
- eISBN:
- 9780191596926
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198294182.003.0005
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations ...
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There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations as do many risks currently traded in financial markets. If those who retail insurance policies against risks of changes in values of claims on incomes or service flows are to be able to tailor their insurance to the various exposures that their different clients have to these risks, they will want to layoff in hedging markets the risks of changes in these income factors that influence them because they are providing the insurance policies. This chapter considers some of the most salient of these other markets: real estate, unincorporated business, and privately held corporations, consumer and producer price index futures, agriculture, and art and collectibles. It also presents some ideas on systematic approaches to finding other markets, including modelling the tendency for co‐movement of incomes and inferring the underlying factors, i.e. looking for the major risk factors to incomes for which new markets would be most useful.Less
There are other income factors, besides the aggregate national income and labour income factors discussed in Ch. 4, that contribute as much uncertainty to the incomes of individuals and organizations as do many risks currently traded in financial markets. If those who retail insurance policies against risks of changes in values of claims on incomes or service flows are to be able to tailor their insurance to the various exposures that their different clients have to these risks, they will want to layoff in hedging markets the risks of changes in these income factors that influence them because they are providing the insurance policies. This chapter considers some of the most salient of these other markets: real estate, unincorporated business, and privately held corporations, consumer and producer price index futures, agriculture, and art and collectibles. It also presents some ideas on systematic approaches to finding other markets, including modelling the tendency for co‐movement of incomes and inferring the underlying factors, i.e. looking for the major risk factors to incomes for which new markets would be most useful.
Jan Luiten van Zanden
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199280681
- eISBN:
- 9780191602467
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199280681.003.0008
- Subject:
- Economics and Finance, Economic History
Presents improved estimates of the cost of living and the real wages of labourers in the western part of the Netherlands. The results show that even in this relatively dynamic economy there was a ...
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Presents improved estimates of the cost of living and the real wages of labourers in the western part of the Netherlands. The results show that even in this relatively dynamic economy there was a decline in real wages during the Early Modern Period.Less
Presents improved estimates of the cost of living and the real wages of labourers in the western part of the Netherlands. The results show that even in this relatively dynamic economy there was a decline in real wages during the Early Modern Period.
Hanaa Kheir-El-Din
- Published in print:
- 2009
- Published Online:
- September 2011
- ISBN:
- 9789774163036
- eISBN:
- 9781617970344
- Item type:
- chapter
- Publisher:
- American University in Cairo Press
- DOI:
- 10.5743/cairo/9789774163036.003.0003
- Subject:
- Political Science, Political Economy
The most widely used total or headline inflation measure is the Consumer Price Index (CPI). Inflation is often said to be “persistent increases in the general level of prices, or a persistent decline ...
More
The most widely used total or headline inflation measure is the Consumer Price Index (CPI). Inflation is often said to be “persistent increases in the general level of prices, or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond available quantities of goods and services.” Inflation measures developed based on this approach represent partial measures only, because they pertain to a number of individual transactions in specific markets. The cost of this subset of goods and services is then compared in two distinct periods to yield a measure of inflation.Less
The most widely used total or headline inflation measure is the Consumer Price Index (CPI). Inflation is often said to be “persistent increases in the general level of prices, or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond available quantities of goods and services.” Inflation measures developed based on this approach represent partial measures only, because they pertain to a number of individual transactions in specific markets. The cost of this subset of goods and services is then compared in two distinct periods to yield a measure of inflation.
Chris Jones
- Published in print:
- 2005
- Published Online:
- July 2005
- ISBN:
- 9780199281978
- eISBN:
- 9780191602535
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0199281971.003.0001
- Subject:
- Economics and Finance, Public and Welfare
This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional ...
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This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional Harberger (1971) analysis. The Hatta (1977) decomposition is used to show how, for individual consumers, dollars are a reliable proxy for utility, whenever policy changes are incrementally small. This decomposition finds that income effects are a scaling coefficient on the efficiency effects from marginal policy changes that play no role in single consumer economies. A number of different approaches are examined to account for distributional effects when there are heterogenous consumers.Less
This chapter examines welfare measures when they are made without cardinal utility functions to understand the properties of the aggregate dollar changes in utility computed in a conventional Harberger (1971) analysis. The Hatta (1977) decomposition is used to show how, for individual consumers, dollars are a reliable proxy for utility, whenever policy changes are incrementally small. This decomposition finds that income effects are a scaling coefficient on the efficiency effects from marginal policy changes that play no role in single consumer economies. A number of different approaches are examined to account for distributional effects when there are heterogenous consumers.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.003.0014
- Subject:
- Economics and Finance, Microeconomics
This is the second of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses the price index, which is associated with ...
