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The new economy and the measurement of GDP growth

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  • F. LEQUILLER

    (Insee)

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    Abstract

    In connection with a surge in the "new economy" that is statistically difficult to measure, doubts have been cast both on European growth and its comparability with that of the United States. This article explores measurement problems in the French case. The data at current prices seem to be reliable, but information by product is becoming increasingly difficult to establish. Contrary to widely held belief, the differences in the application of the famous "hedonic methods" have only a small impact on the French data. On the other hand, there seems to be a difference in the treatment of data between France and the United States, or rather between several European countries and the United States, regarding the distinction between final consumption and intermediate consumption of IT products. The United States national accounts record more gross fixed capital formation in software, ceteris paribus, and this automatically produces a higher measure of GDP in recent years. The difference may be the result of different industrial processes, but it cannot be ruled out that it may be merely the result of applying a different statistical convention. In that case, one might then speak of a comparability bias. The method most widely used in Europe -- and which therefore preserves intra-European comparability -- maintains consistency with the results of private accounting, whereas the American method diverges from it. The use of "net domestic product instead of the usual "gross domestic product" improves comparability with the United States. Taking net domestic product reduces the growth differential between France and the United States in 1999 by half a point.

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    File URL: http://www.insee.fr/fr/publications-et-services/docs_doc_travail/G2001-01.pdf
    File Function: Document de travail de la DESE numéro G2001-01
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    Bibliographic Info

    Paper provided by Institut National de la Statistique et des Etudes Economiques, DESE in its series Documents de Travail de la DESE - Working Papers of the DESE with number g2001-01.

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    Date of creation: 2001
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    Handle: RePEc:crs:wpdeee:g2001-01

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    Related research

    Keywords: national accounts; new economy; GDP; international comparison; information and communication technologies;

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    Cited by:
    1. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The case of the missing productivity growth: or, does information technology explain why productivity accelerated in the United States but not the United Kingdom?," Working Paper Series WP-03-08, Federal Reserve Bank of Chicago.
    2. Guerrero De Lizardi, C. & Pérez García, J., 2002. "Comparación del precio de los ordenadores en Estados Unidos y España 1990-2000: un enfoque hedónico," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 20, pages 549-564, Diciembre.
    3. Nicholas Oulton, 2002. "ICT and Productivity Growth in the United Kingdom," Oxford Review of Economic Policy, Oxford University Press, vol. 18(3), pages 363-379.
    4. Albers, Ronald & Vijselaar, Focco, 2002. "New technologies and productivity growth in the euro area," Working Paper Series 0122, European Central Bank.
    5. Alessandra Colecchia & Paul Schreyer, 2002. "ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 408-442, April.
    6. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc.

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