GDP and GDI Growth Accounting in the Open Economy: Multiplicative Fisher Decompositions
Review of International Economics
Published online on July 12, 2026
Abstract
["Review of International Economics, EarlyView. ", "\nABSTRACT\nWhile most national statistical agencies still use chained Laspeyres indices in their national accounts, the U.S. Bureau of Economic Analysis (BEA) and Statistics Canada have been at the forefront for the past two decades by using instead a superlative index—the Fisher index—when computing price and quantity indices for GDP and its components. Both agencies also publish growth decompositions in additive form. At the same time, when computing total factor productivity (TFP), Statistics Canada and, in the U.S. case, the Bureau of Labor Statistics (BLS) use another superlative index, the Törnqvist, which naturally comes in a multiplicative form. This is somehow as if these two exercises were totally unrelated, whereas in fact they focus on the same set of data, although from somewhat different perspectives. It is little known that the Fisher index too allows for a multiplicative decomposition. Multiplicative decompositions are in many ways much more convenient than additive ones since their elements allow for geometric growth accounting, that is, they can easily be compounded both across good prices and quantities, and through time with yearly averages obtained as geometric means. This paper therefore innovates by proposing a harmonized setting for a complete multiplicative Fisher decomposition of growth, for GDP as well as for GDI. Special attention is devoted to the measurement of trading gains, both in the primal price space and, for the very first time, in the dual quantity space. This exercise leads to a very compact, twin growth decomposition of real GDI and of the GDI price deflator. Canadian annual data for 1990–2023 as used as an illustration.\n"]