Base Effect
기저효과
The base effect is a statistical phenomenon in economic time series analysis whereby the same absolute change produces different percentage changes depending on the level of the base period. An unusually low base value makes even a modest absolute increase appear as a large growth rate, while a high base value can make a substantial absolute increase appear modest. It is an essential consideration when interpreting year-on-year (YoY) economic indicators, and becomes particularly salient after sharp economic fluctuations such as pandemics, financial crises, or commodity price shocks.
Sources
- Wikipedia (EN) Definition of base effect as a mathematical effect where a given percentage of a reference value is not equivalent to the same percentage of a much larger or smaller reference value; covers low base effect, high base effect, and its role in inflation and GDP measurement.
- Wikipedia (KO) Korean Wikipedia entry defining 기저효과 as the relationship between current inflation rates and the previous year's base period, where a low prior-year base produces deceptively high current rates.