More
This is the second of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses the price index, which is associated with a narrow concept of the cost of living problem, is important for both theory and practice, has a long history and large literature, and is now quite an elaborate theory. An outline of the main ideas is given, touching upon history only where points are encountered directly, and bringing in theorems discursively and without proof; William Fleetwood, Irving Fisher, and S. S. Byushgens stand out from the past in the account, with the writings of J. R. Hicks, R. G. D. Allen and Paul Samuelson forming a background. The ‘true index’ of the chapter title is an early vague term that later acquired the meaning dealt with here. The nine sections are: the cost of living; the price index; formulae, and Fisher's Tests (and Ideal Index); the Paasche–Laspeyres interval; existence test; theory and practice; many periods; price levels; and Fisher's formula.Less
This is the second of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses the price index, which is associated with a narrow concept of the cost of living problem, is important for both theory and practice, has a long history and large literature, and is now quite an elaborate theory. An outline of the main ideas is given, touching upon history only where points are encountered directly, and bringing in theorems discursively and without proof; William Fleetwood, Irving Fisher, and S. S. Byushgens stand out from the past in the account, with the writings of J. R. Hicks, R. G. D. Allen and Paul Samuelson forming a background. The ‘true index’ of the chapter title is an early vague term that later acquired the meaning dealt with here. The nine sections are: the cost of living; the price index; formulae, and Fisher's Tests (and Ideal Index); the Paasche–Laspeyres interval; existence test; theory and practice; many periods; price levels; and Fisher's formula.
Matthew P. Drennan
- Published in print:
- 2015
- Published Online:
- May 2016
- ISBN:
- 9780300209587
- eISBN:
- 9780300216349
- Item type:
- chapter
- Publisher:
- Yale University Press
- DOI:
- 10.12987/yale/9780300209587.003.0004
- Subject:
- Political Science, Public Policy
Debt of households has been rising rapidly since 1995. The debt to income ratio of the bottom 95 percent of the income distribution has risen well above 140 percent. The same measure for the top five ...
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Debt of households has been rising rapidly since 1995. The debt to income ratio of the bottom 95 percent of the income distribution has risen well above 140 percent. The same measure for the top five percent has been stable near 60 percent for 25 years. Low interest rates, easy credit terms, subprime mortgages, and mortgage refinancings have all stimulated consumer borrowing. The housing bubble, nationwide, encouraged consumers to extract cash from their properties. Panel regressions relating per capita household debt to declining income shares by state of the bottom 80 percent show that as income shares decline household debt rises. Economic insecurity objectively measured has been rising. The share of household budgets spent on the necessities of housing, health care and education have risen for all quintiles. Prices of those three have exceeded inflation for 20 years. Stagnant incomes and rising prices for those necessities have lured households to take on more debt to sustain their standard of living.Less
Debt of households has been rising rapidly since 1995. The debt to income ratio of the bottom 95 percent of the income distribution has risen well above 140 percent. The same measure for the top five percent has been stable near 60 percent for 25 years. Low interest rates, easy credit terms, subprime mortgages, and mortgage refinancings have all stimulated consumer borrowing. The housing bubble, nationwide, encouraged consumers to extract cash from their properties. Panel regressions relating per capita household debt to declining income shares by state of the bottom 80 percent show that as income shares decline household debt rises. Economic insecurity objectively measured has been rising. The share of household budgets spent on the necessities of housing, health care and education have risen for all quintiles. Prices of those three have exceeded inflation for 20 years. Stagnant incomes and rising prices for those necessities have lured households to take on more debt to sustain their standard of living.
Kenneth Flamm
- Published in print:
- 2021
- Published Online:
- January 2022
- ISBN:
- 9780226728179
- eISBN:
- 9780226728209
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226728209.003.0012
- Subject:
- Economics and Finance, Econometrics
“Moore’s Law” in the semiconductor manufacturing industry is the predictable evolution of a manufacturing technology platform that has continuously reduced the costs of fabricating electronic ...
