Uniqueness of the numeraire and consistent valuation in accounting for real values

Article type: Research Article

Authors: Durand, René^a

Affiliations: [a] Industry Canada, 235 Queen Street, room # 1018 C, Ottawa, Ontraio, Canada K1A 0H5. Tel.: +1 613 954 3494; Fax: +1 613 941 3859; E-mail: [email protected]

Abstract: General equilibrium estimates of the real value of commodities and of their aggregates are consistent (comparable) only if based on a single numeraire. Current estimates of aggregates in national accounts are shown to be based on more than one numeraire and thus to be inconsistent and, in particular, to be non-additive, for whatever choice of index number formula used in their computation. Under a weak separability assumption, these aggregates may alternatively be viewed as physical volumes of macro commodities. As such, they need not satisfy the consistency requirement of the real value estimates. However, the existence of such macro commodities is dubious and would they exist, one could still question their usefulness for economic analysis.

Keywords: index numbers, separability, national accounting, real values, real expenditure, deflation

DOI: 10.3233/JEM-2004-0234

Journal: Journal of Economic and Social Measurement, vol. 29, no. 4, pp. 411-426, 2004