A Guide To U.S. Chain Aggregated Nipa Data

In 1996, the U.S. Department of Commerce began using a new method to construct all aggregate "real" series in the National Income and Product Accounts (NIPA). This method is based on the so-called "ideal chain index" pioneered by Irving Fisher. The new methodology has some extremely important implications that are unfamiliar to many practicing empirical economists; as a result, mistaken calculations with NIPA data have become very common. This paper explains the motivation for the switch to chain aggregation, and then illustrates the usage of chain-aggregated data with three topical examples, each relating to a different aspect of how information technologies are changing the U.S. economy. Copyright 2002 by The International Association for Research in Income and Wealth.