The true index of cost of living under general equilibrium: The numéraire matters
| Autor: | Antonio Manresa, Ana-Isabel Guerra, Ferran Sancho |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Normalization (statistics)
Economics and Econometrics Numéraire General equilibrium theory media_common.quotation_subject 05 social sciences Homothetic transformation Price index 0502 economics and business Econometrics Economics 050207 economics Cost of living Special case Welfare Finance 050205 econometrics media_common |
| Zdroj: | Economics Letters. 173:69-72 |
| ISSN: | 0165-1765 |
| DOI: | 10.1016/j.econlet.2018.09.016 |
| Popis: | The evaluation of welfare effects should be unambiguous. We show that the Konus true index of cost of living is numeraire dependent in general equilibrium. This may lead to ambiguous, even contradictory, interpretations of welfare results. To correct this problematic interpretational situation, we propose a normalization of the standard Konus index using an endogenously determined price index. We also provide a simplified expression of the index for the special case of homothetic utilities, which is especially relevant given their widespread use in numerical general equilibrium. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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