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Why Gross National Disposable Income should substitute Gross National Income

Author

Listed:
  • Clara Capelli

    () (Department of Economics and Management, University of Pavia)

  • Gianni Vaggi

    () (Department of Economics and Management, University of Pavia)

Abstract

The Gross National Income (GNI) is often used as an indicator for a country’s living standards. Yet, it does not record unilateral transfers and notably remittances, which in the last decades have gained growing importance as a source of income for developing countries. Gross National Disposable Income (GNDI), includes both income and transfers and provides a much better account of people’s actually available income. However GNDI is sometimes confused with the GNI and is rarely available in major reports. This paper fills this gap by calculating the GNDI for all the countries in the World Bank database and it discusses the use of GNDI for 27 countries amongst the world top remittance receivers. We show that GNDI is much more informative than GNI and is a much more reliable basis for policy making in developing countries.

Suggested Citation

  • Clara Capelli & Gianni Vaggi, 2014. "Why Gross National Disposable Income should substitute Gross National Income," DEM Working Papers Series 091, University of Pavia, Department of Economics and Management.
  • Handle: RePEc:pav:demwpp:demwp0091
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    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0091.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Gross National Income; Gross National Disposable Income; Living standard; Balance of Payments; Current Account; Remittances;
    All these keywords.

    JEL classification:

    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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