AXIOMATIC PRICE-INDEX THEORY - A SURVEY

This paper provides a survey of the so called 'axiomatic price (and quantity) index theory'. Within this theory a price index is a function of base period and comparison period prices and quantities, on which certain requirements (axioms and/or tests) are imposed. The main conclusions are (a) the requirement of circularity implies that price indices cannot depend on base period or comparison period quantities; (b) the evidence for choosing the Fisher price index as the ultimate index is not conclusive; (c) the use of Laspeyres and Paasche indices in official statistical systems can be legitimized.