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On aggregate price developments

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  • Wolfgang Nierhaus

Abstract

The price index of the gross domestic product (GDP deflator) is one of the most important inflation indicators of national income accounting. This contribution shows how the GDP deflator is calculated following the readjustment of the German national income accounts to the price basis of the previous year and how the most recent data may be interpreted. In Germany, the price level of national income produced domestically in 2005 rose by only 0.4 %; lower rates were last registered in 1999 and 2000 (in 2000, the GDP deflator even declined due to falling unit profits). The major reason for the extraordinarily moderate rate of inflation was that - per unit of real GDP - wages and salaries of people employed in the domestic economy declined and that operating profits no longer rose as much as in 2004 due to rising oil prices. Should these tendencies prevail, the GDP deflator is expected to rise only modestly in the current year.

Suggested Citation

  • Wolfgang Nierhaus, 2006. "On aggregate price developments," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(03), pages 28-31, February.
    • Handle: RePEc:ces:ifosdt:v:59:y:2006:i:03:p:28-31
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    References listed on IDEAS

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    1. Wolfgang Nierhaus, 2000. "Real income in the new European System of Accounts," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 53(04), pages 07-13, February.
    2. Wolfgang Nierhaus, 2005. "Previous year price basis and chain linking in the National Accounts: the most important features of the new volume calculation," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(15), pages 29-35, August.
    3. Wolfgang Nierhaus, 2004. "Economic growth in the system of national accounts: the introduction of the previous-year price base in the German statistics," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(05), pages 28-34, March.
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    Cited by:

    1. Hagen Kraemer, 2011. "Die Entwicklung der funktionalen Einkommensverteilung und ihrer Einflussfaktoren in ausgewählten Industrieländern 1960-2010," IMK Studies 1-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    2. Wolfgang Nierhaus, 2014. "Real value of GDP: Purchasing Power Plus Through Terms-of-Trade Profits," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(14), pages 27-30, July.
    3. Wolfgang Nierhaus, 2014. "Real Value of Gross Domestic Product: Latest Results," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(03), pages 52-55, February.
    4. Wolfgang Nierhaus, 2016. "Quarterly Real Value of GDP: Latest Results," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(15), pages 34-37, August.
    5. Wolfgang Nierhaus, 2015. "Real Value of Gross Domestic Product and Terms of Trade: Results for 2014," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(03), pages 36-40, February.
    6. Wolfgang Nierhaus, 2006. "Aggregate production and price level: Volume calculations in comparison," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 59(14), pages 13-18, July.
    7. Wolfgang Nierhaus, 2016. "Real Value of Gross Domestic Product and Terms of Trade: Results for 2015," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(04), pages 60-64, February.

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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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