how can I constract an aggregate index for three different price indices that start on different date?

Question

I have three price indices (the first starting in 1987, the second in 1991 and the third in 2000). I am trying to construct an aggregate index for all three. I am having trouble because of the different starting date for each index. The problem is that when the second series comes in then the index falls or rises sharply, and the same happens when the third series comes in as well.Could someone please help me out? Thanks

Answer 1

To combine across indices try using weighted averages, ie weighing every index differently. You should normalize by the sum of the weights to avoid sharp rises and falls. It should work fine then.

Answer 2

What I would do is to enter a constant value for the second two indices starting in 1987, running to 1991 and 2000 respectively. That way, you won't get a jump, and you won't have blanks in your spreadsheet.

I would use the first value you have available, and enter it for all previous years.