<p>For a "stable" base, you can use any average of previous years that "makes sense", that is an average with minimal variance and give an explicit explanation
If the last year doesn't deviate from that average then it is unnecessary </p>

<p>To demonstrate the momentum effect you can use a moving average, in that case there is no meaning for the base and edge cases are normalized </p>

CC BY-SA 4.0
2018-09-14T10:07:55.143Z
2018-09-14T10:07:55.143Z
Guy Louzon
<p>I am calculating YoY change in macroeconomic variables (inflation, industrial production etc.). However this growth is distorted by low base of last year. Currently I am using 2 year cagr to adjust for the base effect. Is there a better statistical method to separate the base effect and momentum. </p>

<statistics>
Separation of base and momentum effect
Amit
# Separation of base and momentum effect

(Asked by: username_0 on 2018-08-29)

I am calculating YoY change in macroeconomic variables (inflation, industrial production etc.). However this growth is distorted by low base of last year. Currently I am using 2 year cagr to adjust for the base effect. Is there a better statistical method to separate the base effect and momentum.

**Tags:** statistics

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## 1 answers

### Answer by username_1 on 2018-09-14. Score: 0

For a "stable" base, you can use any average of previous years that "makes sense", that is an average with minimal variance and give an explicit explanation
If the last year doesn't deviate from that average then it is unnecessary

To demonstrate the momentum effect you can use a moving average, in that case there is no meaning for the base and edge cases are normalized


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