This work on index-number construction focuses on production indexes, including output and input deflators that can be used for constructing real output and real input. Fisher and Shell treat separately the different production units: the firm, the industry, and the economy, as well as the different forms of industrial organization: monopoly, monopsony, and competition. Only in the simplest cases is the appropriate theory isomorphic to that of the cost-of-living index because of the interlinkages among the various production units. A firm cannot always assume that the behavior of its competitors, suppliers, and customers will be unaffected by price changes and only in special cases can an industry take supply and demand conditions as given.
• Major contribution to economic theory by two of the best-known senior practitioners in the US, showing direction of bias in traditionally-calculated index numbers • Analysis of index numbers underlies the most important economic indexes, including the gross domestic product, the producer price index, and labour productivity • Will contribute to today's enormously important debate about recalculating the consumer price index and inflation rate
Preface; 1. Introduction; 2. Principles of price and quantity measurement: ouputs; 3. Comparative statics: outputs; 4. Principles of price and quantity measurement: inputs; 5. Comparative statics: inputs; 6. Aggregation; Appendix; References.
'Fisher and Shell have provided the economics profession with an interesting, thought-provoking book on a number of important measurement issues.' Journal of Economics