Sunday, May 23, 2021

Why I had to compare the GVA and GDP price indexes

I took a look at Nonfinancial Corporate Business GVA relative to GDP:

Graph #1: GVA of Nonfinancial Corporate Business relative to GDP

Trend upward from 1947 to 1981. Trend downward from 1981 till now. Just like interest rates. 

Just like interest rates. Now that's interesting. Not sure why the similarity. Maybe it's because the rate of interest and the rate of inflation follow similar paths??? I'll poke around the edges of this until there's something interesting to grab on to, or until I get tired of trying -- whichever comes first. But not today.

I see a big increase there, tall and wide, starting third quarter 1954. And I see the ratio above 0.52 from second quarter 1955 thru third quarter 1957. Looks like high output. I'll have to see how that relates to the 1955 surge in Labor Force Participation, and low productivity and all. But not today.


Dunno why, but the next graph I made was the same data except real-to-real instead of nominal-to-nominal. Should come out exactly the same, I was thinkin.

It didn't:

Graph #2: Real GVA of Nonfinancial Corporate Business relative to Real GDP

 Trend upward from 1947 to 2000 (instead of to 1981), and then but slowly down.

I knew right away: It had to be that the GVA price index is not the same as the GDP Deflator price index. (I ran into this kind of problem before.) But in this case there seems to be a huge difference between the two deflators.

And of course I had to do the "big difference" post, just to be sure it wasn't my glitch. But that wasn't today, either.

No comments: