Definition of Laspeyres Index

Definition: A price index following a particular algorithm.

It is calculated from a set ("basket") of fixed quantities of a finite list of goods. We are assumed to know the prices in two different periods. Let the price index be one in the first period, which is then the base period. Then the value of the index in the second period is equal to this ratio: the total price of the basket of goods in period two divided by the total price of exactly the same basket in period one.

As for any price index, if all prices rise the index rises, and if all prices fall the index falls.

Terms related to Laspeyres Index:

• Price Index
• Paasche Index
• The Fisher Index

About.Com Resources on Laspeyres Index:

• What Is Inflation?
• Should We Adjust Prices For Inflation?
• Cost-Push Inflation vs. Demand-Pull Inflation

Writing a Term Paper? Here are a few starting points for research on Laspeyres Index:

Journal Articles on Laspeyres Index:

• The Substitution Bias of the Laspeyres Price Index
• On the statistical objective of a Laspeyres' Price Index
• Laspeyres and his Index