Chained dollars is a method of adjusting real dollar amounts for inflation over time, so as to allow comparison of figures from different years.[1] The U.S. Department of Commerce introduced the chained-dollar measure in 1996. Chained dollars generally reflect dollar figures computed with 2000 as the base year.
The technique is so named because the second number in a pair of successive years becomes the first in the next pair. The result is a "chain" of weights and averages. [2] The advantage of using the chained-dollar measure is that it is more closely related to any given period covered and is therefore subject to less distortion over time.[3]
See also
References
- ^ Mark McCracken, Definition of Chained dollars TeachMeFinance.com. Accessed 2009.05.11.
- ^ U.S. Department of Energy, Chained Dollars, citing EIA, Annual Energy Review 1999.
- ^ Mark McCracken, op. cit.