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Definition: Factor reversal test
Category: Consumer Price Index
Suppose the prices and quantities in a price index are interchanged to yield a quantity index of exactly the same functional form as the price index. Under the axiomatic approach, the factor reversal test requires that the product of this quantity index and the original price index should be identical to the proportionate change in the value of the aggregate in question. http://www.ilo.org/public/english/bureau/stat/guides/cpi/index.htm
Source:
International Labour Organization (ILO), International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), Statistical Office of the European Communities (Eurostat), United Nations (UNECE), The World Bank, Consumer Price Index Manual: Theory and Practice, Geneva, August 2004
International Labour Organization (ILO), International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), Statistical Office of the European Communities (Eurostat), United Nations (UNECE), The World Bank, Consumer Price Index Manual: Theory and Practice, Geneva, August 2004
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