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User:Bkwillwm/Chain drift

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Chain drift occurs in non transitive price indexes that are based on price and weight comparisons chained over time rather than direct indexes, a series of comparisons back to a single period. Under chain drift, all prices could return to their base period levels, but the index would not be equal to 1, so a change in prices would be implied when no change had occurred.[1]

When indexes are transitive, there is no chain drift and a chained index will equal its corresponding direct index.[1] When indexes are non-transitive, the choice of base period alters the resulting index.[2]

References

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  1. ^ a b de Haan & Krsinich 2012, p. 5.
  2. ^ de Haan & Krsinich 2012, p. 4.

http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/ge.22/2012/ITRYGEKS_deHaan_Krsinich_draft4.pdf