Chained dollars
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 2009 as the base year.
Terms
Constant Dollars: weighted by a constant/unchanging basket/list of goods and services.
Chained Dollars: weighted by a basket/list that changes yearly to more accurately reflect actual spending. The basket is an average of the basket for successive pairs of years; example of paired years are 2010-2011, 2011-2012, etc.
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 continuous "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 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 Archived August 30, 2007, at the Wayback Machine, 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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