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“Moore’s Law” in the semiconductor manufacturing industry is the predictable evolution of a manufacturing technology platform that has continuously reduced the costs of fabricating electronic circuits since the mid-1960s. This chapter reviews how this progression delivered 20 to 30 percent average annual transistor manufacturing cost declines while it lasted. We review how other characteristics associated with smaller feature sizes created additional economic value, and assess their historical trends. These benefits pose special challenges for price and innovation measurement, and motivate quality adjustment methods when measuring semiconductor product prices. Empirical analysis reveals a slowdown in Moore’s Law as measured by quality-adjusted prices for the highest volume products: memory chips, custom chip designs outsourced to foundries, and Intel microprocessors. We assess whether Intel microprocessor price trends might diverge from those of other semiconductor chips. A model of chip characteristics’ effects on microprocessor performance is specified and tested in a structural econometric model of processor performance. A small set of characteristics explains 99% of variance across processor models’ performance on common benchmarks. The diverse effects of changing characteristics on manufacturing costs create a rationale for their inclusion in hedonic price models separate from their demand-side effects on computer performance.Less
“Moore’s Law” in the semiconductor manufacturing industry is the predictable evolution of a manufacturing technology platform that has continuously reduced the costs of fabricating electronic circuits since the mid-1960s. This chapter reviews how this progression delivered 20 to 30 percent average annual transistor manufacturing cost declines while it lasted. We review how other characteristics associated with smaller feature sizes created additional economic value, and assess their historical trends. These benefits pose special challenges for price and innovation measurement, and motivate quality adjustment methods when measuring semiconductor product prices. Empirical analysis reveals a slowdown in Moore’s Law as measured by quality-adjusted prices for the highest volume products: memory chips, custom chip designs outsourced to foundries, and Intel microprocessors. We assess whether Intel microprocessor price trends might diverge from those of other semiconductor chips. A model of chip characteristics’ effects on microprocessor performance is specified and tested in a structural econometric model of processor performance. A small set of characteristics explains 99% of variance across processor models’ performance on common benchmarks. The diverse effects of changing characteristics on manufacturing costs create a rationale for their inclusion in hedonic price models separate from their demand-side effects on computer performance.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.003.0017
- Subject:
- Economics and Finance, Microeconomics
This is the last of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous two chapters, it discusses ...
More
This is the last of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous two chapters, it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. Specifically, it addresses the A. Wald's ‘New Formula’. The four sections of the chapter are: linear expansions; revealed purchasing power; yhe critical points; and marginal price indices and limits.Less
This is the last of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous two chapters, it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. Specifically, it addresses the A. Wald's ‘New Formula’. The four sections of the chapter are: linear expansions; revealed purchasing power; yhe critical points; and marginal price indices and limits.
Erich H. Strassner and David B. Wasshausen
- Published in print:
- 2021
- Published Online:
- January 2022
- ISBN:
- 9780226728179
- eISBN:
- 9780226728209
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226728209.003.0015
- Subject:
- Economics and Finance, Econometrics
The accuracy and integrity of BEA’s featured measures, including inflation-adjusted (i.e., “real”) GDP, consumer spending and business investment, rely on the ability to accurately measure quality ...
More
The accuracy and integrity of BEA’s featured measures, including inflation-adjusted (i.e., “real”) GDP, consumer spending and business investment, rely on the ability to accurately measure quality adjusted price indexes. It is often the case that high-profile, innovative goods and services that reflect rapidly changing technologies and notable improvements present significant measurement challenges using traditional approaches, especially when required to be produced at high frequencies. With an aim toward facilitating and encouraging further price research, this paper first provides a historical perspective and an analysis of BEA’s ICT prices, including an overview of the sources and methods used to construct BEA’s quality-adjusted prices. In the second part of the paper, we discuss current-work and future plans for continuing to ensure the accuracy of BEA’s price indexes and corresponding inflation-adjusted measures. Appendix A provides an update that assesses recent progress in price measurement as reflected in BEA’s 15th comprehensive update of the NIPAs, released July 27, 2018.Less
The accuracy and integrity of BEA’s featured measures, including inflation-adjusted (i.e., “real”) GDP, consumer spending and business investment, rely on the ability to accurately measure quality adjusted price indexes. It is often the case that high-profile, innovative goods and services that reflect rapidly changing technologies and notable improvements present significant measurement challenges using traditional approaches, especially when required to be produced at high frequencies. With an aim toward facilitating and encouraging further price research, this paper first provides a historical perspective and an analysis of BEA’s ICT prices, including an overview of the sources and methods used to construct BEA’s quality-adjusted prices. In the second part of the paper, we discuss current-work and future plans for continuing to ensure the accuracy of BEA’s price indexes and corresponding inflation-adjusted measures. Appendix A provides an update that assesses recent progress in price measurement as reflected in BEA’s 15th comprehensive update of the NIPAs, released July 27, 2018.
