Double deflation is the technique used to estimate real value added of an industry. In the double deflation method, real value added is measured as the difference between real gross output and real intermediate inputs. Double deflation is the conceptually preferred method of computing real value added because it requires fewer assumptions about the relationships among gross output and intermediate inputs.
For more information on the double deflation methodology, please refer to the “price and quantity indexes for the GDP-by-industry accounts” section of the following March 2004 Survey of Current Business (SCB) article at: http://www.bea.gov/scb/pdf/2004/03March/0304IndustryAcctsV3.pdf
Published