# Concepts

## Base year

Base year refers to the base point in time of a time series. Normally, years divisible evenly by five are used as base years. In releases base year is noted, for example, as 2010 = 100 or 2015 = 100. The mean of the index point figures of a base year is 100. For example, in monthly indices the the index point figures of the months of the base year disclose the distribution of an examined variable between different months.

#### Statistics using the definition

#### Validity of the definition

- Valid until (31 December 2078)

#### Source organisation

- Tilastokeskus

#### Related concepts

The normal base period in national accounts is one year. Constant price data are expressed in base year prices. The base year can either be fixed (i.e. changed every five years) or variable, meaning that the previous year's weights are used. Variable base year (i.e. the previous year) is recommended for use in constant price calculations.

There is an important conceptual difference between base year and reference year. Any year can be assigned as reference year without necessitating a change of weights (in price and volume series), but the weights used in a series are always those of the base year. One can assign any year in an index the value of 100 - or use data for a year of one's choosing as the level to which a volume series is linked to - without having to change the weights. This entails the use of a reference year.

ESA 1995 10.64.- 10.67.:

Chain indices that use Laspeyres volume indices to measure changes in volume and Paasche price indices to measure year to year price movements provide acceptable alternatives to Fisher indices.

Although the preferred measure of volume and price is a chain index, it must be recognised that the lack of additive consistency can be a serious disadvantage for many types of analysis.

It is therefore recommended that disaggregated constant price data, i.e. direct valuation of current quantities at base-year prices, are compiled in addition to the chain indices for the main aggregates.

Estimating accounts data in constant prices has to be done at the finest level of detail possible if the data are to be consistent within the framework of an integrated system of price and volume measures. The supply and use tables form the central, conceptual and statistical framework for all the measures at constant prices. Additional data are found in supplementary tables.

Constant price series have nevertheless to be rebased in the course of time. The ESA has adopted the principle of changing the base year every five years as from 1995. When the base year is changed it is customary to link the data on the old base to the date on the new base rather than to carry the rebasing backwards. When the base year is updated additivity is lost as a result of linking.

When base year values are extrapolated by chain volume indices, it will have to be explained to users why there is no additivity in the tables.

The non-additive "constant price" data is published without any adjustment. This method is transparent and indicates to users the extent of the problem.

This does not preclude the possibility that there may be circumstances in which compilers may judge it preferable to eliminate the discrepancies in order to improve the overall consistency of the data.

#### Statistics using the definition

#### Topic

#### Validity of the definition

- Valid until (31 December 2078)

#### Source organisation

- EU

#### Related concepts

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