Measure up: A Better Way to Calculate GDP

By Thomas F Alexander, Claudia H Dziobek, Marco Marini, Eric Metreau, Michael Stanger

February 2, 2017

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Thomas F Alexander, Claudia H Dziobek, Marco Marini, Eric Metreau, and Michael Stanger. Measure up: A Better Way to Calculate GDP, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

To derive real GDP, the System of National Accounts 2008 (2008 SNA) recommends a technique called double deflation. Some countries use single deflation techniques, which fail to capture important relative price changes and introduce estimation errors in official GDP growth. We simulate the effects of single deflation to the GDP data of eight countries that use double deflation. We find that errors due to single deflation can be significant, but their magnitude and direction are not systematic over time and across countries. We conclude that countries still using single deflation should move to double deflation.

Subject: Commodity price fluctuations, Commodity prices, Consumption, Deflation, National accounts, Price indexes, Prices

Keywords: China, Commodity price fluctuations, Consumption, Deflation, Deflation measure, G20 Data Gaps Initiative, GDP at constant prices, GDP deflator, Global, India, Output price, Price indexes, SDN, Single and double deflation, Single deflation, Single-deflation estimate, Single-deflation method, Value

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2017/002
Stock No:

SDNEA2017002
ISBN:

9781475572605
ISSN:

2617-6750

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