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Productivity Versus Welfare; Or GDP Versus Weitzman's NDP

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Author Info
Nicholas Oulton

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Abstract

While GDP is the appropriate measure of output, I argue that Weitzman's NDP (WNDP)-nominal net domestic product deflated by the price of consumption-is the appropriate measure of welfare. Total factor productivity (TFP) growth measures the shift in the GDP frontier, and there is an analogous concept for WNDP, which I call total factor welfare (TFW) growth. I calculate and compare WNDP and GDP, and TFP and TFW, for the United States in the 1990s. I find that the acceleration of WNDP post 1995 was as great as that of GDP, even though the aggregate depreciation rate was rising. Copyright 2004 Blackwell Publishing Ltd.

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Income and Wealth.

Volume (Year): 50 (2004)
Issue (Month): 3 (09)
Pages: 329-355
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Handle: RePEc:bla:revinw:v:50:y:2004:i:3:p:329-355

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Karl Whelan, 2001. "A two-sector approach to modeling U.S. NIPA data," Finance and Economics Discussion Series 2001-04, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
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  2. Oulton, Nicholas, 2001. "Must the Growth Rate Decline? Baumol's Unbalanced Growth Revisited," Oxford Economic Papers, Oxford University Press, vol. 53(4), pages 605-27, October.
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  3. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
  4. Diewert, Erwin, 2007. "Index Numbers," UBC Departmental Archives diewert-07-01-03-08-17-23, UBC Department of Economics, revised 31 Jan 2007. [Downloadable!]
  5. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD, Economics Department. [Downloadable!]
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  6. Martin L Weitzman, 1999. "A Contribution to the Theory of Welfare Comparisons," Harvard Institute of Economic Research Working Papers 1864, Harvard - Institute of Economic Research.
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  7. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June. [Downloadable!] (restricted)
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  8. Basu, Susanto & Fernald, John G., 2002. "Aggregate productivity and aggregate technology," European Economic Review, Elsevier, vol. 46(6), pages 963-991, June. [Downloadable!] (restricted)
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  9. Bradford, David F, 1990. "Extended Accounts for National Income and Product: Comment," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1183-86, September. [Downloadable!] (restricted)
  10. Scott, Maurice, 1990. "Extended Accounts for National Income and Product: A Comment," Journal of Economic Literature, American Economic Association, vol. 28(3), pages 1172-79, September. [Downloadable!] (restricted)
  11. Michael R. Pakko, 2001. "What happens when the technology growth trend changes?: transition dynamics, capital growth and the "new economy"," Working Papers 2001-020, Federal Reserve Bank of St. Louis. [Downloadable!]
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  12. Sefton, J. A. & Weale, M. R., 1996. "The net national product and exhaustible resources: The effects of foreign trade," Journal of Public Economics, Elsevier, vol. 61(1), pages 21-47, July. [Downloadable!] (restricted)
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  13. Weitzman, Martin L, 1997. " Sustainability and Technical Progress," Scandinavian Journal of Economics, Blackwell Publishing, vol. 99(1), pages 1-13, March. [Downloadable!] (restricted)
  14. repec:cup:cbooks:9780521556231 is not listed on IDEAS
  15. Weitzman, Martin L, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 156-62, February. [Downloadable!] (restricted)
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  16. Jayasri Dutta & James Sefton & Martin R. Weale, 2000. "Real National Income," NIESR Discussion Papers 163, National Institute of Economic and Social Research. [Downloadable!]
  17. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March. [Downloadable!] (restricted)
  18. Martin N. Baily & Robert Lawrence, 2001. "Do We Have A New E-Conomy?," NBER Working Papers 8243, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jorge Durán & Omar Licandro & Luis A. Puch, 2006. "Sobre la medición del crecimiento económico en presencia de progreso técnico incorporado," Working Papers 2006-24, FEDEA. [Downloadable!]
  2. Voxi Heinrich S. Amavilah, 2005. "The National Wealth of Selected Countries - A Descriptive Essay," Development and Comp Systems 0508007, EconWPA. [Downloadable!]
  3. Nicholas Oulton, 2004. "A Statistical Framework for the Analysis of Productivity and Sustainable Development," CEP Discussion Papers dp0629, Centre for Economic Performance, LSE. [Downloadable!]
  4. Nicholas Oulton & Sylaja Srinivasan, . "Capital stocks, capital services, and depreciation: an integrated framework," Bank of England working papers 192, Bank of England. [Downloadable!]
  5. Nicholas Oulton, . "Investment-specific technological change and growth accounting," Bank of England working papers 213, Bank of England. [Downloadable!]
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