<abstract xmlns="http://www.w3.org/1999/xhtml"><p>There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally axiomatic tests are defined for a fixed universe. We propose five tests explicitly formulated for a dynamic item universe, and motivate them both from the perspectives of a cost-of-goods index and a cost-of-living index. None of the indices that are currently available for making use of scanner data satisfies all the tests at the same time. The set of tests provides a rigorous diagnostic for whether an index is completely appropriate in a dynamic item universe, as well as pointing towards the directions of possible remedies. We thus outline a large index family that potentially can satisfy all the tests.</p></abstract>

There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally axiomatic tests are defined for a fixed universe. We propose five tests explicitly formulated for a dynamic item universe, and motivate them both from the perspectives of a cost-of-goods index and a cost-of-living index. None of the indices that are currently available for making use of scanner data satisfies all the tests at the same time. The set of tests provides a rigorous diagnostic for whether an index is completely appropriate in a dynamic item universe, as well as pointing towards the directions of possible remedies. We thus outline a large index family that potentially can satisfy all the tests.

Tests for Price Indices in a Dynamic Item Universe

Journal of Official Statistics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Tests for Price Indices in a Dynamic Item Universe"}

There is generally a need to deal with quality change and new goods in the consumer price index due to the underlying dynamic item universe. Traditionally...

Tests for Price Indices in a Dynamic Item Universe

Published Online: Sep 09, 2019

Page range: 683 - 697

Received: Nov 01, 2018

Accepted: May 01, 2019

DOI: https://doi.org/10.2478/jos-2019-0028

Keywords
Axiomatic test, cost of goods, cost of living, quality change, new goods

© 2019 Li-Chun Zhang et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Tests for Price Indices in a Dynamic Item Universe

Published Online: Sep 09, 2019

Page range: 683 - 697

Received: Nov 01, 2018

Accepted: May 01, 2019

DOI: https://doi.org/10.2478/jos-2019-0028

KeywordsAxiomatic test, cost of goods, cost of living, quality change, new goods

© 2019 Li-Chun Zhang et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Axiomatic test, cost of goods, cost of living, quality change, new goods