The introduction of the previous-year price basis in German National Accounts: Consequences for business-cycle analysis

The real gross domestic product (GDP), the most important indicator of economic activity and growth, has up to now been published in the German National Accounts (VGR) at constant prices of a base year (fixed price basis). Following the decision of the European Commission of 30 November 1998, the concept of the previous-year price base for GDP estimates will be introduced in the next VGR revision this spring. This article examines the new calculation method, the reason for the system change and some consequences of the new calculation for business-cycle analysis.