Consider the following two price index series:
Year 1995 = 100
2002 80
2003 86
2004 90
2005 94
Year 2000 = 100
2005 115
2006 121
2007 130
2008 133
Splice the two index series to form one continuous series with 1995 as the base year. The index for 2005 is:
94
115
81.74
80
To splice the two index series, we need to adjust the second index series (2000 = 100) to match the base year of the first index series (1995 = 100).
To do this, we need to calculate the adjustment factor. The adjustment factor is calculated by dividing the index value in the first series for the year where the two series overlap by the index value in the second series for the same year.
In this case, we need to adjust the second index series for the year 2005.
Adjustment factor = Index value for 2005 in first series / Index value for 2005 in second series
Adjustment factor = 94 / 115
Adjustment factor = 0.8174
Now we can adjust the second index series to match the base year of the first series by multiplying each index value by the adjustment factor.
Adjusted index value for 2005 in second series = Adjustment factor * Index value for 2005 in second series
Adjusted index value for 2005 in second series = 0.8174 * 115
Adjusted index value for 2005 in second series = 94.226
Therefore, the spliced index for 2005 is approximately 94.23.