Chained dollars: Difference between revisions
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'''Chained dollars''' is a method of adjusting real dollar amounts for [[inflation]] over time, so as to allow comparison of figures from different years.<ref>Mark McCracken, [http://www.teachmefinance.com/Scientific_Terms/Chained_dollars.html Definition of Chained dollars] TeachMeFinance.com. Accessed 2009.05.11.</ref> The [[U.S. Department of Commerce]] introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2005 as the base year. |
'''Chained dollars''' is a method of adjusting real dollar amounts for [[inflation]] over time, so as to allow comparison of figures from different years.<ref>Mark McCracken, [http://www.teachmefinance.com/Scientific_Terms/Chained_dollars.html Definition of Chained dollars] TeachMeFinance.com. Accessed 2009.05.11.</ref> The [[U.S. Department of Commerce]] introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2005 as the base year. |
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The difference between chained dollars and the previous measure, constant dollars, is that while the latter is weighted by a constant basket of goods and services, chained dollars are weighted by a basket that changes from year to year so as to more accurately reflect spending. The basket is an average of the basket for that year and the following year. |
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The technique is so named because the second number in a pair of successive years becomes the first in the next pair. The result is a "chain" of weights and averages. <ref>U.S. Department of Energy, [http://www.eia.doe.gov/emeu/consumptionbriefs/recs/natgas/chained.html Chained Dollars], citing EIA, ''Annual Energy Review 1999''.</ref> The advantage of using the chained-dollar measure is that it is more closely related to any given period covered and is therefore subject to less distortion over time.<ref>Mark McCracken, ''op. cit.''</ref> |
The technique is so named because the second number in a pair of successive years becomes the first in the next pair. The result is a "chain" of weights and averages. <ref>U.S. Department of Energy, [http://www.eia.doe.gov/emeu/consumptionbriefs/recs/natgas/chained.html Chained Dollars], citing EIA, ''Annual Energy Review 1999''.</ref> The advantage of using the chained-dollar measure is that it is more closely related to any given period covered and is therefore subject to less distortion over time.<ref>Mark McCracken, ''op. cit.''</ref> |
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Revision as of 15:43, 16 June 2010
Chained dollars is a method of adjusting real dollar amounts for inflation over time, so as to allow comparison of figures from different years.[1] The U.S. Department of Commerce introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2005 as the base year.
The difference between chained dollars and the previous measure, constant dollars, is that while the latter is weighted by a constant basket of goods and services, chained dollars are weighted by a basket that changes from year to year so as to more accurately reflect spending. The basket is an average of the basket for that year and the following year.
The technique is so named because the second number in a pair of successive years becomes the first in the next pair. The result is a "chain" of weights and averages. [2] The advantage of using the chained-dollar measure is that it is more closely related to any given period covered and is therefore subject to less distortion over time.[3]
See also
References
- ^ Mark McCracken, Definition of Chained dollars TeachMeFinance.com. Accessed 2009.05.11.
- ^ U.S. Department of Energy, Chained Dollars, citing EIA, Annual Energy Review 1999.
- ^ Mark McCracken, op. cit.
External links
- Selected Per Capita Product and Income Series in Current and Chained Dollars (U.S. Bureau of Economic Analysis)
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