sub-indices and the removal of obsolete ones.
In order to be able to chain the old and the new series, an overlappingperiod (k) is needed in which the index has to be calculated using both the old and the new set of weights.
A chain index may have two or more links. In each link, the index may be calculated as a fixed weight index using equation 9.1 , or indeed using any other index formula. The chaining period may be a month or a year, provided the weights and indices refer to the same period.
Chaining is intended to ensure that the individual
measure as much as possible the same concept. Backward data are obtained by multiplying the values of the old series by the ratio between new and old levels in the overlapperiod. In the case of quarterly series, the overlapperiod can be either the first quarter or the first year in the new series. In the former case, the new series will show the same quarter-to-quarter rates of change of the old series in the backward period. The underlying assumption is that the impact of the changes in the overlapperiod remains the same in the backcasting period. With an annual
adjustments of prices between the old and new popular varieties more difficult. The differences in quality are likely to be beyond those that can be attributed to price differences in some overlapperiod, as one variety is in the final stages of its life cycle and the other in its first. Furthermore, the technical differences between the varieties are likely to be of an order that makes it more difficult to provide reliable, explicit estimates of the effect of quality differences on prices. Finally, the (quality-adjusted) price changes of very old and very new varieties are