Fisherindekser

Fisherindekser, or Fisher ideal price indices, are a class of price indices named after Irving Fisher. They measure changes in the overall price level between two periods by combining two staple indices—Laspeyres and Paasche—into a single measure that aims to capture substitution effects without fully committing to a fixed or current basket.

Construction and interpretation: In a fixed-basket setting, the Laspeyres index L uses base-period quantities, while the Paasche index P uses current-period quantities. The Fisher index is defined as the geometric mean F = sqrt(L × P). A simple numeric example: if L = 110 and P = 105, then F ≈ sqrt(110 × 105) ≈ 107.5. For time series, a chain Fisher index can be formed by multiplying successive period Fisher indices, or by computing a period-by-period Fisher index and chaining them.

Properties and advantages: The Fisher index lies between the Laspeyres and Paasche indices and tends to reduce substitution bias compared with Laspeyres and to avoid some of the bias of Paasche. It is homogeneous of degree one and is often viewed as a good compromise for measuring price changes when the basket of goods changes over time. The Fisher index is considered a superlative index, which makes it attractive for approximating a true cost-of-living index under evolving consumption patterns.

Limitations and use: Fisherindekser require price data for both base and current baskets, making data collection more demanding than single-basket indices. They can be more complex to compute, especially in chained form, and are not universally available in all national accounts datasets. Nevertheless, they remain a standard reference in theoretical discussions and in research on price level measurement.

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