Green lumber grade yields were then used along with price relatives developed from 5-year lumber grade price averages (nominal) to develop Quality Indexes for each species.
1 Common to develop price relatives for each species (Table 3).
For example, the annual price relatives
for the commodity "offices of physicians" are multiplied by the annual MEPS adjustment factors to yield the MEPS adjusted price relatives
for "offices of physicians.
Using the methodology suggested by Kothari, Sloan (1992), the degree of the relationship between price relatives
(one plus the buy-and-hold return) and earnings-to-price ratio (earnings yield) is tested using a quarterly, yearly and intertemporal sample.
This new technique is based on the Q-Q plot and involves estimating the slope parameter as the value that maximizes the correlation between the observed log price relatives
and the theoretical quantiles.
Hypothetical Comparison of Quality Adjusted Price Relatives
Price SPEC Integer/ floating point rating New microprocessor $220 14.
If we select 1998 as the base year, we construct simple price relatives
for the three years as follows:
The method we propose could be further refined by (a) centering the price relatives
within the period during which the expenditure shares are calculated (e.
Calculation of economic rents and economic rent price relatives
using the normalized rents (1 above) and the adjustments mentioned in 3, 4, 5, and 6 above.
The Fisher-Ideal price relative
is simply the geometric mean of the Laspeyres and Paasche price relatives
, that is,
The effect of the functional form on the calculation of the price relatives
at the elementary aggregate level, the area in which substitution is most likely to be observed, is discussed by Brent Moulton on pages 13-24, this issue.
Individual price relatives
are aggregated by means of the Laspeyres formula using export value weights.