Is China's GDP Growth Overstated? An Empirical Analysis of the Bias caused by the Single Deflation Method
Jie Li

According to Alexander et al. (2017), major developed countries among the G20 nations mainly utilize the double deflation method to calculate value added at constant prices, while China and India utilize the single deflation method. Calculation using the double deflation method requires frequently published input-output data and detailed price indices, giving rise to many practical difficulties. The System of National Accounts (SNA, 2008) suggests the single deflation method as an alternative solution. By using the input - output framework, this paper discusses the relationship between the relative price change between industries and the bias caused by single deflation method. Based on the outcome of that discussion, empirical analysis is conducted using input-output data and GDP (gross domestic product) deflators regarding the nature of the impact of the bias caused by single deflation on the magnitude of China’s GDP growth, and how it distorts the relative contribution of each industry to GDP growth.

Full Text: PDF     DOI: 10.15640/jeds.v5n4a1