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Gross domestic product: Are other measures needed?

Author

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  • Barbara M. Fraumeni

    (Central University of Finance and Economics, China, NBER, USA, and IZA, Germany)

Abstract

Gross domestic product (GDP) is the key indicator of the health of an economy and can be easily compared across countries. But it has limitations. GDP tells what is going on today, but does not inform about sustainability of growth. The majority of time is spent in home production, yet the value of this time is not included in GDP. GDP does not measure happiness, so residents can be dissatisfied even when GDP is rising. In addition, GDP does not consider environmental factors, reflect what individuals do outside paid employment, or even measure the current or future potential human capital of a country. Hence, complementary measures may help to show a more comprehensive picture of an economy.

Suggested Citation

  • Barbara M. Fraumeni, 2022. "Gross domestic product: Are other measures needed?," IZA World of Labor, Institute of Labor Economics (IZA), pages 368-368, April.
    • Handle: RePEc:iza:izawol:journl:2022:n:368
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    References listed on IDEAS

    as
    1. J. Steven Landefeld & Eugene P. Seskin & Barbara M. Fraumeni, 2008. "Taking the Pulse of the Economy: Measuring GDP," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 193-216, Spring.
    2. Diane Coyle, 2014. "GDP: A Brief but Affectionate History," Economics Books, Princeton University Press, edition 1, number 10183.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    GDP; macroeconomic measures; national income accounting;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology

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