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Consistent with the methodology applied in the Australian National Accounts (ANA), TSA chain volume estimates are derived using a combination of chain Laspeyres price indexes and implicit price deflators. Key concepts for this approach are described below.
Price deflation – a measure of the price component of the current price value is obtained (usually in the form of a price index) and is divided into the current price value in order to re-value it in the prices of the previous year.
Implicit price deflator – is the ratio of the current price value of a series to its corresponding chain dollar value, multiplied by 100. Therefore, the tourism gross value added implicit price deflator is the ratio of the current price value of tourism value added to its corresponding chain volume value. This represents the net weighted prices of tourism output less weighted prices of intermediate use.
Reference year – chain volume estimates need to be expressed in terms of the values of a particular reference year. The reference year for an index series is equal to 100, that is, the chain volume estimates are set equal to the current price values. The reference year chosen for the tourism chain volume estimates is the previous financial year (t-1). This reference year ensures use of the most recent data available for sub-division level industry value added from unpublished ANA’s supply-use tables as well as consistency with the key macroeconomic aggregates (e.g. GDP) published in the ANA’s annual estimates.
Volume indexes – measures growth in the volume of production and expenditures on products between any two periods of interest. Where there is more than one type of product, it is necessary to apply some kind of weighting. This is possible by valuing products at their prices in one or other period and dividing the total value of their combined production in the second period by that in the first. The same prices must be used for both periods to ensure the index reflects only changes in quantities produced. Chain linked volume indexes take account of changes to price relativities that occur from one year to the next. It is the price relativities that determine the weight given to each component of a volume index.
Non-additivity – additivity refers to an aggregate being the sum of its components. This only exists in volume index estimates when a fixed set of prices is used. As weights of a chain volume index change from year to year, chain volume indexes have no base period in the sense of a fixed weight index base period and therefore non-additivity exists in the chain volume measures. In the context of the tourism chain volume estimates, 'totals' have been chained separately based on deflating the aggregate current price values, rather than summing the component chain volume estimates. Therefore, it is not recommended to calculate the proportion tourism contributes to GDP or gross value added in chain volume terms.
For a full discussion of the issues involved in the introduction of annually re-weighted Laspeyres chain volume measures in the ANA refer to the information paper Chain Volume Measures in the Australian National Accounts (cat. no. 5248.0). The following sections outline how the methodology is applied to derive tourism chain volume estimates.
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