10.61 The construction of an integrated system of price and volume indices entails a deliberate choice as to the types of indices to be used.
10.62 The preferred measure of year to year changes in volume is a Fisher volume index which is defined as the geometric mean of the Laspeyres and the Paasche indices. Changes in volume over longer periods being obtained by chaining, i.e. by cumulating the year to year volume movements.
10.63 The preferred measure of year to year changes in prices is a Fisher price index. Price changes over long periods being obtained by chaining the year to year price movements.
10.64 Chain indices that use Laspeyres volume indices to measure changes in volume and Paasche price indices to measure year to year price movements provide acceptable alternatives to Fisher indices.
10.65 Although the preferred measure of volume and price is a chain index, it must be recognised that the lack of additive consistency can be a serious disadvantage for many types of analysis.
An aggregate is defined as the sum of its components. Additivity requires this identity to be preserved when the values of both an aggregate and its components in some reference period are extrapolated over time using a set of volume index numbers.
10.66 It is therefore recommended that disaggregated constant price data, i.e. direct valuation of current quantities at base-year prices, are compiled in addition to the chain indices for the main aggregates.
Estimating accounts data in constant prices has to be done at the finest level of detail possible if the data are to be consistent within the framework of an integrated system of price and volume measures. The supply and use tables form the central, conceptual and statistical framework for all the measures at constant prices. Additional data are found in supplementary tables.
Constant price series have nevertheless to be rebased in the course of time. The ESA has adopted the principle of changing the base year every five years as from 1995. When the base year is changed it is customary to link the data on the old base to the date on the new base rather than to carry the rebasing backwards. When the base year is updated additivity is lost as a result of linking.
10.67 When base year values are extrapolated by chain volume indices, it will have to be explained to users why there is no additivity in the tables.
The non-additive 'constant price' data is published without any adjustment. This method is transparent and indicates to users the extent of the problem.
This does not preclude the possibility that there may be circumstances in which compilers may judge it preferable to eliminate the discrepancies in order to improve the overall consistency of the data.