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

Kiyohiko G. Nishimura and Junko Ishikawa
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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

No CARF-F-424, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

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).

Pages: 28 pages
Date: 2017-10
New Economics Papers: this item is included in nep-mac and nep-upt
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