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Title: A new proposal for the construction of a multi-period/multilateral price index Authors:  Consuelo Nava - University of Turin (Italy) [presenting]
Maria Grazia Zoia - Catholic University of the Sacred Heart - Milan (Italy)
Abstract: A price index providing a novel and effective solution both in a multi-period and a multilateral framework is devised within the stochastic framework. The derivation of the index, denoted MPL index, is obtained as a solution to an optimization problem which requires values and quantities of the commodities, not prices. Depending on the choice of the objective function to optimize, some of the most popular price indexes, namely Laspeyeres, Paasche, Marshall-Edgeworth and Walsh, arise as a special case. The MPL reference basket is the union of the intersections of the baskets of all periods/countries in pairs. As such, it provides broader coverage than usual indexes. Index closed-form expressions and updating formulas are provided and its properties investigated. Last, applications of the MPL index with both real and simulated data provide evidence of its good performance. In particular, a comparison between the MPL and the country/time-product dummy index highlights how the former proves to be more efficient with respect to the latter.