and behaviour of the various kinds of index number that are, or might be, used for CPI purposes. In principle, it is necessary to settle what type of index to calculate before going on to consider the best way in which to estimate it in practice, taking account of the resources available. 1.6 The main topics covered in this chapter are as follows: –the origins and uses of CPIs; –basic index number theory, including the axiomatic and economic approaches to CPIs; –elementary price indices and aggregate CPIs; –the transactions, activities and
; –they may produce them themselves for their own consumption; –they may receive them as payments in kind through barter transactions, particularly as remuneration in kind for work done; –they may receive them as free gifts, or transfers, from other economic units. 3.8 The broadest concept of consumption for CPI purposes would be a price index embracing all four categories of consumption goods and services listed above. This set of consumption goods and services may be described as total acquisitions . Total acquisitions are equivalent to the total
data. When such data are being collected, therefore, it is important to recognize that they can be used for PPPs as well as CPIs. PPPs are essentially international deflators which are analogous to the inter-temporal deflators needed for the national accounts of a single country. Thus, while the processing and aggregation of the basic data for CPI purposes should be determined by the needs of the CPI itself, it is appropriate to take account of the requirements of these other kinds of price indices at the data collection stage. There may be important economies of
Introduction 8.1 In Chapter 3 it was mentioned that for national accounts and CPI purposes, it will be useful or necessary to have a decomposition of the residential property price index (RPPI) into two components: a quality adjusted price index for structures and a price index for the land on which the house is built. The present chapter outlines how hedonic regression can be utilized to derive such a decomposition. Hedonic regression methods were discussed in Chapter 5 . 8.2 Some economic reasoning will be helpful to derive an appropriate hedonic
methodology here but simply to note that PPPs create another demand for basic price data. When such data are being collected, it is important to recognize that they can be used for PPPs as well as CPIs. PPPs are essentially international deflators that are analogous to the intertemporal deflators needed for the national accounts of a single country. Thus, while the processing and aggregation of the basic data for CPI purposes should be determined by the needs of the CPI itself, it is appropriate to take into account the requirements of these other kinds of price indices at