Decomposition of GDP growth in European countries; different methods tell different stories
The composition of economic growth can be analysed in two different ways. In the 'traditional method' for the decomposition of GDP growth, total imports are deducted from exports. This approach underestimates the importance of exports for the growth in GDP, and overestimates the importance of domestic expenditure categories. In the alternative methodology proposed in this paper, imports are allocated to all expenditure categories. Although this 'import-adjusted method' is more complex than the 'traditional method', it has the considerable advantage that the contributions of the expenditure categories to GDP growth provide a better understanding of why GDP growth decelerates or accelerates. The methodology for calculating the import content of final demand, and the implications for the decomposition of real GDP growth, are discussed. For six individual European countries and the euro area, the paper shows that applying the alternative methodology provides rather a different economic story.
|Date of creation:||Jan 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (070) 338 33 80
Fax: (070) 338 33 50
Web page: http://www.cpb.nl/Email:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henk Kranendonk & Johan Verbruggen, 2005. "How to determine the contributions of domestic demand and exports to economic growth?," CPB Memorandum 129, CPB Netherlands Bureau for Economic Policy Analysis.
- Martin Mellens & Herman Noordman & Johan Verbruggen, 2007. "Re-exports: international comparison and implications for performance indicators," CPB Document 149, CPB Netherlands Bureau for Economic Policy Analysis.
When requesting a correction, please mention this item's handle: RePEc:cpb:docmnt:158. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.