Additivity of national accounts reconsidered

Article type: Research Article

Authors: Balk, Bert M.^{a; b} | Reich, Utz-Peter^c

Affiliations: [a] Rotterdam School of Management, Erasmus University, Rotterdam, The Netherlands. E-mail: bbalk@rsm.nl | [b] Statistics Netherlands, The Hague, The Netherlands | [c] Mainz University of Applied Sciences

Abstract: It is well known that the use of chained indices in economic accounting systems leads to volume figures (deflated nominal values) that are inherently non-additive. This inconvenience for users is caused by a mathematical impossibility result. Recognizing this state of affairs, in this article a deflation method will be developed that uses chained indices of a certain functional form but leads to volume figures that exhibit additivity and can be nicely interpreted.

Keywords: National accounts, additivity, chained indices

DOI: 10.3233/JEM-2008-0303

Journal: Journal of Economic and Social Measurement, vol. 33, no. 2-3, pp. 165-178, 2008