June 2, 2011 updated
How do you get from Nominal GDP to Real GDP? The Bureau of Economic Analysis (BEA) uses its own GDP Deflator for this purpose. In a recent commentary Rick Davis, the founder of Consumer Metrics Institute, made some interesting observations on the BEA’s adjustment technique.
His comments prompted me to investigate what Real GDP would look like if we use the PCE Deflator or the Consumer Price Index for the adjustment. More…
