Calculating GDP
Posted on | December 22, 2008 | Comments Off by Aschwin de Wolf
Greg Mankiw writes:
If the government hires people to produce stuff that is worthless, that stuff is included in GDP just as much as if the government buys something valuable. When calculating GDP, the national income accountants do not pass judgment on the social utility of government spending. Anyone concerned with economic well-being has to go beyond thinking about GDP…Willy-nilly spending is a good way to stimulate the economy only if the outcome is judged by the wrong metric.
Read the complete post here.
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