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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. 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.
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Cited by:
  1. Nicholas Oulton & Sylaja Srinivasan, 2003. "Capital stocks, capital services, and depreciation: an integrated framework," Bank of England working papers 192, Bank of England.
  2. Jorge Duran & Omar Licandro, 2013. "Is the GDP growth rate in NIPA a welfare measure?," 2013 Meeting Papers 191, Society for Economic Dynamics.
  3. Nicholas Oulton, 2004. "Investment-specific technological change and growth accounting," Bank of England working papers 213, Bank of England.
  4. Iain Clacher,, 2010. "National accounting for intangible assets in the knowledge economy," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 18(2), pages 106-119, May.
  5. Nicholas Oulton, 2004. "A statistical framework for the analysis of productivity and sustainable development," LSE Research Online Documents on Economics 19963, London School of Economics and Political Science, LSE Library.
  6. 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.
  7. Voxi Heinrich S. Amavilah, 2005. "The National Wealth of Selected Countries - A Descriptive Essay," Development and Comp Systems 0508007, EconWPA.

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