TY - JOUR
AU - Feenstra,Robert C.
AU - Reinsdorf,Marshall B.
TI - Should Exact Index Numbers Have Standard Errors? Theory and Application to Asian Growth
JF - National Bureau of Economic Research Working Paper Series
VL - No. 10197
PY - 2004
Y2 - January 2004
DO - 10.3386/w10197
UR - http://www.nber.org/papers/w10197
L1 - http://www.nber.org/papers/w10197.pdf
N1 - Author contact info:
Robert C. Feenstra
Department of Economics
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-7022
Fax: 530/752-9382
E-Mail: rcfeenstra@ucdavis.edu
Marshall B. Reinsdorf
International Monetary Fund
E-Mail: MReinsdorf@IMF.org
M1 - published as Robert C. Feenstra, Marshall B. Reinsdorf. "Should Exact Index Numbers Have Standard Errors? Theory and Application to Asian Growth," in Ernst R. Berndt and Charles R. Hulten, editors, "Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches" University of Chicago Press (2007)
AB - In this paper we derive the standard error of a price index when both prices and tastes or technology are treated as stochastic. Changing tastes or technology are a reason for the weights in the price index to be treated as stochastic, which can interact with the stochastic prices themselves. We derive results for the constant elasticity of substitution expenditure function (with Sato-Vartia price index), and also the translog function (with TÃ¶rnqvist price index), which proves to be more general and easier to implement. In our application to Asian growth, we construct standard errors on the total factor productivity (TFP) estimates of Hsieh (2002) for Singapore. We find that TFP growth is insignificantly different from zero in any year, but cumulative TFP over fifteen years is indeed positive.
ER -