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MULTILATERAL INDICES: CONFLICTING APPROACHES?
Review of Income and Wealth, 2007This short paper focusses on an apparent conflict between two results from different approaches to the problem of finding multilateral index numbers. The impossibility theorem of Van Veelen (2002) is an axiomatic result that rules out the existence of a multilateral index that satisfies four modest requirements.
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Latent Multilateral Trade Resistance Indices: Theory and Evidence
Scottish Journal of Political Economy, 2015AbstractAnderson and van Wincoop (American Economic Review (2003), 69:106) make a convincing argument that traditional gravity equation estimates are biased by the omission of multilateral resistance terms. They show that these multilateral resistance terms are implicitly defined by a system of non‐linear equations involving all regions' GDP shares and
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The Theil-Tornqvist (TT) index is a well-known index for binary comparisons of cost-of-living and for comparisons of prices, real output and productivity. Caves, Christensen, and Diewert (CCD) propose a multilateral method based on a simple averaging procedure that is consistent and base-invariant.
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