GDP deflator and Producer Price index for Volumes

General DSGE Modeling
1

Dear all,

I’m currently calibrating a model with different sectors, especially distribution parameters following the reparametrization of Cantore and Levine. I need the real values of the capital stock and the value added of each sector. Normally, with a final good firm, I would get this real value by deflating the nominal values of these variables by the GDP deflator. But, when having different sectors, should I do the same by replacing the GDP deflator by the producer price index of each sector to deflate the VA and capital stock ?

Thank you.

2

I would tend to say yes. You want to compute the real units of the goods (baskets) produced in the respective sectors.

1 Like