3 ms·

I know it's real GDP. I'm saying this number is noisier when inflation is high because you only ever measure nominal GDP and then deflate.

• RC_ITR 4y ago
  Well what don't you believe because you're using 6.6% inflation as your reason for skepticism, but that's what GDP is deflated by?
  • lmm 4y ago
    They believe the error bar on that inflation number must be pretty wide, presumably.
    • RC_ITR 4y ago
      But by that logic, error bars increased because the number went up? Idk if that’s how statistics works.
      • ivalm 4y ago
        Errors in counting generally go as square root of the count. So yes, as number goes up so does the deviation.
        • RC_ITR 4y ago
          Inflation readings being higher have nothing to do with a higher count. Exact same amount of data points for inputs as 2% inflation.
          • ivalm 4y ago
            It’s not about the amount of measurement points, uncertainties in dollar amounts tend to scale as sqrt. When you error propagate that you see that inflation uncertainty scales with inflation. Very simple model Inflation=v1/v2 D(inflation)=sqrt((D(v1)/v2)^2+(v1/v2^2 D(v2))^2) Suppose D(v1)=c sqrt(v1) D(v2)=c sqrt(v2) D(inflation)=c sqrt(v1/v2^2+v1^2/v2^3)= c sqrt(inflation+inflation^2)/sqrt(v2) So can be seen that the leading term for uncertainty in inflation is linear with inflation.