2. A brief history of indices

Although the word "index" was not adopted in economics until the early twentieth century, it is possible to calculate the "consumer price index" for a very long period using data collected from different sources. In this lesson we will study the history of price indices from as far back as the days of Charlemagne around 850 AD through to the late nineteenth century.

We then move on to look at how the cost-of-living index was created in Finland and see who is behind today's most widely used formulae of index calculation. In this connection we also learn about the concepts of inflation and deflation.

To conclude our second lesson, we briefly review the history of other widely used indices in Finland and examine the patterns of inflation in Finland and Sweden before the First World War.