Abstract
Mary F. Kokoski, Brent R. Moulton, and Kimberly D.
Zieschang. (1996) "Interarea Price Comparisons for
Heterogeneous Goods and Several Levels of Commodity
Aggregation."
We derive a general form of Törnqvist multilateral
(transitive) place to place index numbers and a new variant
of regression methodology for imposing transitivity while
minimally adjusting the initial system of bilateral index
comparisons. We show that when several levels of item
aggregation are to be published in a system of Törnqvist
interarea parities, the adjusted, transitive Törnqvist
parities at each level of aggregation preserve the
aggregation rule in the unadjusted data. Finally, the method
incorporates characteristics-based, hedonic quality
adjustment as an integral feature. We apply the method to a
subset of commodity price and expenditure data for the 44
areas of the United States covered by the Consumer Price
Index. In closing, we also discuss an application of the
method that makes time series and geographical comparisons
consistent with one another, and note that it permits
decentralization of calculation in a way that may have
distinct advantages for compiling international price
comparisons.
Last Modified Date: July 19, 2008
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