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Adjusting NNP for instrumental or defensive expenditures. An analytical approach

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Abstract

In this paper we provide a formal analysis to evaluate the subtraction of defensive expenditures from GDP. We consider expenditures that are used to produce non- market goods as candidates for being subtracted from GDP. It will be demonstrated that income net such expenditures will account for total welfare changes only if the supply of the non- market good is constant, while the expenditures should not be subtracted if external factors are constant. We argue that the latter case will apply to most use of the GDP incator for planning purposes. We also consider a model of disamenities of urbanization, and argue that there are important shortcomings in the methods used to estimate these. Daly and Cobb's estimate consideres only a selection of disamenities, and only those that are negative. We also argue that Nordhaus and Tobins migration based procedure will significantly overestimate the level of disamenity, but is correct at the margin. On the other hand, there may be important problems with double counting.

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  • Kjell Arne Brekke & Hanne A. Gravningsmyhr, 1994. "Adjusting NNP for instrumental or defensive expenditures. An analytical approach," Discussion Papers 134, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:134
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp_134.pdf
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    Cited by:

    1. Lars Håkonsen & Lars Mathiesen, 1997. "CO 2 -stabilization may be a ‘no-regrets’ policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(2), pages 171-198, March.
    2. Brita Bye & Snorre Kverndokk & Knut Rosendahl, 2002. "Mitigation costs, distributional effects, and ancillary benefits of carbon policies in the Nordic countries, the U.K., and Ireland," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(4), pages 339-366, December.

    More about this item

    Keywords

    Defensive expenditure; National product; Urbanization.;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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