Multilateral index number systems for international price comparisons: properties, existence and uniqueness

DOI10.1016/J.JMATECO.2019.02.004zbMATH Open1417.91395arXiv1811.04197OpenAlexW2900117696MaRDI QIDQ2425189FDOQ2425189

D. S. Prasada Rao, Gholamreza Hajargasht

Publication date: 26 June 2019

Published in: Journal of Mathematical Economics (Search for Journal in Brave)

Abstract: Over the past five decades a number of multilateral index number systems have been proposed for spatial and cross-country price comparisons. These multilateral indexes are usually expressed as solutions to systems of linear or nonlinear equations. In this paper, we provide general theorems that can be used to establish necessary and sufficient conditions for the existence and uniqueness of the Geary-Khamis, IDB, Neary and Rao indexes as well as potential new systems including two generalized systems of index numbers. One of our main results is that the necessary and sufficient conditions for existence and uniqueness of solutions can often be stated in terms of graph-theoretic concepts and a verifiable condition based on observed quantities of commodities.

Full work available at URL: https://arxiv.org/abs/1811.04197

zbMATH Keywords

connected graphsgeneralized meannonlinear Perron-Frobenius problemDAD problempurchasing power paritiesinternational prices

Mathematics Subject Classification ID

Statistical methods; economic indices and measures (91B82) Microeconomic theory (price theory and economic markets) (91B24)

Cites Work

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• Nonlinear Perron-Frobenius theory
• The Perron-Frobenius theorem for homogeneous, monotone functions
• Exact and superlative index numbers
• Price and Quantity Index Numbers
• The spectrum of a nonlinear operator associated with a matrix
• Stochastic approach to computation of purchasing power parities in the International Comparison Program (ICP)
• CONSISTENT COMPARISONS OF REAL INCOMES ACROSS TIME AND SPACE

Cited In (4)

• On the Factorial Approach Multilateral Index Number System Satisfying base Invariance and Consistency
• Measuring spatial price differentials at the basic heading level: a comparison of stochastic index number methods
• On the multilateral index number system based on the factorial approach
• A log-change index number formula for multilateral comparisons

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