Marshall Reinsdorf and Jack E. Triplett (eds)
- Published in print:
- 2010
- Published Online:
- February 2013
- ISBN:
- 9780226148557
- eISBN:
- 9780226148571
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226148571.003.0002
- Subject:
- Economics and Finance, Econometrics
This chapter provides a detailed history of the evolution of the Consumer Price Index (CPI), and a comprehensive review of the various commissions formed to study it. It reveals the long-standing ...
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This chapter provides a detailed history of the evolution of the Consumer Price Index (CPI), and a comprehensive review of the various commissions formed to study it. It reveals the long-standing nature of many CPI issues that are still controversial today. Apart from providing various CPI reviews, the authors present their views on the alternative methodological foundations for a consumer price index and, in particular, debate the merits of the economic or Cost-of-Living Index (COLI) approach versus the Cost-of-Goods Index (COGI). It is found that the COLI approach to CPI index construction is superior to either the COGI or test approaches, but it is also noted that the test approach can be useful on occasion as a supplement to the economic approach to index construction.Less
This chapter provides a detailed history of the evolution of the Consumer Price Index (CPI), and a comprehensive review of the various commissions formed to study it. It reveals the long-standing nature of many CPI issues that are still controversial today. Apart from providing various CPI reviews, the authors present their views on the alternative methodological foundations for a consumer price index and, in particular, debate the merits of the economic or Cost-of-Living Index (COLI) approach versus the Cost-of-Goods Index (COGI). It is found that the COLI approach to CPI index construction is superior to either the COGI or test approaches, but it is also noted that the test approach can be useful on occasion as a supplement to the economic approach to index construction.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.003.0015
- Subject:
- Economics and Finance, Microeconomics
This is the third of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the next two chapters, it discusses ...
More
This is the third of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the next two chapters, it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. The four sections of the chapter are: Byushgens's theorem; the existence question; purchasing power correspondence; and many‐period generalization.Less
This is the third of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the next two chapters, it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. The four sections of the chapter are: Byushgens's theorem; the existence question; purchasing power correspondence; and many‐period generalization.
W. M. Gorman
C. Blackorby and A. F. Shorrocks (eds)
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198285212
- eISBN:
- 9780191596322
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198285213.003.0005
- Subject:
- Economics and Finance, Microeconomics
This is the most ambitious of the papers in Part I of the book that are explicitly concerned with budgeting; it is from an unpublished typescript dated 1965. Here, Gorman discards the previously ...
More
This is the most ambitious of the papers in Part I of the book that are explicitly concerned with budgeting; it is from an unpublished typescript dated 1965. Here, Gorman discards the previously maintained hypothesis of separability and attempts to discover the implications of perfect price aggregation itself. Specifically, in the notation of this paper, he looks for the conditions under which a consumer with a well‐behaved utility function can determine the optimal intersector allocations. Sect. 2 of the paper solves this problem by deriving the necessary and sufficient conditions on the indirect utility function and develops this in various ways. The remaining sections add an assumption on price aggregation, and a requirement that the demand functions are derived from conditional subutility functions.Less
This is the most ambitious of the papers in Part I of the book that are explicitly concerned with budgeting; it is from an unpublished typescript dated 1965. Here, Gorman discards the previously maintained hypothesis of separability and attempts to discover the implications of perfect price aggregation itself. Specifically, in the notation of this paper, he looks for the conditions under which a consumer with a well‐behaved utility function can determine the optimal intersector allocations. Sect. 2 of the paper solves this problem by deriving the necessary and sufficient conditions on the indirect utility function and develops this in various ways. The remaining sections add an assumption on price aggregation, and a requirement that the demand functions are derived from conditional subutility functions.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.001.0001
- Subject:
- Economics and Finance, Microeconomics
This book approaches various aspects of economics that have to do with choice, and the opportunity for it, such as individual and social choice, production, optimal programming, and the market. The ...
