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The theoretical model for an output producer price index (PPI) based on the assumption of fixed technology and inputs. It requires the index to reflect changes in revenue resulting from the sale of the same products - although not necessarily the same mix of products - produced under the same circumstances and sold under the same terms.

In other words, changes in the index arise solely from changes in output prices and are not influenced by changes in inputs. Revenue maximizing behaviour is assumed on the part of the producer.

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


Statistical Theme: Prices and purchasing power partities

Created on Tuesday, February 18, 2003

Last updated on Friday, December 2, 2005