Aggregate Properties of Two-Staged Price Indices

The present paper contributes to the literature by looking at the empirical evidence of calculations of Laspeyres price indices formed from dierent elementary indices. For three German price statistics, disaggregate ocial data are analysed. Generalised means of price relatives are systematically calculated and plugged into the aggregate formula. The results point to widely dierent estimates between Laspeyres price indices based on the alternative elementary indices. There is a \price to be paid at the upper level for suboptimal index formula selection at the lower level. Thus, the need for two-staged price indices to be accurately constructed becomes obvious.