MEASURING INFLATION THROUGH STOCHASTIC APPROACH TO INDEX NUMBERS FOR PAKISTAN

Zahid Asghar, Farhat Tahira

Abstract


This study attempts to estimate the rate of inflation in Pakistan through stochastic approach to index numbers which provides not only point estimate but also confidence interval for the rate of inflation. There are two types of approaches to index number theory namely: the functional economic approaches and the stochastic approach. The attraction of stochastic approach is that it estimates the rate of inflation in which uncertainty and statistical ideas play a major roll of screening index numbers. We have used extended stochastic approach to index numbers for measuring inflation by allowing for the systematic changes in the relative prices. We use CPI data covering the period July 2001--March 2008 for Pakistan.


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DOI: http://dx.doi.org/10.18187/pjsor.v5i2.42

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Title

MEASURING INFLATION THROUGH STOCHASTIC APPROACH TO INDEX NUMBERS FOR PAKISTAN

Keywords


Description

This study attempts to estimate the rate of inflation in Pakistan through stochastic approach to index numbers which provides not only point estimate but also confidence interval for the rate of inflation. There are two types of approaches to index number theory namely: the functional economic approaches and the stochastic approach. The attraction of stochastic approach is that it estimates the rate of inflation in which uncertainty and statistical ideas play a major roll of screening index numbers. We have used extended stochastic approach to index numbers for measuring inflation by allowing for the systematic changes in the relative prices. We use CPI data covering the period July 2001--March 2008 for Pakistan.


Date

2010-09-02

Identifier


Source

Pakistan Journal of Statistics and Operation Research; Vol 5. No. 2, July 2009



Print ISSN: 1816-2711 | Electronic ISSN: 2220-5810