Has the Growth of Real GDP in the UK been Overstated because of Mis-Measurement of Banking Output?
AbstractIf official figures overstated the growth of banking output in the UK in the recent boom, does this mean that GDP growth was overstated too? The answer is no. It is truer to say that if banking output was overstated then the output of some other industry or industries must have been understated, leaving GDP relatively unaffected. The reason is that the Office for National Statistics measures the real growth of GDP primarily from the expenditure side. And from the expenditure side most of the problematic part of banking output drops out since it constitutes intermediate consumption not final expenditure. Consequently, the effect of any mis-measurement of banking output on GDP growth in the boom of 2000-2007 is likely to have been small: GDP growth might have been overstated by about 0.1% p.a.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Occasional Papers with number 33.
Date of creation: Jan 2013
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEPOP
GDP; national income accounting; banking; financial services; mis-measurement;
Other versions of this item:
- Nicholas Oulton, 2013. "Has the Growth of Real GDP in the UK Been Overstated Because of Mismeasurement of Banking Output?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 224(1), pages R59-R65, May.
- E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-25 (All new papers)
- NEP-BAN-2013-10-25 (Banking)
- NEP-MAC-2013-10-25 (Macroeconomics)
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- Nicholas Oulton, 2013. "Medium and Long Run Prospects for UK Growth in the Aftermath of the Financial Crisis," CEP Occasional Papers 37, Centre for Economic Performance, LSE.
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