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GDP Price Deflator

What is the 'GDP Price Deflator'

GDP price deflator is an economic metric that accounts for inflation by converting output measured at current prices into constant-dollar GDP. This specific deflator shows how much a change in the base year's GDP relies upon changes in the price level. The GDP price deflator is also known as the "implicit price deflator."

Explaining 'GDP Price Deflator'

The GDP price deflator is an economic measure of inflation and is derived by dividing nominal GDP by real GDP, and then multiplying by 100. It is important because an economy's nominal GPD differs from its real GDP in that nominal GDP includes inflation, while real GDP does not. Therefore, the GDP price deflator measures the difference between real GDP and nominal GDP, which can also be used as a measure for price inflation.

The GDP Price Deflator Versus the Consumer Price Index

There are indexes other than the GDP that help measure an economy's inflation. Many of these alternatives are based on a fixed basket of goods. The consumer price index (CPI), for example, measures the level of retail prices of goods and services at a specific point in time. The CPI is considered by some to be one of the most relevant inflation measures in that it reflects any changes to a consumer's cost of living.


Further Reading


The financial and economic crisis of 2008: A systemic crisis of neoliberal capitalism
journals.sagepub.com [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

On the use of high-frequency economic information to anticipate the current quarter GDP: A study case for MexicoOn the use of high-frequency economic information to anticipate the current quarter GDP: A study case for Mexico
www.sciencedirect.com [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Financial deepening and economic development of Nigeria: An empirical investigationFinancial deepening and economic development of Nigeria: An empirical investigation
papers.ssrn.com [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Analysis of the effect of inflation, interest rates, and exchange rates on Gross Domestic Product (GDP) in IndonesiaAnalysis of the effect of inflation, interest rates, and exchange rates on Gross Domestic Product (GDP) in Indonesia
repository.petra.ac.id [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Financial intermediation and economic performance: historical evidence from five industrialized countriesFinancial intermediation and economic performance: historical evidence from five industrialized countries
www.jstor.org [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Financial conditions indexes: A fresh look after the financial crisisFinancial conditions indexes: A fresh look after the financial crisis
www.nber.org [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Oil price shocks and the US economy: Where does the asymmetry originate?Oil price shocks and the US economy: Where does the asymmetry originate?
www.iaee.org [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …

Japan's financial crisis and economic stagnationJapan's financial crisis and economic stagnation
www.aeaweb.org [PDF]
… During 1982-95 the ratio of the Housing Price Index to the Homeowners' Equivalent Rent (the … How could consumption grow faster not only than GDP but than disposable income … scale asset bubbles, many actors became persuaded that the rising asset prices would continue …



Q&A About GDP Price Deflator


What does this measure show about an economy's inflation?

It measures how much a change in the base year's real GPD relies on changes in its price level.

How do you derive the implicit price deflator from nominal and real GDP?

Divide nominal GDP by real GDP, and then multiply by 1.

What is the GDP price deflator?

The GDP price deflator is an economic metric that accounts for inflation by converting output measured at current prices into constant-dollar GDP. This specific deflator shows how much a change in the base year's GDP relies upon changes in the price level.

Why is it important to know this information about an economy's inflation?

Knowing what affects an economy's inflation can help investors make better decisions about their investments.