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In economics, the GDP
GDP
deflator (implicit price deflator) is a measure of the level of prices of all new, domestically produced, final goods and services in an economy. GDP
GDP
stands for gross domestic product, the total value of all final goods and services produced within that economy during a specified period. Like the consumer price index (CPI), the GDP
GDP
deflator is a measure of price inflation/deflation with respect to a specific base year; the GDP
GDP
deflator of the base year itself is equal to 100. Unlike the CPI, the GDP
GDP
deflator is not based on a fixed basket of goods and services; the "basket" for the GDP
GDP
deflator is allowed to change from year to year with people's consumption and investment patterns.

Contents

1 Calculation

1.1 Measurement in national accounts 1.2 Pakistan 1.3 India 1.4 USA 1.5 United Kingdom 1.6 Canada 1.7 Australia 1.8 Argentina 1.9 Japan 1.10 Hong Kong 1.11 Nepal

2 See also 3 References 4 External links

4.1 Data

Calculation[edit] Measurement in national accounts[edit] In most systems of national accounts the GDP
GDP
deflator measures the ratio of nominal (or current-price) GDP
GDP
to the real (or chain volume) measure of GDP. The formula used to calculate the deflator is:

G D P   d e f l a t o r

=

N o m i n a l   G D P

R e a l   G D P

× 100

displaystyle operatorname GDP
GDP
deflator = frac operatorname Nominal GDP
Nominal GDP
operatorname Real GDP
Real GDP
times 100

The nominal GDP
GDP
of a given year is computed using that year's prices, while the real GDP
GDP
of that year is computed using the base year's prices. The formula implies that dividing the nominal GDP
GDP
by the GDP
GDP
deflator and multiplying it by 100 will give the real GDP, hence "deflating" the nominal GDP
GDP
into a real measure.[1] 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 - price inflation. A price deflator of 50 means that the current-year price is half the base year price - price deflation. This can lead to a situation where official statistics reflect a drop in prices, even though they have stayed the same. Unlike some price indices (like the CPI), the GDP
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.[2] Specifically, for the GDP
GDP
deflator, 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. The theory behind this approach is that the GDP
GDP
deflator reflects up to date expenditure patterns. For instance, if the price of chicken increases relative to the price of beef, it is claimed that people will likely spend more money on beef as a substitute for chicken. In practice, the difference between the deflator and a price index like the Consumer price index
Consumer price index
(CPI) is often relatively small. On the other hand, with governments in developed countries increasingly utilizing price indexes for everything from fiscal and monetary planning to payments to social program recipients, even small differences between inflation measures can shift budget revenues and expenses by millions or billions of dollars. Pakistan[edit] The State Bank of Pakistan
State Bank of Pakistan
reports the GDP
GDP
Deflator and the real GDP of Pakistan. India[edit] GDP
GDP
Deflator in India is reported by the Ministry of Statistics and Programme Implementation (India). USA[edit] The GDP
GDP
and GDP
GDP
deflator are calculated by the US Bureau of Economic Analysis. United Kingdom[edit] The GDP
GDP
and GDP
GDP
deflator series are published by the Office for National Statistics.[3] Canada[edit] The GDP
GDP
and GDP
GDP
deflator series are published by Statistics Canada.[4] Australia[edit] The GDP
GDP
and GDP
GDP
deflator are calculated by the Australian Bureau of Statistics. Argentina[edit] The GDP
GDP
and GDP
GDP
deflator are calculated by the INDEC. Japan[edit] The GDP
GDP
and GDP
GDP
deflator are calculated by the Cabinet Office (Japan). Hong Kong[edit] The GDP
GDP
and GDP
GDP
deflator series are published by the Census and Statistics Department (Hong Kong).[5] Nepal[edit] The GDP
GDP
and GDP
GDP
deflator series are published by the Central Bureau of Statistics.[6] See also[edit]

Economics
Economics
portal

Fisher index Etienne Laspeyres Hermann Paasche Chained volume series (of GDP
GDP
data.) Implicit Price Deflator for Personal Consumption Expenditures (IPD for PCE) Inflation GDP

References[edit]

^ "Concepts and Methods of the U.S. National Income and Product Accounts" (PDF). Bureau of Economic Analysis. July 2008.  ^ "Archived copy". Archived from the original on 2009-01-17. Retrieved 2016-09-23.  ^ National Statistics Online ^ Statistics Canada: Canada's national statistical agency / Statistique Canada : Organisme statistique national du Canada ^ http://censtatd.gov.hk/hkstat/sub/so250.jsp Census and Statistics Department: National Income ^ http://cbs.gov.np/sectoral_statistics/national_accounts

External links[edit]

Gross Domestic Product (GDP) deflators: user guide

Data[edit]

OECD GDP
GDP
deflator data IMF database of country GDP
GDP
deflators for 1980-2013 Briefing.com: GDP-Adv.

Compare with

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