#1996-010C "To Chain or Not to Chain Trade-Weighted Exchange Rate Indexes"
by Cletus C. Coughlin, Patricia S. Pollard, and Jerram C. Betts

Revised February 1997

With the advent of chain calculations for the U.S. national income and product accounts, it seems reasonable to contemplate using the chain approach for other indexes, such as trade-weighted exchange rates (TWEXs). A fundamental criticism of measuring the growth of gross domestic product by a fixed-base-year method is that the estimates are highly sensitive, especially when the economy?s structure is changing dramatically, to the arbitrary choice of the base year. More...

PUBLISHED: The International Trade Journal, Fall 1998