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On Measuring Regional or Global Growth and Inflation

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Abstract

In a paper contributed to the Ottawa Group, Rao and Balk (2013) presented an overview of concepts used in the field of international comparison, such as Nominal GDP, Real GDP, and Price Level Index. The present paper continues by providing a simple, symmetric formula for the calculation of regional or global growth and inflation. What distinguishes our proposal from currently used methods (at international organisations such as Eurostat, OECD, and The World Bank) is its top-down approach ensuring consistency between value, quantity, and price developments. The role played by exchange rates and purchasing power parities also becomes clear. We consider the aggregation properties of the method with respect to two dimensions, namely the grouping of countries, and the components of GDP (private household consumption, investment, government consumption, exports, and imports). An example, based on data recently released by the International Comparison Program, illustrates our proposal.

Suggested Citation

  • D. S. Prasada Rao & Alicia N. Rambaldi & Bert M. Balk, 2015. "On Measuring Regional or Global Growth and Inflation," Discussion Papers Series 552, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uq2004:552
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    File URL: https://economics.uq.edu.au/files/46440/552.pdf
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    1. Ulrich Kohli & Jean-Marc Natal, 2014. "The real exchange rate and the structure of aggregate production," Journal of Productivity Analysis, Springer, vol. 42(1), pages 1-13, August.
    2. 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.
    3. Balk,Bert M., 2012. "Price and Quantity Index Numbers," Cambridge Books, Cambridge University Press, number 9781107404960, January.
    4. , & Diewert, Erwin, 2014. "Alternative Measures of OECD Output Growth and Inflation," Economics working papers erwin_diewert-2014-1, Vancouver School of Economics, revised 20 Feb 2014.
    5. World Bank, 2011. "World Bank for Results 2011," World Bank Publications - Books, The World Bank Group, number 15792, December.
    6. Bert M. Balk, 2010. "An Assumption‐Free Framework For Measuring Productivity Change," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(s1), pages 224-256, June.
    7. Dale W. Jorgenson & Paul Schreyer, 2013. "Industry-Level Productivity Measurement And The 2008 System Of National Accounts," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 59(2), pages 185-211, June.
    8. Asian Development Bank (ADB), 2014. "Purchasing Power Parities and Real Expenditures," ADB Reports RPT146710-2, Asian Development Bank (ADB), revised 19 Aug 2014.
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    More about this item

    Keywords

    International comparison; world growth; world inflation; exchange rate; purchasing power parity; index number theory;
    All these keywords.

    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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