More
This book approaches various aspects of economics that have to do with choice, and the opportunity for it, such as individual and social choice, production, optimal programming, and the market. The topics belong mostly to microeconomics, but they also have other connections. The object is to state a view about choice and value and to give an account of the logical apparatus. With this there is a wish to present limited matters fairly completely and unproblematically, and where there is some issue about their nature to consider that also. The book consists of six parts, each containing several chapters.Parts I–IV deal with generalities about choice, individual or social, and representative economic topics. The remaining parts have more concern with straightforwardly mathematical subjects, which have an application or interpretation for economics but need not be exclusively connected there. Chapters often are fairly self‐contained or belong to sequences that can be taken more or less on their own. The topics are in the main fabric of economic theory, and most students encounter them. A preamble at the start of every chapter tells what it is about; from this and possibly some further scanning, the main ideas should be easily gathered by those who might not be concerned with all details. Expository materials and reworkings of published fragments have been joined with unpublished work from past and recent years. In all there is a view about choice and ‘the optimum’ in economics surely acceptable to some and perhaps what they have always thought but undoubtedly not to everyone.Less
This book approaches various aspects of economics that have to do with choice, and the opportunity for it, such as individual and social choice, production, optimal programming, and the market. The topics belong mostly to microeconomics, but they also have other connections. The object is to state a view about choice and value and to give an account of the logical apparatus. With this there is a wish to present limited matters fairly completely and unproblematically, and where there is some issue about their nature to consider that also. The book consists of six parts, each containing several chapters.
Parts I–IV deal with generalities about choice, individual or social, and representative economic topics. The remaining parts have more concern with straightforwardly mathematical subjects, which have an application or interpretation for economics but need not be exclusively connected there. Chapters often are fairly self‐contained or belong to sequences that can be taken more or less on their own. The topics are in the main fabric of economic theory, and most students encounter them. A preamble at the start of every chapter tells what it is about; from this and possibly some further scanning, the main ideas should be easily gathered by those who might not be concerned with all details. Expository materials and reworkings of published fragments have been joined with unpublished work from past and recent years. In all there is a view about choice and ‘the optimum’ in economics surely acceptable to some and perhaps what they have always thought but undoubtedly not to everyone.
W. M. Gorman
C. Blackorby and A. F. Shorrocks (eds)
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198285212
- eISBN:
- 9780191596322
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198285213.003.0003
- Subject:
- Economics and Finance, Microeconomics
Separability is a maintained hypothesis throughout this paper, which was published in Econometrica 27 (1959). Hence, the results of the previous paper are applicable: that is, it begins with the ...
More
Separability is a maintained hypothesis throughout this paper, which was published in Econometrica 27 (1959). Hence, the results of the previous paper are applicable: that is, it begins with the assumption that two‐stage budgeting is possible, but that no restrictions are imposed on the information used to discover the optimal expenditure on each group. The paper considers the implications of reducing the information available to make the intergroup allocation decision, and begins by investigating the conditions in which a consumer with a well‐behaved separable utility function can find the optimal income allocation for a group, given only the price indices for each group. In Sect. 1, Gorman posits the existence of differential price indices, and his Proposition I provides the necessary and sufficient conditions for local price aggregation, maintaining separability of the direct utility function. Section 2 of the paper considers the case of perfect price aggregates, and the conclusion makes specific remarks about an earlier paper written for the same journal by R. H. Strotz, of which this paper of Gorman's is essentially an elaboration of Gorman's referee's report.Less
Separability is a maintained hypothesis throughout this paper, which was published in Econometrica 27 (1959). Hence, the results of the previous paper are applicable: that is, it begins with the assumption that two‐stage budgeting is possible, but that no restrictions are imposed on the information used to discover the optimal expenditure on each group. The paper considers the implications of reducing the information available to make the intergroup allocation decision, and begins by investigating the conditions in which a consumer with a well‐behaved separable utility function can find the optimal income allocation for a group, given only the price indices for each group. In Sect. 1, Gorman posits the existence of differential price indices, and his Proposition I provides the necessary and sufficient conditions for local price aggregation, maintaining separability of the direct utility function. Section 2 of the paper considers the case of perfect price aggregates, and the conclusion makes specific remarks about an earlier paper written for the same journal by R. H. Strotz, of which this paper of Gorman's is essentially an elaboration of Gorman's referee's report.
W. M. Gorman
C. Blackorby and A. F. Shorrocks (eds)
- Published in print:
- 1996
- Published Online:
- November 2003
- ISBN:
- 9780198285212
- eISBN:
- 9780191596322
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198285213.003.0004
- Subject:
- Economics and Finance, Microeconomics
This paper is from an unpublished typescript written for a workshop at the University of North Carolina in 1970, and is a summary of what was known at the time about Divisia price indices, plus some ...
