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Macro-Economic Measures For A Globalized World: Global Growth And Inflation

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  • Balk, Bert M.
  • Rambaldi, Alicia N.
  • Rao, D. S. Prasada

Abstract

This paper offers a framework for measuring global growth and inflation, built on standard index number theory, national accounts principles, and the concepts and methods for international macro-economic comparisons. Our approach provides a sound basis for purchasing power parity (PPP)- and exchange rate (XR)-based global growth and inflation measures. The Sato–Vartia index number system advocated here offers very similar results to a Fisher system but has the added advantage of allowing a complete decomposition with PPP or XR effects. For illustrative purposes, we present estimates of global growth and inflation for 141 countries over the years 2005 and 2011. The contribution of movements in XRs and PPPs to global inflation are presented. The aggregation properties of the method are also discussed.

Suggested Citation

  • Balk, Bert M. & Rambaldi, Alicia N. & Rao, D. S. Prasada, 2022. "Macro-Economic Measures For A Globalized World: Global Growth And Inflation," Macroeconomic Dynamics, Cambridge University Press, vol. 26(2), pages 314-360, March.
    • Handle: RePEc:cup:macdyn:v:26:y:2022:i:2:p:314-360_2
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    References listed on IDEAS

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    1. World Bank, 2008. "Global Purchasing Power Parities and Real Expenditures : 2005 International Comparison Program," World Bank Publications - Books, The World Bank Group, number 21558, December.
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    6. World Bank, 2011. "World Bank for Results 2011," World Bank Publications - Books, The World Bank Group, number 15792, December.
    7. Sato, Kazuo, 1976. "The Ideal Log-Change Index Number," The Review of Economics and Statistics, MIT Press, vol. 58(2), pages 223-228, May.
    8. Clague, Christopher, 1986. "Determinants of the National Price Level: Some Empirical Results," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 320-323, May.
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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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