MORE ON LOG-CHANGE INDEX NUMBERS.

The article presents a comment by the author on the article "Ideal Index Numbers that almost satisfy the Factor Reversal Test," by Professor Kazuo Sato, published in the November 1974 issue of the journal "Review of Economics and Statistics." According to the author Sato analyzes the ratio of the product of the price and quantity indexes to the expenditure ratio, which the factor reversal test requires to be 1. This is called the logarithmic discrepancy of the factor reversal test and is noted as D. There are two separate equations for which the logarithmic discrepancy is considered as D_A and D_B. If the expenditure shares do not change very much, x_i - y, (where x and y are commodity shares of the i^th commodity), being close to zero for each i, the discrepancy D is very close to zero for most reasonable choices of f( ). But the author says that he rejected this choice because D is bounded under the specification (3) given in the article, for 0 <=x and Y <=1.