At this point you might well be wondering whether real GDP has any link at all to what we might think of as happiness or welfare. After all, if the time you spend tinkering on your classic car is excluded from real GDP, while the gas you burn stuck in traffic every morning is included in real GDP, it almost seems as though the government accountants have things upside down and backwards. Read More →
Category Archives: Economy
What Does GDP Tell Us?
Are Subtractions Necessary, Too? (II)
As such, they probably should be subtracted from real GDP to get to a better measure of the final goods relevant to individuals, but the government statisticians won’t hear of it. It is also important to recognize that our urbanized, industrialized society has some drawbacks. Big cities make large-scale commercial activities (and thus more market goods) feasible. Read More →
Are Subtractions Necessary, Too? (I)
If we were able to adjust for the items mentioned in the previous section, we might agree that we have a solid measure of real GDP. Nevertheless, we might also feel that we should make some adjustments to real GDP to get a more accurate notion of the level of our material standard of living. Read More →
Imputed and Missing Information (II)
If you take your car to a mechanic, the services performed on the car end up as part of measured real GDP. But if you and a friend repair your car, these services are not included in the statistics. The biggest category of do-it-yourself services left out of the official GDP statistics consists of those performed in the house by homemakers. Read More →
Imputed and Missing Information (I)
Real GDP, that is, GDP corrected for changes in the price level, is the official measure of the new, domestically produced, final goods and services in an economy. Although this number is widely used for many purposes, you should be aware of its limitations. Read More →
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