The Index Number Problem

Abstract

The purpose of national accounts is to compare economic parameters in time and space. However nominal values, which are the value of transactions between institutions, are not directly comparable in this way. They must be controlled for changes in the purchasing power of the transaction unit: money. This chapter investigates the procedures employed in this process, focusing on the recommendations of the SNA, namely the Geary-Khamis index and the chained Fisher index for comparisons in space and time. A theory of relativity of value is inferred, resulting from the necessity of working with commodity bundles as the standard of value in spatial and temporal comparisons. A scheme for integrating these two dimensions in one coherent system is proposed.