Teaching Chain-Weight Real GDP Measures

Miles Cahill ()
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Miles Cahill: Department of Economics, College of the Holy Cross

No 206, Working Papers from College of the Holy Cross, Department of Economics

Abstract: In 1996, the Bureau of Economic Analysis (BEA) changed the method used to calculate measures of real GDP from a Laspeyres or Paasche index to a Fisher ideal index, also called a chain-weight index. Even though this is a significant change in approach and has resulted in extensive revisions of reported statistics, many intermediate-level textbooks treat this topic casually, if at all. This article presents two applications in which this topic can be explored more thoroughly, with the help of spreadsheet software. One exercise introduces the concept of the chain-weight index by comparing it to Laspeyres, Paasche and ideal indexes with the use of utility analysis. The second exercise is a step-by-step process to calculate chain-weight index statistics.

Keywords: Teaching methods; Chain-weighting; GDP (search for similar items in EconPapers)
JEL-codes: A22 E10 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2002-12
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Published in Journal of Economic Education, Vol. 34:3, Summer 2003, pp. 224-234.

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