Comparing GDP in constant and in chained prices: Some new results

This papers framework for GDP in chained prices yields GDP in constant prices as a special case of
constant relative prices, i.e., these GDP measures differ only when relative prices change. The framework has a
novel additive procedure, counter to the prevailing view that GDP in chained prices is non-additive. This
procedure allows relative prices to change but when they are constant, components in chained and in constant
prices are equal, implying consistency with the additivity of GDP in constant prices. Finally, GDP conversion
from constant to chained prices removes the fixed baseby making the immediately preceding period the base,
i.e., continuous updatingand allows relative prices to change and, thus, removes the base-period dependence
and substitution bias of GDP in constant prices.