TITLE:
Value Data and the Fisher Index
AUTHORS:
Robin M. Cross, Rolf Färe
KEYWORDS:
Constrained Equilibrium, Index Number Theory, Nonlinear Programming, Value Data, Weak Axiom
JOURNAL NAME:
Theoretical Economics Letters,
Vol.5 No.2,
April
16,
2015
ABSTRACT: In this paper we show
how to use value data (price times quantity) to construct Fisher price and
quantity indexes. In particular, we think of revenue and expenditure data. This
model extends the work of Cross and F?re, who showed how to recover relative
prices from value data with no explicit price or quantity information. We
examine the accuracy of our model over a range of price changes, firm sample
sizes, and response variation, in a Monte Carlo experiment in which firms
respond to price changes with error. The model outperforms it component indexes
with accuracy levels that increase with response variation.