The use of fixed weights not only tends to cause errors and revisions in real GDP and prices when base periods are updated, but the errors themselves are biased.
The advantages of the new indexes are particularly important for long-term time series, such as those presented in this issue of the Survey of Current Business, and for analyses of current economic conditions as the base period becomes out of date.
This article briefly reviews the advantages of BEA'S chain-type indexes for various types of analyses, explains the conceptual and empirical problems encountered when using chained-dollar estimates far from the base period, describes the time series BEA WHI publish, presents several sets of tables and estimates designed to assist analysts in using the NIPA chain-type estimates beginning with 1929, and discusses work that BEA is considering to further improve its chain-type indexes for the most recent quarters.
Low Ratio Base Periods, Start-up Operations, or Expansion of Foreign Investment.
(6) We commend the IRS for proposing alternative base periods and allowing taxpayers to elect retroactively to apply the proposed regulations to tax years affected by the temporary regulations.
ERGI is the amount of intercompany loans (related-group indebtedness) in the current year (which is an average of the beginning and end of the year amounts) in excess of the amount that would have been proportionate to the average allowable related-group indebtedness to CFCs during the five base period tax years.
To qualify for benefits, an individual must have (1) wage credits in two or more quarters of the base periods; (2) minimum total base-period wage credits equal to wages earned in the high quarter of the base period multiplied by 1.25; (3) high-quarter wage credits of $1,000; and (4) effective July 1, 1986, base-period wage credits in 15 or more weeks.
Beginning January 1, 1988, an individual's weekly benefit amount will be computed as 1/46 of the awages in the two highest quarters of the base period if the trust fund balance is equal to or greater than $90 million, or as 1/52 of the wages in the two highest quarters of the base period if the trust fund balance is less than $90 million.
the base-period qualifying wages were changed from 11/2 to 11/4 times the wages earned in the high quarter of the base period. The minimum high-quarter wage requirement of $1,144.01 still applies.
The month, year, or series of years from which the index measures changes is called the base period. We always set the index number for the base period at 100 and express values for other time periods as percentages of the base period.
Also, we want the base period to be fairly close to the present, i.e., we prefer a base of 1990-1994 to 1910-1914.
We generally use quantities as weights in price indexes and are concerned with whether the quantities are from the base period or the current period, or represent some average of the two.