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In the field of economy , the term deflator refers to a coefficient which is used for the development of the procedure of deflate . This verb, meanwhile, refers to the action of converting a nominal monetary value in another that is expressed in a currency that has constant purchasing power .

A deflator, therefore, is used to solve the problem that arises when some economic variables are overestimated. When analyzing the growth of an economy over time, the result may be distorted by rising prices (inflation ). That is why it is necessary to consider real growth beyond the increase in value.

In this context, it is essential to rule out the effect of variations in prices About the economy This measure is possible thanks to the use of a deflator that allows the figures to be adjusted.

The deflators are indexes that allow a distinction between prices and quantities. The most common deflator is the one that applies to the Gross Domestic Product (GDP ), also know as Gross Domestic Product (GDP ).

The GDP reveals the monetary value that the production of services and goods of final demand in a region during a certain time period.

Specifically, we can state that the deflator of the mentioned Gross Domestic Product if it is so used is because it has a great utility. And that is none other than an evaluation as accurate as possible of what is the economic growth that has occurred in a country.

Other interesting data about the so-called GDP deflator are the following:
-In no time come to measure what is the quality of life of a country.
-Also, it must be taken into account that it is not used to calculate what the price level is.
-In the same way, it is relevant to know that this deflator does not consider what intermediate consumer goods are. That is, it does include what the final production is, but not what the imported goods are.
-Among the main advantages that comes with the employment of this factor that concerns us are both knowing the changes that occur year after year in terms of buying habits and knowing and valuing the goods and services that come to Produce in a specific country.
-In addition to all of the above, we cannot ignore that it is also considered that using the GDP deflator brings its disadvantages. Specifically, the most significant is that it fails to take into account or study what is called the submerged economy. It is also considered that calculating it is more laborious than obtaining other important data in the same field.

It is possible to differentiate between Nominal GDP (considered with current prices) and the Real GDP (calculated from constant prices).

He GDP deflator It is calculated by dividing the Nominal GDP by real GDP and then multiplying the figure obtained by 100 . He result lets you know how prices varied in a period.

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