|
In economics, the GDP deflator (implicit price deflator for GDP) is a measure of the change in prices of all new, domestically produced, final goods and services in an economy. GDP stands for gross domestic product, the total value of all goods and services produced within that economy during a specified period. Face-to-face trading interactions among on the New York Stock Exchange trading floor Economics, as a social science, studies the production, distribution, and consumption of resources. ...
IMF 2005 figures of GDP of nominal compared to PPP. A regions gross domestic product, or GDP, is one of several measures of the size of its economy. ...
The GDP deflator is not based on a fixed market basket of goods and services. The basket is allowed to change with people's consumption and investment patterns. Therefore, new expenditure patterns are allowed to show up in the deflator as people respond to changing prices. For the New England grocery store chain, see DeMoulas Market Basket. ...
Calculation
Measurement in National Accounts In most systems of National Accounts the GDP deflator measures the difference between the real (or chain volume measure) GDP and the nominal (or current price) GDP. The formula used to calculate the deflator is: To meet Wikipedias quality standards, this article or section may require cleanup. ...
A nominal is a word or a group of words that functions as a noun, i. ...
Dividing the nominal GDP by the GDP deflator would then give the figure for real GDP, hence deflating the nominal GDP into a real measure.
It is often useful to consider implicit price deflators for certain subcategories of GDP, such as computer hardware. In this case, it is useful to think of the price deflator as the ratio of the current-year price of a good to its price in some base year. The price in the base year is normalized to 100. For example, for computer hardware, we could define a "unit" to be a computer with a specific level of processing power, memory, hard drive space and so on. A price deflator of 200 means that the current-year price of this computing power is twice its base-year price - a price inflation. A price deflator of 50 means that the current-year price is half the base year price - a price deflation.
Unlike a price index, the GDP deflator is not based on a fixed basket of goods and services. The basket is allowed to change with people's consumption and investment patterns. (Specifically, for GDP, the "basket" in each year is the set of all goods that were produced domestically, weighted by the market value of the total consumption of each good.) Therefore, new expenditure patterns are allowed to show up in the deflator as people respond to changing prices. However, the disadvantage of this approach is that the GDP deflator measures changes in both prices and the composition of the basket, and so should not be used as a measure of pure price changes in the economy. In practice, the difference between the deflator and a price index on the same set of goods and services is relatively small. A price index is any single number calculated from an array of prices and quantities over a period. ...
For the New England grocery store chain, see DeMoulas Market Basket. ...
United States The GDP and GDP deflator are calculated by the Bureau of Economic Analysis (BEA). The Bureau of Economic Analysis (BEA) is an agency in the United States Department of Commerce that provides a comprehensive statistical picture of the economy of the United States. ...
Hedonics A hedonic price index for a specific good is based on the price of the good's various characteristics. For example, hedonic price indices are often applied to computers. The price of a computer can be explained as the price of its processor speed, memory, hard drive capacity, and so on. Hedonic price indices can vary over time as the prices of the underlying characteristics change.
In recent years, some commentators have expressed concern that the national accounts may overstate spending on computer hardware because of the way the hedonic price index and implicit price deflator are used. It is well-known that the prices of a unit of processor speed, a unit of memory, and a unit of hard drive capacity have declined very quickly since 1995. Therefore, the current-year (say, 2003) price deflator for an entire computer - using the hedonic method - is less than one relative to a base year of 1995. This means that when nominal spending on computer hardware is divided by the deflator to give real spending on computers, the number rises. (The "deflator" here is actually an inflator!) From the second quarter of 2000 through the fourth quarter of 2003, the government estimated that real tech spending rose from $446 billion to $557 billion, when nominal spending only increased to $488 billion. Some analysts feel that this overstates the "true" spending on computers. However, the extra $72 billion captures the increase in value of the computers that were purchased, due to the superior quality of computers that sold for the same nominal price in 2003 as in 2000.
See also In economics, a consumer price index (CPI) or retail price index (RPI) is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers. ...
A price index is any single number calculated from an array of prices and quantities over a period. ...
(Ernst Louis) Etienne Laspeyres (Halle an der Saale, November 28, 1834 – August 4, 1913) was Professor ordinarius of Economics and Statistics or State Sciences and cameralistics in Basel, Riga, Dorpat, Karlsruhe and finally for 26 years in Giessen. ...
Hermann Paasche (1851-1925) was a German economist. ...
The PCE price index (PCEPI) (or PCE deflator, PCE price deflator, Implicit Price Deflator for Personal Consumption Expenditures (IPD for PCE) (by the Bureau of Economic Analysis) or the chain-type price index for personal consumption expenditures (CTPIPCE) (by the FOMC)) is a nation-wide indicator of the average increase...
External links - GDP implicit price deflator Definition
Data
Hedonics |
Feeds |
Contact