An Alternative Decomposition of the Fisher Index

17 Pages Posted: 22 Apr 2004

See all articles by Winfried G. Hallerbach

Winfried G. Hallerbach

Fintelligence CCT; EDHEC Business School - Department of Economics & Finance

Date Written: February 2004

Abstract

Aside from the aggregated information provided by price and quantity indexes, there is growing interest in index decompositions that reveal the contribution of each index component to overall index change. In this paper, we derive a "natural" decomposition of the Fisher price index that is directly implied by its linear homogeneity in price relatives. The proposed "Euler" weights not only indicate the total contribution of each component to total index change but also reveal which component had the highest or lowest marginal impact. Our results can readily be generalized to any index that satisfies the linear homogeneity property.

Keywords: Fisher index, linear homogeneity, decomposition

JEL Classification: C43, C63, O11, O47

Suggested Citation

Hallerbach, Winfried George, An Alternative Decomposition of the Fisher Index (February 2004). Available at SSRN: https://ssrn.com/abstract=534264

Winfried George Hallerbach (Contact Author)

Fintelligence CCT ( email )

Salernes, Var 83690
France

EDHEC Business School - Department of Economics & Finance ( email )

France

HOME PAGE: http://https://www.edhec.edu/

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