The most important of the problems relating to the construction of BEA's deflators
is that the five separate type-of-equipment price indexes were not used directly in each of the GNP components.
Table 7 shows that computers (NAICS 334111) and semiconductors (NAICS 334413) had much the largest average rates of declines of their deflators
, as well as the largest falls in those decline rates between the earlier and later periods.
The greatest difference between industry-specific and aggregate deflators
shows up in industries where labor and other input costs have a different growth rate from the single index chosen.
An important distinction between pairing GDP with its deflator
and pairing IP with the CPI is the extent to which products in the output index are matched to products in the price index.
Second, in the post-1982 sample period, NFB inflation has estimated measurement error properties that are quite similar to those of the GDP and PCE deflators
. Third, there is a substantial decline in the signal to noise ratio for all three of the inflation measures in the second subsample period.
Second, the paper deflates state GSP with the state-specific price deflator
. This adjustment significantly changes the pattern of convergence.
The purpose of this brief note is to show the extent to which the choice of the deflator
can alter the adjustment of a monetary economy to various shocks in a qualitative, and hence important, way.
For its 1982 benchmark indexes of office and computing machines, the Census Bureau adopted the price deflator
that the Commerce Department's Bureau of Economic Analysis (BEA) and the IBM Corporation developed jointly.
According to the reconciliation methodology used in this article, all of the difference in the growth rates of these two series was caused by the different price deflators
. As mentioned earlier, the CPI rose much faster than the PCE Deflator
at the end of the 1970's and beginning of the 1980's.
The wedge between the value added and consumption deflators
is largely driven by countries' external terms of trade since both consumption deflators
include imported goods whereas the value added deflator
includes only domestic production.
In 1985, BEA introduced quality-adjusted deflators
for purchases of computers in GNP for 1969-84.(1) Purchases in GNP consist of purchases by all domestic purchasers--business, persons, and government--and of exports; computers, or computing equipment, consist of processors and peripheral equipment, such as printers, disk drives, and displays.
While this is a reasonable stand-in until something better can be developed, trends in deflators
for some categories of intangible capital could be quite different from the GDP deflator