Why is Chain Volume Measures adopted in the compilation of GDP?

Under the constant price method, the price structure of a base year is used as weights for aggregating the volumes of components in compiling the volume measure of GDP; however, for periods that are distant from the base year, the price structure become less relevant. With rapid changes in the economy of Macao, the constant price method is insufficient to reflect the actual conditions of the economy. Taking into account the international recommendations, chain volume measures are adopted to compute the volume change of GDP, where the price structure of the preceding year is used as weights to compile the volume measures of GDP of the current year. As the price structures of two consecutive years are similar, chain volume measures can better reflect the real changes of GDP.

Geometric Mean

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