Maurice Obstfeld, Oya Celasun, Mahnaz Hemmati, Gian Maria Milesi-Ferretti, 11 December 2015

IMF data showed that the dollar value of ‘planetary GDP’ fell in 2015, but the IMF projects that world real GDP growth and inflation will be positive. This column notes that there is no inconsistency here. The decline in the dollar value of ‘planetary GDP’ reflects the 2015 increase in the value of the US dollar, not calculation errors or inconsistencies between real growth, inflation, and nominal GDP projections. The choice of numeraire matters in measuring nominal GDP growth, especially in years with very large currency movements such as the ones we have seen this year.


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