Questions tagged [price-index]

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How to rebase quarterly price index?

For rebasing annual price index, we divide all price indices by the value of the new base year. With quarterly price indices, there is not a single base year with the value 1.00. In the base year, ...
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Should Prices (or Price Indices) be modelled with deterministic trend?

I always face a dilemma on whether to assume prices to have a time trend or not while modelling. It is also partly a statistics problem. Let me explain. Assume I have time series, $y_t$ of price of a ...
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Mathematical question in macroeconomic task

I am currently working on a project where I want to explore how changes in a couple of currencies affects the income for my countrys exported fish. My country (Norway) sells it fish in 4 different ...
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What are indices in Economics?

Really, what are indexes in Economics? And bilateral and multilateral indexes? Take the Malmquist Index: it is a bilateral index, even though it uses four numbers: $Q_1$, $Q_2$, $Q_3$ and $Q_4$? And ...
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Comparing PPI weights for USA and GER

I am trying to explain why the size of producer price changes for Germany is significantly smaller than for the USA. For this purpose I wanted to look into the calculation method for both Producer ...
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1answer
39 views

Why would an investor choose to invest in one index fund as opposed to another?

Assuming no transaction costs or management fees, why would an investor choose to invest in a fund tracking the Nikkei 225 over say the S&P500. If I was quite bullish on Japan, and I made the ...
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Difficulty Understanding CPI (Consumer Price Index)

Here's a question about CPI in my microeconomics text (Pindyck), which I don't seem to understand: The price of computers has fallen substantially over the past two decades. Use this drop in price ...
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1answer
28 views

Manipulating index numbers

I have a producer price index which is the composite of 9 various commodity prices including that of coal. I want to remove the effects of coal price changes from the original index. I have data on ...
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1answer
872 views

How can I adjust the base year of this price index?

I am given the following data for GDP deflator: 1997: 100.0 1998: 100.8 1999: 102.5 2000: 109.9 2001: 112.5 2002: 115.9 2003: 119.7 2004: 122.1 2005: 126.5 ...and so on. Currently, 1997 is ...
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1answer
30 views

What does the sun product of price times quantity divided by average price

I have a very simple question, what is the meaning, if any, of this? I.e. Economically what does the following calculation mean? $$ \left(\frac{(Q1\cdot P1)+(Q2\cdot P2)+(Q3\cdot P3)}{Q1 + Q2 + Q3}\...
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191 views

Why are Big Macs supposed to cost the same around the world?

The Big Mac index is frequently mentioned in media, but I could never understand how it makes any sense. According to Wiki: The Big Mac Index is published by The Economist as an informal way of ...
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What does a stock market index stand for?

I know that a stock market index (like S&P, NIKKEI, etc.) is computed from the prices of selected stocks, but I was wondering why the name of the currency is almost never expressed. For example, ...
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Can the CPIH be used to find the real terms rise in price of a component of the basket of goods?

I want to calculate the real terms rise in UK private rent prices since 2011 using the CPIH measure. The indexes of nominal rent prices and the CPIH rose by 14.7% and 13.5% respectively, so I can say ...
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1answer
28 views

Daily variable for inflation

I was wondering if there is a way to account for daily inflation data. I have daily short-term interest rates, and I would like to convert them to real short-term interest rates. Can I just average ...
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53 views

Interpretation of price indices

How can cpi 3.41 and Wpi 3.54 be interpreted? I know that cpi gives the inflation rate but what is it that we understand from these figures?
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Measuring quantities for price indices?

I'm confused about how one acquires the data necessary to compute price indices--specifically, how one acquires quantity data. Suppose I wanted to compute the Laspeyres Index, defined as $\sum\...
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1answer
110 views

Difference between chained CPI and normal CPI in simple terms

I am taking a community college level intro to macro course, and while self-studying the text, I came across the concept of C-CPI or chained CPI. While I feel I have a grasp as to what CPI is, I have ...
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Distributing inflation in a hierarchical model

I am trying to distribute inflation in a hierarchical model. In both of the following two scenarios, the Laspeyres' Index over the entire data set is 1.8; However, in the first scenario, the ...
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39 views

How to calculate price index for natural gas in India?

Ministry of commerce and industry of India doesn't provide WPI index for Natural Gas. Is there a way to calculate the same?
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839 views

Log relative price index - calculation question

I have US CPI prices & Canada CPI prices (where US is my base). I am trying to calculate the 'log relative price index'. Do I log the individual CPI prices first then calculate log Canada CPI/log ...
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398 views

How to calculate constant GDP in international $ from nominal GDP in local currency units

I want to calculate a constant GDP serie from 1995 till 2014 based on nominal GDP expressed in Yuan (Chinese currency). I already get stuck on how to first make a constant GDP serie based on Yuan, ...