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Understanding Macroeconomic Statistics: An "Ideal-Type" Economy Approach

Author

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  • Kiyohiko G. Nishimura

    (Professor of Economics, National Graduate Institute for Policy Studies (GRIPS); Emeritus Professor and Distinguished Project Research Fellow, Center for Advanced Research in Finance (CARF) at the University of Tokyo; Chair, Statistics Commission of Japan; Former Deputy Governor, Bank of Japan)

  • Junko Ishikawa

    (Researcher, Nomura Research Institute)

Abstract

GDP statistics have been a focus of debates, especially about whether real (constant-price) GDP figures appropriately represent the economic conditions of the economy. This paper shows that the official nominal (current price) GDP is the nominal value of utility the nation enjoys from the current consumption and future consumption that current investment enables to realize in an ideal-type economy with money, which is an intuitive interpretation. However, in this framework, an appropriate real GDP is not the official constant-price GDP but the utility or value GDP, which is the nominal GDP divided by the Consumer Price Index (most broadly defined).

Suggested Citation

  • Kiyohiko G. Nishimura & Junko Ishikawa, 2017. "Understanding Macroeconomic Statistics: An "Ideal-Type" Economy Approach," CARF F-Series CARF-F-424, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    • Handle: RePEc:cfi:fseres:cf424
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    File URL: https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/F424.pdf
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    References listed on IDEAS

    as
    1. Weitzman, Martin L., 2000. "The linearised Hamiltonian as comprehensive NDP," Environment and Development Economics, Cambridge University Press, vol. 5(1), pages 55-68, February.
    2. Nishimura, Kiyohiko G., 1983. "Rational expectations and the theory of aggregate investment," Economics Letters, Elsevier, vol. 11(1-2), pages 101-106.
    3. J. A. Sefton & M. R. Weale, 2006. "The Concept of Income in a General Equilibrium," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(1), pages 219-249.
    4. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(1), pages 156-162.
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