price index

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Related to Paasche index: Laspeyres index

price index

[′prīs ‚in‚deks]
(statistics)
A statistic used primarily in economics to indicate an average level of prices in a time series; combines several series of price data into one index.
References in periodicals archive ?
G] be the Paasche index that measures period t prices relative to period 0 prices for G.
In the Laspeyres index formula the initial period is the base period, while in the Paasche index formula the final period is the base period.
18) Although the Paasche index is a lower bound in the theory of consumption price indexes, in the theory of output price indexes it is an upper bound.
During periods when certain commodities are experiencing rapidly falling prices, the Laspeyres index overstates their contributions, while the Paasche index understates their contributions.
The second step is to form the Paasche index where the numerator is the second-quarter output forecasted in current dollars.
By contrast, the Paasche index weights the price increase for hamburger (the price of which has risen more slowly) more heavily.
Because fewer nurses and more nursing aides are employed in the reference period than in the base period, the Paasche index will give greater weight to the group of workers with the slower growing compensation costs.
While it is not clear on purely theoretical grounds whether the Laspeyres or Paasche index is preferable, something can be said about the potential biases in the two indexes.
Because the Laspeyres index tends to overstate increases in labor costs, and the Paasche index tends to understate them, it might seem sensible to take an average of the two indexes.
The Fisher ideal index is the geometric mean of a Laspeyres and Paasche index.
Although the expenditure weights are from the period t, whereas the Laspeyres index uses period 0, the Paasche index is less useful for official measures because the time needed to estimate these shares from survey data creates a lag in publishing the current value of the index.
Price indexes and substitution bias in Laspeyres index, 1984 and 1994 [1984=100] All Income Expendi- Program Index and bias Consumer poor ture poor participants units Paasche index 139.