Measure up: A Better Way to Calculate GDP
Staff Discussion Notes, February 2, 2017
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- Measure up: A Better Way to Calculate GDP
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Bibliographic details
- Authors: Thomas F Alexander, Claudia H Dziobek, Marco Marini, Eric Metreau, Michael Stanger
- Published: February 2, 2017
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781475572605.006
Overview and purpose
- Publication type: Staff Discussion Notes.
- Authors: Thomas F Alexander, Claudia H Dziobek, Marco Marini, Eric Metreau, Michael Stanger.
- Date: February 2, 2017.
- Objective: Assess the effects of using single deflation versus the 2008 SNA–recommended double deflation method when deriving real GDP.
Methodology
- Approach: Simulate the effects of single deflation on GDP data for countries that apply double deflation.
- Scope: Eight countries that use double deflation were used in the simulation.
Key findings
- Single deflation techniques fail to capture important relative price changes and introduce estimation errors in official GDP growth.
- Errors due to single deflation can be significant.
- The magnitude and direction of the errors are not systematic over time and across countries.
- Conclusion drawn: Countries still using single deflation should move to double deflation.
Policy recommendation
- Move from single deflation to double deflation in national accounts compilation to reduce estimation errors in real GDP.
Subject areas and keywords (as listed)
- 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.
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- Staff Discussion Note