Quantity and Price Indexes in National Accounts

Abstract

This concise Report is intended to be a sequel to Professor Stone's Standardised System of National Accounts, also published by O.E.E.C., several years ago. While there are a number of connecting links between the two studies, the emphasis and manner of exposition are notably different. Professor Stone's aim here is to expound the application of Laspeyres' and Paasche's index-numbers over the framework of aggregated commodity transactions— a task that he accomplishes with polished restraint and imaginative dexterity. Chapters I and II are mainly concerned to clear away possible misunderstandings as to what can and cannot be brought within the measuring rod he is wielding, given the present state of empirical knowledge. Chapter III develops the price/quantity dichotomy in various social accounting settings, and Chapter IV treads cautiously among the hazards of “ measuring “ or “ indicating “ quantitatively certain kinds of quality changes. Chapters V and VI deal respectively with problems of routing commodity flows and with the interesting difficulties connected with seasonal variation. The final chapters demonstrate the arbitrary nature of attempting to reduce an accounting system to a balance in constant prices, discuss the more general problems of choosing indicators, weights and a base-year, and list briefly the main types of index-number in use. There is a helpful Summary and some excellent advice on how to economise scarce statistical resources. While the Report is for the most part written in a clear literary style, the level of exposition varies a great deal. Passages in which any student familiar with the elements of index-number and national income accounting should feel completely at home alternate in several sections of Chapters II—VI with highly technical excursions into matrix algebra and demand theory.