IDEAS home Printed from https://ideas.repec.org/h/spr/sptchp/978-981-97-6305-4_8.html
   My bibliography  Save this book chapter

Chain Index

In: Price Index Numbers

Author

Listed:
  • Naohito Abe

    (Hitotsubashi University)

Abstract

The chain index, introduced by Alfred Marshall in 1887, calculates indices over multiple periods or regions by sequentially shifting the base period and multiplying the indices from each intermediate period. This method, praised by Irving Fisher in the early twentieth century, addresses issues with commodities changing over time and is expected to help narrow the gap between Laspeyres and Paasche indices. Chain indices, such as the chain Laspeyres and chain Paasche indices, can result in significant chain drift, especially with high-frequency data, leading to discrepancies between direct and chain indices. This drift occurs due to non-transitivity in standard indices and is exacerbated by product turnover and seasonal variations. While chain indices offer advantages in dealing with changing products, they also face theoretical and practical challenges, such as losing desirable properties like identity and monotonicity. Recent approaches like the GEKS method, which ensures transitivity by using the geometric mean of bilateral indices, aim to mitigate chain drift. However, when combined with rolling windows, even GEKS can exhibit chain drift. The use of chain indices requires careful consideration of their limitations and the specific context of their application.

Suggested Citation

  • Naohito Abe, 2025. "Chain Index," Springer Texts in Business and Economics, in: Price Index Numbers, chapter 0, pages 167-194, Springer.
    • Handle: RePEc:spr:sptchp:978-981-97-6305-4_8
    DOI: 10.1007/978-981-97-6305-4_8
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sptchp:978-981-97-6305-4_8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.