paasche index การใช้

• It uses the Paasche Index Formula.
• Hence, one may think of the Paasche index as one where the numeraire is the bundle of goods using current year prices and current year quantities.
• The Laspeyres index tends to overstate inflation ( in a cost of living framework ), while the Paasche index tends to understate it, because the indices do not account for the fact that consumers typically react to price changes by changing the quantities that they buy.
• When applied to bundles of individual consumers, a Laspeyres index of 1 would state that an agent in the current period can afford to buy the same bundle as she consumed in the previous period, given that income has not changed; a Paasche index of 1 would state that an agent could have consumed the same bundle in the base period as she is consuming in the current period, given that income has not changed.