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The theoretical model for an input producer price index (PPI) based on the assumption of fixed technology and outputs. It requires the index to reflect changes in costs resulting from the purchase of the same inputs - although not necessarily the same mix of inputs - purchased under the same terms in order to produce the same output with the same technology.

In other words, changes in the index arise solely from changes in input prices and are not influenced by changes in outputs. Cost minimizing 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 Wednesday, January 4, 2006