Syllabus for Introduction to Price Indices

A price index gives a way to systematically condense information about many prices for a range of goods and services into a single value. Price indices are widely used to analyze and compare macroeconomic conditions over time, and have important implications for government policies.

The goal of this module is to provide an introduction to price indices, with an application to price indices for the inputs and outputs of production (producer price index), and for prices faced by consumers (consumer price index). By the end of the module, an individual should:

  1. Understand the reasons why price indices are compiled, and why they’re important.

  2. Be familiar with common index-number formulas and how to manipulate them.

  3. Have a basic understanding of the structure of a price index and its calculation.

This module is useful for both users and compilers of price indices with little prior knowledge of the uses and construction of a price index.

This module consists of self-directed readings, along with an assignment. In total, about 10 to 15 hours should be devoted for this module.

There are no prerequisites for this module, although individuals should be comfortable with basic algebra and simple mathematical arguments. An introductory course in macroeconomics is helpful.

Evaluation for this module is based on an assignment consisting of 20 multiple-choice/true-false questions that draw on material in the course content and readings. Collaboration on the assignment is welcomed, but each person must submit their own unique work. Passing this module requires at least a 65% on the assignment.

Readings for this module come from chapters 1, 2, 4, and 9 of the Producer Price Index Manual (ILO et al. 2004b) and/or the Consumer Price Index Manual (ILO et al. 2004a), published by the IMF (freely available on their website). As there is considerable overlap between these sources, the PPI manual is used as the main reference.

Please email one of the course instructors (either Steve Martin or Shaoxiong Wang or Anastasiia Nosach) if you have any questions, or need help with any of the course material or assignment.