Double Deflation

Subject – Economy

Context – growth rate of real GDP is contaminated by the “double deflation problem”.

Concept –

In the double deflation method, real value added is measured as the difference between real gross output and real intermediate inputs.
Double deflation is the technique used to estimate real value added of an industry.
Double deflation is the conceptually preferred method of computing real value added because it requires fewer assumptions about the relationships among gross output and intermediate inputs.