Abstract
This article deals with the construction of price and quantity index numbers for an arbitrary number of periods (or geographical units) which satisfy the requirement that the total sum of squares of the discrepancies between true and index-constructed cross-values is minimized. Special attention is paid to the aggregation problem which arises when this method is applied to a group of commodities as well as to subgroups.
This article first appeared in Econometrica, 28 (1960), 464–480. Reprinted with the permission of The Econometric Society.
This work was supported by the Office of Naval Research under Task NR 047-004 and will be included in the Reprint Series of the Stanford Institute for Mathematical Studies in the Social Sciences.
The author is indebted to Professor Kenneth J. Arrow of Stanford University, to Mr. P.J.M. van den Bogaard of the Econometric Institute of the Netherlands School of Economics, and to Mr. J. van IJzeren of the Technical University of Eindhoven for their valuable comments.
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References
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© 1992 Springer Science+Business Media Dordrecht
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Theil, H. (1992). Best Linear Index Numbers of Prices and Quantities. In: Raj, B., Koerts, J. (eds) Henri Theil’s Contributions to Economics and Econometrics. Advanced Studies in Theoretical and Applied Econometrics, vol 25. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2408-9_4
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DOI: https://doi.org/10.1007/978-94-011-2408-9_4
Publisher Name: Springer, Dordrecht
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