At present Statistics New Zealand updates the base year of the published constant price gross domestic product series (and the price "weights" used to combine components of aggregates) every 5 to 10 years. To this extent the existing constant price series are chainlinked, but with links many years apart. Statistical agencies in countries such as the United States and Australia now update these weights on an annual basis. These countries have found that doing this can provide more accurate measures of growth. Annual updating of weights or chainlinking is also a recommendation of the System of National Accounts 1993.
For these reasons Statistics New Zealand has formed chainlinked indexes for each currently published expenditure aggregate. Chainlinked indexes of the production-based constant price GDP series have not yet been complied.
The chainlinked indexes published in this report offer in some cases small gains in accuracy over the existing measures. Section 9 of this report estimates that for total expenditure on gross domestic product the annual increase in accuracy from chainlinking is between -1 and +3 percentage points. Larger improvements in accuracy are apparent for imports and gross fixed capital formation series where chainlinking, respectively, improved accuracy by up to 16 and 19 percentage points annually.
There also exist disadvantages to chainlinking. Comparisons between non-adjacent periods become more difficult to interpret. Chainlinking also causes loss of additivity in the series - the chainlinked value for an aggregate will not equal the sum of the chainlinked values of its components. This could pose serious difficulties for some users.
This report contains a full set of annually linked series for Gross Domestic Expenditure (GDE) and its components. These chainlinked indexes are, however, experimental series and it is proposed they will be updated periodically.
As experimental series, they have been released to report on work to date and to invite comments from users about the concepts and methods employed in their derivation.
The chainlinked indexes will remain experimental until a final decision has been made by Statistics New Zealand whether to produce them on an ongoing basis, and replace the existing constant price series.
Figure 1 compares the currently published base-weighted GDE in 1991/92 prices with a chainlinked Laspeyres GDE series, also in 1991/92 prices. Refer table F1, in section 10.
Figure 1 Comparison of growth rates for gross domestic expenditure
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