Questions

  • CPI grows faster than the GDP-deflator because the former is a Laspeyres index while the latter is a Paasche index. If you plot this out over time, you can see this divergence from 1970 onward. However, between 1950 and 1970, there was no such divergence, even when you limit the GDP-deflator to consumption. This is odd and deserves and explanation. [CPI, GDP-Deflator]