1. bookVolume 11 (2022): Issue 2 (May 2022)
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
access type Open Access

An Application of Index Number Theory to Interest Rates: Evidence from Selected Post-Soviet Countries

Published Online: 30 Apr 2022
Volume & Issue: Volume 11 (2022) - Issue 2 (May 2022)
Page range: 165 - 186
Received: 14 Sep 2020
Accepted: 27 Apr 2021
Journal Details
License
Format
Journal
eISSN
2336-9205
First Published
11 Mar 2014
Publication timeframe
3 times per year
Languages
English
Abstract

In this paper, we use index number theory to decompose changes in total interest rate due to changes in the interest rate component and the weight component. We discuss the optimal calculation of a binary index using axiomatic index number theory. Based on this theory we compare alternative indexes and as a result, we choose the Marshall-Edgeworth index because most axioms are satisfied by this index. Comparing the results of binary periods decomposition, we conclude that the differences are not significant when we apply different indices. For multiple period comparison, we suggest using the chain index because it allows accounting for the weights evolution during the whole period. In addition, we derive a formula that could be useful for explaining the differences between chain and direct indexes when we produce multiple period comparison.

Keywords

JEL Classification

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