Decomposing the Changes of the Divisia Price Index: Application to Inflation in the Philippines

• Main Author: FUJII, Tomoki
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2011
• Subjects: Divisia price index; preference change; decomposition; Philippines; Asian Studies; Macroeconomics
• Online Access: https://ink.library.smu.edu.sg/soe_research/1263; https://ink.library.smu.edu.sg/context/soe_research/article/2262/viewcontent/divisia_06_2011.pdf
• Institution: Singapore Management University

We propose a method to decompose the logarithmic change of the Divisia price index into the pure price effect, the preference effect and the substitution effect. Our empirical results in the Philippines shows the effects of preference change on the Divisia price index are heterogeneous but positive...