The various formula discussed so far assumed that the base period is any fixed period. the base period is the immediately preceding year of the current year. Moreover, the index of a given period on a given fixed base was not affected by changes in the relevant values of any other year. but in the chain base method, the date of each period is related with that of the immediately preceding period and not with any fixed period. this means that for the index of 2000 the base would be 1999 and for the index of 1999 the base would be 1998 and similarly of the index of 1998 the base would be 1997. such as index numbers are very useful in comparing current period date with the preceding periods date. fixed base index in such a case does not give an appropriate comparison, because all prices are based on the fixed base period which may be far away for the current period and the preceding period.
for constructing an index by the chain base method, a series of indexes are computed for each period with preceding period as the base. these indexes are knows as link index or link relatives.
The steps of calculating link relatives are Summarized below:
(1) Express the data of a particular period as a percentage of the preceding periods date. this is called the link relative.
(2) these link relatives can be chained together. this is done by multiplying the link relative of the current year by the chain index of the previous year and dividing the product by 100.
Chain index for current year= link relative of current year * chain index of previous year/100
The chain index is useful for long - tern comparison whereas link relatives are used for a comparison with the immediately preceding period. the fixed base index compiled directly from the original data and the chain indexes compiled from link relatives give the same value of index provided there is only one commodity whose indexes are being constructed.
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The various formula discussed so far assumed that the base period is any fixed period. the base period is the immediately preceding year of the current year. Moreover, the index of a given period on a given fixed base was not affected by changes in the relevant values of any other year. but in the chain base method, the date of each period is related with that of the immediately preceding period and not with any fixed period. this means that for the index of 2000 the base would be 1999 and for the index of 1999 the base would be 1998 and similarly of the index of 1998 the base would be 1997. such as index numbers are very useful in comparing current period date with the preceding periods date. fixed base index in such a case does not give an appropriate comparison, because all prices are based on the fixed base period which may be far away for the current period and the preceding period.
for constructing an index by the chain base method, a series of indexes are computed for each period with preceding period as the base. these indexes are knows as link index or link relatives.
The steps of calculating link relatives are Summarized below:
(1) Express the data of a particular period as a percentage of the preceding periods date. this is called the link relative.
(2) these link relatives can be chained together. this is done by multiplying the link relative of the current year by the chain index of the previous year and dividing the product by 100.
Chain index for current year= link relative of current year * chain index of previous year/100
The chain index is useful for long - tern comparison whereas link relatives are used for a comparison with the immediately preceding period. the fixed base index compiled directly from the original data and the chain indexes compiled from link relatives give the same value of index provided there is only one commodity whose indexes are being constructed.
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Sort ↓ Add your comment A cahain index is written is verry beautiful it’s verry helpfull and uncommon.. Keep it up
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$ 0.00 User's avatar Anowar90 Reply 16 hours ago A chain index is an index number in which the value of any given period is related to the value of its immediately preceding period (resulting in an index for the given period expressed against the preceding period = 100); this is distinct from the fixed-base index, where the value of every period in a time series is directly related to the same value of one fixed base period.
This index type is called a chain index because individual indices with previous period = 100 can be chained together by multiplying (and dividing by 100) all consecutive indices, thus converting them into a series of indices with the first reference period = 100. This way, the consecutive values of the index numbers form a chain, as it were, from the first (reference) to the last period.
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$ 0.00 User's avatar Sonik63 Reply a day ago all prices are based on the fixed base period
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$ 0.00 User's avatar Fariza123 Reply a day ago Very rare topics, I always wanted to read about rare typs of items.Now I found one.Thank you for sharing us.
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$ 0.00 User's avatar DeepKnowledge Reply a day ago Congratulated guys for sharing uncommon article post. Go ahed
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$ 0.00 User's avatar Sharafat771 Reply a day ago Right information. The various formula discussed so far assumed that the base period is any fixed period.
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$ 0.00 User's avatar rabiul25447 Reply a day ago Nice written. Best of luck.
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$ 0.00 User's avatar Mobarok0210 Reply a day ago Thanks for sharing about chain indexes
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