Econometrica: Apr 1960, Volume 28, Issue 2
Best Linear Index Numbers of Prices and Quantities
H. TheilThis article deals with the construction of price and quantity index numbers for an arbitrary number of periods (or georgraphical units) which satisfy the requirement that the total sum of squares of the discrepancies between true and index-constructed cross-values is minimized. Special attention is paid to the aggregation problem which arises when this method is applied to a group of commodities as well as to subgroups.
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