A major fault with [the fixed-base-year] method is that in periods of substantial economic change it results in BEA growth estimates that are highly sensitive to the arbitrary choice of the base year. ...
Although BEA has always acknowledged these problems, they have gained greater urgency in recent years because of the spectacular fall in computer prices ...
[By using chain-weighting,] BEA will, in effect, use
I.
Great post, but chaining merits more than just a disclaimer here. After all, it was introduced to deal with some of the issues your post discusses.
I highly recommend reading this 1995 article explaining the introduction of the chain-weighting approach. It's short, accessible, and has several simple concrete examples.
A few excerpts:
... (read more)