Description

As from issue number 50, the Series of Economic Studies of the Central Bank of Chile will be called Studies in Economic Statistics.

The use of chain-linked methods reduces significantly the problem of price structure obsolescence present in fixed base environments. However, price updating introduces a new dimension that may produce confusion if not accounted for. Probably the most notorious difficulty generated by the introduction of chain-linked indices has been that an aggregate is not the direct sum of its components, therefore, making it harder to explain its behaviour. This document develops a framework to understand, from the industry perspective, the elements that affect the behaviour of an aggregate obtained using the annual overlap chain-linking method. In the process, an exact expression for the industry contribution to the quarterly GDP growth is presented that is consistent with the annual contribution and that only requires the real quarterly figures and the nominal annual values.