<p>This will provide you with a GDP in constant prices of the previous year. "Real GDP" only make sense if you mention which is you basis year. It is not an absolute figure. </p>

<p>Indeed, it would not make sense (beside research purposes) to display a real GDP in terms of the first year in which GDP was recorded. Accumulating 50 years on inflation in your figure would produce a tremendous discrepancy between your real GDP and your nominal GDP, resulting in confusion.</p>

CC BY-SA 3.0
2016-01-16T21:32:38.827Z
In your first sentence you mention prices of the previous year;but, what previous year? Can you use an example? Say I have nominal GDP for 2005 and I have a real GDP series from 2000 to 2010. Then, I calculate the real GDP growth rate between 2010 and 2005. If I apply this growth rate to the 2005 nominal GDP figure, what does this give me? I'm assuming the result will be a different figure for 2010 than than what I had for this year from the real GDP series I used to calculate the growth rate, to begin with.
StatsScared
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2016-01-16T17:59:19.587Z
2016-01-16T17:59:19.587Z
Hector
<p>What happens if one applies a real GDP growth rate to a nominal GDP value? The result can't be a GDP figure in constant prices, since that would imply applying a real GDP growth rate to constant GDP figure. </p>

<p>Any thoughts?</p>

<macroeconomics><mathematical-economics><gdp>
Applying real growth rate to nominal value
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# Applying real growth rate to nominal value

(Asked by: username_0 on 2016-01-16)

What happens if one applies a real GDP growth rate to a nominal GDP value? The result can't be a GDP figure in constant prices, since that would imply applying a real GDP growth rate to constant GDP figure.

Any thoughts?

**Tags:** macroeconomics, mathematical-economics, gdp

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## 1 answers

### Answer by username_1 on 2016-01-16. Score: 1

This will provide you with a GDP in constant prices of the previous year. "Real GDP" only make sense if you mention which is you basis year. It is not an absolute figure.

Indeed, it would not make sense (beside research purposes) to display a real GDP in terms of the first year in which GDP was recorded. Accumulating 50 years on inflation in your figure would produce a tremendous discrepancy between your real GDP and your nominal GDP, resulting in confusion.

> **Comments:**
> **username_0**: In your first sentence you mention prices of the previous year;but, what previous year? Can you use an example? Say I have nominal GDP for 2005 and I have a real GDP series from 2000 to 2010. Then, I calculate the real GDP growth rate between 2010 and 2005. If I apply this growth rate to the 2005 nominal GDP figure, what does this give me? I'm assuming the result will be a different figure for 2010 than than what I had for this year from the real GDP series I used to calculate the growth rate, to begin with.  

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