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dc.contributor.authorBenedictow, Andreas
dc.contributor.authorBoug, Pål
dc.date.accessioned2022-06-10T07:34:29Z
dc.date.available2022-06-10T07:34:29Z
dc.date.created2021-07-26T17:59:18Z
dc.date.issued2021-07-05
dc.identifier.citationEmpirical Economics. 2021, 1-14.en_US
dc.identifier.issn0377-7332
dc.identifier.issn1435-8921
dc.identifier.urihttps://hdl.handle.net/11250/2998240
dc.description.abstractA reasonable concept for the true trade price index in situations where low-price countries capture market shares from high-price countries is the average price paid by importers for the same quality of good or service from all exporting countries. However, decompositions of trade price indices are usually inexact in the sense that the average price used as the underlying aggregator formula is not exactly reproduced. In this paper, we compare analytically exact and inexact decompositions of trade price indices, paying particular attention to the bias in aggregate inflation occurring from applying the first-order Taylor series approximation and not the quadratic approximation lemma to a geometric average price. Our calculations, using the Norwegian clothing industry as an illustration, reveal that the bias in aggregate inflation over the sample period of 1997–2016 is quite substantial and as much as 0.6 percentage point in some years. We therefore conclude that the quadratic approximation lemma should be used in practice to exactly reproduce the underlying aggregator formula.en_US
dc.description.sponsorshipThis study was funded by Statistics Norway.en_US
dc.language.isoengen_US
dc.publisherSpringeren_US
dc.relation.ispartofseriesEmpirical Economics;62 (2022)
dc.rightsNavngivelse 4.0 Internasjonal*
dc.rights.urihttp://creativecommons.org/licenses/by/4.0/deed.no*
dc.subjectTrade price indicesen_US
dc.subjectExact decompositionsen_US
dc.subjectInexact decompositionsen_US
dc.subjectFirst- and second-order Taylor series approximationsen_US
dc.subjectQuadratic approximation lemmaen_US
dc.subjectBias in aggregate inflationen_US
dc.titleExact and inexact decompositions of trade price indicesen_US
dc.typePeer revieweden_US
dc.typeJournal articleen_US
dc.description.versionpublishedVersionen_US
dc.rights.holder© The Author(s) 2021en_US
cristin.ispublishedtrue
cristin.fulltextoriginal
cristin.qualitycode1
dc.identifier.doihttps://doi.org/10.1007/s00181-021-02078-4
dc.identifier.cristin1922707
dc.source.journalEmpirical Economicsen_US
dc.source.volume62en_US
dc.source.issue62en_US
dc.source.pagenumber1981–1994en_US


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