engleski

Correction of chain-linking method by means of Lloyd-Moulton-Fisher-Tornqvist index on Croatian GDP data

National statistical agencies of European Union use chain-linking method in order to achieve as best as possible decomposition of GDP. The main advantage of this method is its simplicity by which it can be applied in practice, what makes it particularly attractive under circumstances when GDP has to be compiled on due time. By this method transformation-substitution effect – inherent to rational producers and consumers, has been implicitly built into GDP compilation, what is prior assumption of normative economic theory, what on empirical (ex-post) ground gives more precise volume-price decomposition. In this paper, by means of constructing LMTF index and Fisher index derived from the previous one, suggestion is given how to improve chain linking method, due to the following reasons: a) it is theoretically restrictive), b) it gives only rough GDP decomposition onto volume and price and, what seems to be its main disadvantage, c) it gives additively inconsistent GDP.

transformation-substition effect, elasticity of substition, Lloyd-Moulton-Fisher-Tornqvist index , additive GDP consistency

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