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This paper is from an unpublished typescript written for a workshop at the University of North Carolina in 1970, and is a summary of what was known at the time about Divisia price indices, plus some illuminating sidelights. The main properties of the indices are listed, noting the assumptions needed for each. The paper goes on to discuss the conditions under which the Divisia indices are independent of the path followed from the base to the current position. The conclusion is that given constant returns and perfect competition, the Divisia indices corresponding to a set of goods are independent of the path if a ’true’ aggregate exists for these goods, and then give the value of that aggregate, and of a corresponding price aggregate. The final section discusses a generalization of the idea of a Divisia index.Less
This paper is from an unpublished typescript written for a workshop at the University of North Carolina in 1970, and is a summary of what was known at the time about Divisia price indices, plus some illuminating sidelights. The main properties of the indices are listed, noting the assumptions needed for each. The paper goes on to discuss the conditions under which the Divisia indices are independent of the path followed from the base to the current position. The conclusion is that given constant returns and perfect competition, the Divisia indices corresponding to a set of goods are independent of the path if a ’true’ aggregate exists for these goods, and then give the value of that aggregate, and of a corresponding price aggregate. The final section discusses a generalization of the idea of a Divisia index.
Ana M. Aizcorbe
- Published in print:
- 2014
- Published Online:
- August 2014
- ISBN:
- 9780198702429
- eISBN:
- 9780191772115
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198702429.001.0001
- Subject:
- Economics and Finance, Econometrics
This book provides an accessible guide to price index and hedonic techniques, with a focus on how to best apply these techniques and interpret the resulting measures. One goal of this book is to ...
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This book provides an accessible guide to price index and hedonic techniques, with a focus on how to best apply these techniques and interpret the resulting measures. One goal of this book is to provide first-hand experience at constructing these measures, with guidance on practical issues such as what the ideal data would look like and how best to construct these measures when the data are less than ideal. A related objective is to bridge the wide gulf between the necessarily simplistic elementary treatments in textbooks and the very complex discussions found in the theoretical and empirical measurement literature. Here, the theoretical results are summarized in an intuitive way and their numerical importance is illustrated using data and results from existing studies. Finally, while the aim of much of the existing literature is to better understand official price indexes like the Consumer Price Index, the emphasis here is more practical: to provide the necessary tools for individuals to apply these techniques on their own. As new datasets become increasingly accessible, tools like these will be needed to obtain summary price measures. Indeed, these techniques have been applied for years in anti-trust cases that involve pricing, where economic experts typically have access to large, granular datasets.Less
This book provides an accessible guide to price index and hedonic techniques, with a focus on how to best apply these techniques and interpret the resulting measures. One goal of this book is to provide first-hand experience at constructing these measures, with guidance on practical issues such as what the ideal data would look like and how best to construct these measures when the data are less than ideal. A related objective is to bridge the wide gulf between the necessarily simplistic elementary treatments in textbooks and the very complex discussions found in the theoretical and empirical measurement literature. Here, the theoretical results are summarized in an intuitive way and their numerical importance is illustrated using data and results from existing studies. Finally, while the aim of much of the existing literature is to better understand official price indexes like the Consumer Price Index, the emphasis here is more practical: to provide the necessary tools for individuals to apply these techniques on their own. As new datasets become increasingly accessible, tools like these will be needed to obtain summary price measures. Indeed, these techniques have been applied for years in anti-trust cases that involve pricing, where economic experts typically have access to large, granular datasets.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.003.0013
- Subject:
- Economics and Finance, Microeconomics
This is the first of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses price and quantity levels. The four ...
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This is the first of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses price and quantity levels. The four sections of the chapter are: price–quantity duality; dual function examples (Cobb–Douglas and Cobb–Douglas, polyhedral and polytope); price and quantity levels; and limits of indeterminacy.Less
This is the first of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. It discusses price and quantity levels. The four sections of the chapter are: price–quantity duality; dual function examples (Cobb–Douglas and Cobb–Douglas, polyhedral and polytope); price and quantity levels; and limits of indeterminacy.
S. N. Afriat
- Published in print:
- 1987
- Published Online:
- November 2003
- ISBN:
- 9780198284611
- eISBN:
- 9780191595844
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198284616.003.0016
- Subject:
- Economics and Finance, Microeconomics
This is the fourth of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous and next chapters it ...
