time series analyses

• A time series is a set of sequential measurements on a time series variable
• An index number is a number that measures the relative change in a set of measurements over time.
• A simple index number is the ratio of two values of a variable, expressed as a percentage
• The base period is the reference point used to calculate an index number
• To calculate the average rate of growth (or decline) of a phenomenon over n periods, one should apply the formula of geometric mean for chain index numbers
• When we have more than one input or output of goods we need to find an aggregation method.
• The most popular aggregate index number formulae are:

  – Laspeyres

  – Paasche

  – Fisher
• The base weighted price index or Laspeyres’ price index
• The end year weighted price index or Paasche's price index
• The Laspeyres index concentrates on measuring price changes from a

  base year. It is called a base weighted index because we use the quantities

  purchased in the base year to weight the unit prices in both years.

  Keeping the quantities constant in this way means that any change in the

  calculated expenditure is due solely to price changes.
• the primary distinction is in the treatment of quantities: the Paasche Index uses current quantities, while the Laspeyres Index uses base period quantities. There is a third type of price index called the Fisher Index, which is a geometric mean of the Paasche and Laspeyres indices.