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Do alternative measures of GDP affect its interpretation?

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  • Bart Hobijn
  • Charles Steindel

Abstract

Gross domestic product's high correlation with unemployment and inflation makes it a key measure of the U.S. economy. Yet the somewhat arbitrary nature of the GDP construction process complicates interpretation and measurement of the indicator. A study of an alternative measure of GDP designed to address the published series' limitations finds that the adjusted measure differs in its representation of the long-term trend--but not the short-term fluctuations--of GDP. The published series' relevance as an indicator is therefore robust to some of the arbitrariness of its construction.

Suggested Citation

  • Bart Hobijn & Charles Steindel, 2009. "Do alternative measures of GDP affect its interpretation?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 15(Nov).
    • Handle: RePEc:fip:fednci:y:2009:i:nov:n:v.15no.7
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    References listed on IDEAS

    as
    1. A. W. Phillips, 1958. "The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861–1957," Economica, London School of Economics and Political Science, vol. 25(100), pages 283-299, November.
    2. Christopher House & John Laitner & Dmitriy Stolyarov, 2008. "Valuing Lost Home Production Of Dual Earner Couples," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 701-736, May.
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    Cited by:

    1. Charles Steindel, 2009. "Implications of the financial crisis for potential growth: past, present, and future," Staff Reports 408, Federal Reserve Bank of New York.
    2. Laopodis, Nikiforos T., 2011. "Equity prices and macroeconomic fundamentals: International evidence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 21(2), pages 247-276, April.

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