IMF Working Papers

IMF Working Papers
Journal
Publisher:
International Monetary Fund
ISSN:
1018-5941
The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
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Fixed Base Year vs. Chain Linking in National Accounts : Experience of Sub-Saharan African Countries

Fixed Base Year vs. Chain Linking in National Accounts : Experience of Sub-Saharan African Countries
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Journal Issue
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Volume/Issue:
2016/133
Series:
IMF Working Papers
Author(s):
Robert Dippelsman, Venkat Josyula, and Eric Métreau
Publisher:
INTERNATIONAL MONETARY FUND
Published Date:
July 2016
DOI:
http://dx.doi.org/10.5089/9781475569339.001
ISBN:
9781475569339
ISSN:
1018-5941
Page:
22
There are two approaches for producing volume estimates of GDP, fixed base year and annual chaining. While most advanced economies have adopted the chain-linked approach in the past twenty years, some African countries are hesitant to do so, in part because of the computation and data requirements, and resource constraints. What difference does this make for the accuracy of the growth rates? From detailed data provided by three Sub-Saharan African countries we run simulations and conclude that the differences of GDP growth using the two approaches are small and do not behave in the consistent way found in advanced countries. We also show that weak deflation techniques and overly aggregated classifications used to derive volume measures can lead to large distortions. We conclude that improved deflation techniques and detailed classification should be addressed before adopting chain linking.
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