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This is the fourth of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous and next chapters it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. specifically, it addresses the four‐point formula. the eight sections of the chapter are: median multipliers and levels; centre locus; linear purchasing power; critical locations; elliptical case; hyperbolic case; parabolic limits; and demonstration: Fisher's data.Less
This is the fourth of five chapters about the cost of living problem and price indices, a typical area for what is understood as choice theory. Together with the previous and next chapters it discusses theoretical matters arising from the finding of S. S. Byushgens (1925) that Irving Fisher's ‘Ideal Index’ is exact if demand is governed by a homogeneous quadratic utility. specifically, it addresses the four‐point formula. the eight sections of the chapter are: median multipliers and levels; centre locus; linear purchasing power; critical locations; elliptical case; hyperbolic case; parabolic limits; and demonstration: Fisher's data.
Ernst R. Berndt, David M. Cutler, Richard G. Frank, Zvi Griliches, Joseph P. Newhouse, and Jack E. Triplett
- Published in print:
- 2001
- Published Online:
- February 2013
- ISBN:
- 9780226132266
- eISBN:
- 9780226132303
- Item type:
- chapter
- Publisher:
- University of Chicago Press
- DOI:
- 10.7208/chicago/9780226132303.003.0005
- Subject:
- Economics and Finance, Econometrics
The measurement of the output of the medical care system is necessary to assess the productivity levels and growth of a country's economy and medical care system. Medical price indexes have uses ...
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The measurement of the output of the medical care system is necessary to assess the productivity levels and growth of a country's economy and medical care system. Medical price indexes have uses other than those involving output and productivity measurement. In the United States, both within the health sector and more generally, contracts occasionally contain provisions that depend on growth of the medical Consumer Price Index (CPI). The CPI and the Producer Price Index (PPI) are also employed in updating fee schedules for certain administered pricing schemes and payments to some health plans. This chapter reviews the measurement issues underlying the construction of medical care price indexes. It describes procedures employed by the U.S. Bureau of Labor Statistics in the construction of its medical CPIs and PPIs (including recent revisions and changes). It also discusses alternative notions of medical care output that involve the price of a treatment episode rather than the prices of fixed bundles of inputs. Finally, the chapter outlines salient features of a new price index for health expenditures.Less
The measurement of the output of the medical care system is necessary to assess the productivity levels and growth of a country's economy and medical care system. Medical price indexes have uses other than those involving output and productivity measurement. In the United States, both within the health sector and more generally, contracts occasionally contain provisions that depend on growth of the medical Consumer Price Index (CPI). The CPI and the Producer Price Index (PPI) are also employed in updating fee schedules for certain administered pricing schemes and payments to some health plans. This chapter reviews the measurement issues underlying the construction of medical care price indexes. It describes procedures employed by the U.S. Bureau of Labor Statistics in the construction of its medical CPIs and PPIs (including recent revisions and changes). It also discusses alternative notions of medical care output that involve the price of a treatment episode rather than the prices of fixed bundles of inputs. Finally, the chapter outlines salient features of a new price index for health expenditures.
Ana M. Aizcorbe
- Published in print:
- 2014
- Published Online:
- August 2014
- ISBN:
- 9780198702429
- eISBN:
- 9780191772115
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198702429.003.0002
- Subject:
- Economics and Finance, Econometrics
This chapter provides a description of basic price index techniques, the intuition underlying their construction, and how one interprets the results. In particular, the chapter provides instructions ...
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This chapter provides a description of basic price index techniques, the intuition underlying their construction, and how one interprets the results. In particular, the chapter provides instructions on how to construct fixed-based and chained indexes and discusses some of the common problems, like substitution bias, the new goods problem and chain drift. It also discusses the intuition behind two popular interpretations of price indexes: the cost of living index interpretation and the constant-quality price index interpretation. The formulas considered are: Laspeyres, Paasche, Fisher Ideal, Tornquist, Jevons.Less
This chapter provides a description of basic price index techniques, the intuition underlying their construction, and how one interprets the results. In particular, the chapter provides instructions on how to construct fixed-based and chained indexes and discusses some of the common problems, like substitution bias, the new goods problem and chain drift. It also discusses the intuition behind two popular interpretations of price indexes: the cost of living index interpretation and the constant-quality price index interpretation. The formulas considered are: Laspeyres, Paasche, Fisher Ideal, Tornquist, Jevons.