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base-weighted index


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A weighted average of prices or quantities, where the weights used are the quantities or the prices of the base period. Where pij and qij are the prices and quantities of N goods, i = 1, 2,…N, in period j, and t labels the latest period and 0 the base period, the base-weighted or Laspeyres price index is given by

PB = (Σipitqi0)/(Σipi0qi0)

and the base-weighted or Laspeyres quantity index is given by

QB = (Σipi0qit)/(Σipi0qi0).

Subjects: Economics.


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