IDEAS home Printed from https://ideas.repec.org/p/phd/dpaper/dp_2011-09.html
   My bibliography  Save this paper

Implementing Weights for Additivity of Chained Volume Measures in the National Accounts

Author

Listed:
  • Dumagan, Jesus C.

Abstract

In current practice, subaggregate chained volume measures (CVMs) are neither weighted nor additive. This paper derives and implements "weights" for weighted subaggregate CVMs to be additive (i.e., their sum equals aggregate CVM) because without weights, nonadditivity permits the nonsensical result that a subaggregate CVM could exceed aggregate CVM. The weights are ratios of subaggregate to aggregate chained price deflators that exceed, equal, or fall below 1 depending on relative prices. CVMs in current practice are additive in the special case of constant relative prices when all weights equal 1. If relative prices change, weights do not equal 1 and their use avoids nonadditivity and the above nonsensical result. Empirically, they have widespread implications because CVM is now implemented in over 40 countries. Application to actual GDP data shows significant distortions of GDP composition due to nonadditivity of subaggregate CVMs from ignoring relative price changes. Among this paper`s formulas for additive weighted subaggregate CVMs, the one based on Paasche price and Laspeyres quantity indexes is recommended for practical implementation.

Suggested Citation

  • Dumagan, Jesus C., 2011. "Implementing Weights for Additivity of Chained Volume Measures in the National Accounts," Discussion Papers DP 2011-09, Philippine Institute for Development Studies.
  • Handle: RePEc:phd:dpaper:dp_2011-09
    as

    Download full text from publisher

    File URL: https://serp-p.pids.gov.ph/serp-p/download.php?d=4952&s=3
    Download Restriction: no

    References listed on IDEAS

    as
    1. Whelan, Karl, 2002. "A Guide to U.S. Chain Aggregated NIPA Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(2), pages 217-233, June.
    2. Dumagan, Jesus C., 2008. "Avoiding Anomalies of GDP in Constant Prices by Conversion to Chained Prices: Accentuating Shifts in Philippine Economic Transformation," Discussion Papers DP 2008-24, Philippine Institute for Development Studies.
    3. Diewert, W Erwin, 1978. "Superlative Index Numbers and Consistency in Aggregation," Econometrica, Econometric Society, vol. 46(4), pages 883-900, July.
    4. Dumagan, Jesus C., 2011. "Deriving Weights for Additivity of Chained Volume Measures in the National Accounts," Discussion Papers DP 2011-08, Philippine Institute for Development Studies.
    5. Balk, Bert M., 2004. "Decompositions of Fisher indexes," Economics Letters, Elsevier, vol. 82(1), pages 107-113, January.
    6. Fisher,Franklin M. & Shell,Karl, 1998. "Economic Analysis of Production Price Indexes," Cambridge Books, Cambridge University Press, number 9780521556231.
    7. Dumagan, Jesus C., 2010. "Computing Additive Chained Volume Measures of GDP Subaggregates," Discussion Papers DP 2010-16, Philippine Institute for Development Studies.
    8. Dumagan, Jesus C., 2002. "Comparing the superlative Tornqvist and Fisher ideal indexes," Economics Letters, Elsevier, vol. 76(2), pages 251-258, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dumagan, Jesus C., 2011. "Deriving Weights for Additivity of Chained Volume Measures in the National Accounts," Discussion Papers DP 2011-08, Philippine Institute for Development Studies.

    More about this item

    Keywords

    additivity; chained volume measure; Government Service Insurance System (GSIS); Social Security System (SSS); GDP in chained prices; chained index;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:phd:dpaper:dp_2011-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Aniceto Orbeta). General contact details of provider: http://edirc.repec.org/data/pidgvph.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.