Correction of Chain-linking Method by Means of Lloyd-moulton-fisher-törnqvist Index on Croatian Gdp Data

National statistical agencies of European Union use chain-linking method to achieve the best possible decomposition of GDP. The main advantage of this method is its simplicity, thus it can be applied in practice, which makes it particularly attractive in the situation when GDP has to be compiled on due time. By this method transformation-substitution effect – inherent to rational producers and consumers, has been implicitly built into GDP compilation, which is prior assumption of normative economic theory. On empirical (ex-post) ground it gives more precise volume-price decomposition. In this paper, by means of constructing LMTF index and Fisher index derived from the previous one, it is suggested how to improve chain linking method, due to following reasons: a) it is theoretically restrictive), b) it gives only rough GDP decomposition into volume and price and, what seems to be its main disadvantage, c) it gives additively inconsistent GDP.