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Previous year price basis: Aggregation and linked difference

Wolfgang Nierhaus
ifo Institut für Wirtschaftsforschung, München, 2007

ifo Schnelldienst, 2007, 60, Nr. 06, 29-33

In spring 2005 the Federal Statistical Office readjusted its calculation of real GDP from a fixed price basis to a previous year price basis. A central problem is the non-additivity of linked volume values, that is, the sum of linked partial aggregates deviates, as a rule, from the value of the linked total aggregate. In general, a linked difference (residue) arises. This article examines the calculation procedure and its associated problems.

JEL Classification: C820,E100

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ifo Institut für Wirtschaftsforschung, München, 2007