value index

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An index number of the total value of any economic aggregate at current prices: if pt is the price and qt the quantity concerned at time t, the value index is given by


where 0 is the base date. Where pt and qt are themselves index numbers, as is the case when dealing with aggregates, for example consumption, the value index Vt can be found as the product of a price and a quantity index; one of these must be base-weighted and the other current-weighted. Thus where there are n goods,that is, the product of a current-weighted or Paasche price index and a base-weighted or Laspeyres quantity index; or alternativelythat is, the product of a base-weighted price index and a current-weighted quantity index.

Subjects: Economics.

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