The elasticity of substitution of superlative price indices
Working paper
Åpne
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http://hdl.handle.net/11250/180283Utgivelsesdato
2005Metadata
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- Discussion Papers [1002]
Sammendrag
Abstract:
The paper presents a method for computing the curvature implicit in the use of superlative price
indices. It extends the quadratic lemma and allows us to compute the elasticity of substitution of the
underlying preferences in the direction of the observed price change for the Törnqvist and the
quadratic mean of order r indices. It derives the expressions for the directional shadow elasticity of
substitution and applies the results to the Norwegian CPI data base.
Keywords: elasticity of substitution, superlative index, consumer price index (CPI).