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Productivity Versus Welfare; Or GDP Versus Weitzman's NDP

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  • Nicholas Oulton

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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Bibliographic Info

Article provided by International Association for Research in Income and Wealth 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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  1. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
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  7. 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.
  8. 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.
  9. 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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  13. 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.
  14. 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.).
  15. Hulten, Charles R. & Wykoff, Frank C., 1981. "The estimation of economic depreciation using vintage asset prices : An application of the Box-Cox power transformation," Journal of Econometrics, Elsevier, vol. 15(3), pages 367-396, April.
  16. 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.
  17. John Forth, 2001. "The low-paid worker and the low-paying employer: characterisations using WERS98," NIESR Discussion Papers 163, National Institute of Economic and Social Research.
  18. Hasan Bakhshi & Jens Larsen, 2001. "Investment-specific technological progress in the United Kingdom," Bank of England working papers 129, Bank of England.
  19. Michael R. Pakko, 2002. "What Happens When the Technology Growth Trend Changes?: Transition Dynamics, Capital Growth and the 'New Economy'," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 376-407, April.
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Citations

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Cited by:
  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.
  2. Voxi Heinrich S. Amavilah, 2005. "The National Wealth of Selected Countries - A Descriptive Essay," Development and Comp Systems 0508007, EconWPA.
  3. Nicholas Oulton, 2004. "A Statistical Framework for the Analysis of Productivity and Sustainable Development," CEP Discussion Papers dp0629, Centre for Economic Performance, LSE.
  4. Oulton, Nicholas, 2007. "Investment-specific technological change and growth accounting," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1290-1299, May.
  5. Nicholas Oulton & Sylaja Srinivasan, 2003. "Capital stocks, capital services, and depreciation: an integrated framework," Bank of England working papers 192, Bank of England.

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