Producer Price Index Manual: Theory and Practice ... - METAC

22. Treatment of Seasonal Products
Figure 22.4 Lowe, Young, Geometric Laspeyres, and Centered Rolling-Year Indices with Carryforward
Prices
1.9
1.8
1.7
Index
1.6
1.5
1.4
1.3
Plo PLO
Py PY
Pgl PGL
Pcry PCRY
1.2
1.1
1.0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37
Months
prices are on average a bit higher than their counterparts
that used carryforward prices, but the variability
of the imputed indices is generally a bit
lower. 42 The series that are listed in Table 22.24
are also plotted in Figure 22.5. It is apparent that
the Lowe, Young, and geometric Laspeyres indices
that use imputed prices still have a huge amount of
seasonality in them and do not closely approximate
their rolling-year counterparts listed in the last col-
42 For the Lowe indices, the mean for the first 31 observations
increases (with imputed prices) from 1.3009 to 1.3047
but the standard deviation decreases from 0.18356 to
0.18319; for the Young indices, the mean for the first 31
observations increases from 1.3186 to 1.3224, but the standard
deviation decreases from 0.18781 to 0.18730; and for
the geometric Laspeyres indices, the mean for the first 31
observations increases from 1.2949 to 1.2994, and the standard
deviation also increases slightly from 0.17582 to
0.17599. The imputed indices are preferred to the carryforward
indices on general methodological grounds: in high
inflation environments, the carryforward indices will be
subject to sudden jumps when previously unavailable products
become available.
umn of Table 22.24. 43 Consequently, without seasonal
adjustment, the Lowe, Young, and geometric
Laspeyres indices using imputed prices are not
suitable predictors for their seasonally adjusted
rolling-year counterparts. 44 As these indices stand,
they are not suitable as measures of general inflation
going from month-to-month.
J. Bean and Stine Type C or
Rothwell Indices
22.87 The final month-to-month index 45 that will
be considered in this chapter is the Bean and Stine
Type C (1924, p. 31) or Rothwell (1958, p. 72)
43 Note also that Figures 22.4 and 22.5 are similar.
44 In Section K, the Lowe, Young, and geometric
Laspeyres indices using imputed prices will be seasonally
adjusted.
45 For other suggested month-to-month indices in the seasonal
context, see Balk (1980a, 1980b, 1980c, 1981).
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