Measure up : A Better Way to Calculate GDP

Author/Editor:

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

Publication Date:

February 2, 2017

Electronic Access:

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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.

Series:

Staff Discussion Notes No. 17/02

Subject:

English

Publication Date:

February 2, 2017

ISBN/ISSN:

9781475572605/

Stock No:

SDNEA2017002

Format:

Paper

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