Testing the product test

Testing the product test

The product test asks the product of the volume and price index numbers to equal the corresponding value change. The literature treats the product test as a requirement. We treat it as a hypothesis, and we provide an empirical test. ► We treat the product test as a hypothesis to be tested. ► We pair...

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Bibliographic Details
Published in:Economics letters 2011-11, Vol.113 (2), p.157-159
Main Authors: Brea, H., Grifell-Tatjé, E., Lovell, C.A.K.
Format: Article
Language:eng
Subjects:
Economic theory
Empirical research
Index numbers
Measurement
Price index
Price indexes
Product test
Product testing
Profitability
Profitability change
Studies
Valuation
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Summary:The product test asks the product of the volume and price index numbers to equal the corresponding value change. The literature treats the product test as a requirement. We treat it as a hypothesis, and we provide an empirical test. ► We treat the product test as a hypothesis to be tested. ► We pair Malmquist volume indexes with Fisher price indexes. ► We test the hypothesis using US agriculture panel data. ► We fail to reject the hypothesis for output and input indexes. ► We reject the hypothesis for productivity and price recovery indexes.
ISSN:0165-1765
1873-7374