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Oct 20

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Iran Regional GDP in Fixed-Base Year Method Between 2001 to 2010

Fixed Base Method

            In fixed base method, a particular year is generally chosen arbitrarily and the prices of the subsequent years are expressed as relatives of the prices of the base year. Sometimes instead of choosing a single year as the base, a period of a few years is chosen and the average price of this period is taken as the base year’s price. The year which is selected as a base should be normal year or in other words, the price level in this year should neither be abnormally low nor abnormally high. If an abnormal year is chosen as the base, the price relatives of the current year calculated on its basis would give misleading conclusions. For example, a year in which war was at its peak, say the year 1965, is chosen as a base year, the comparison of the price level of the subsequent years to the prices of 1965 is bound to give misleading conclusions. The reason is that the price level in the year 1965 was abnormally high. In order to remove this difficulty associated with the selection of a normal year, the average price of a few years is sometimes taken as the base price. The fixed base method is used by the Government in the calculation of national index numbers.

In Fixed Base,
                        Price relative for current year
                        or                                     

Example:
            Find index numbers for the following data taking 1980 as base year.

Years

Price

Solution:
           

Year

Price

Index No’s as base

From: www.emathzone.com

____________________________________________________

For the first time in the framework of Iran economy national and regional GDP based on fixed-base year by use of two different method (Paasche & Laspeyers Formula) between 2001 to 2010 have been calculated and their results are ready to use in  two distinct book.

For  extra information please follow these addresses.

 

Iran Real Regional GDP (Based on Paasche Formula)

Iran Real Regional GDP (Based on Laspeyers Formula)

Permanent link to this article: http://www.mfanni.com/iran-regional-gdp-in-fixed-base-year-method/

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