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FACTOR REVERSAL TEST

Statistics Directorate    
French Equivalent: Test de réversibilité par rapport aux facteurs

Definition:
The factor reversal test requires that multiplying a price index and a volume index of the same type should be equal to the proportionate change in the current values (e.g. the “Fisher Ideal” price and volume indexes satisfy this test, unlike either the Paasche or Laspeyres indexes).

Context:
Suppose the roles of the prices and quantities in a price index are reversed to yield a quantity index of exactly the same functional form as the price index. The factor reversal test used under the axiomatic approach requires that the product of this quantity index and the original price index should be identical with the proportionate change in the value of the aggregate in question.

Also known as the “product test”.

ILO, IMF, OECD, Eurostat, UNECE, World Bank, 2004, Producer Price Index Manual: Theory and Practice, International Monetary Fund, Washington DC

http://www.imf.org/external/np/sta/tegppi/index.htm.

Source Publication:
SNA 16.24.

Hyperlink:
http://esa.un.org/unsd/sna1993/introduction.asp

Statistical Theme: National accounts

Created on Tuesday, September 25, 2001

Last updated on Friday, July 08, 2005