Is the output growth rate in NIPA a welfare measure?

Omar Licandro ()

No 11594, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: National Income and Product Accounts (NIPA) measure real output growth by means of a Fisher ideal chain index. Bridging modern macroeconomics and the economic theory of index numbers, this paper shows that output growth as measured by NIPA is welfare based. In a dynamic general equilibrium model with general recursive preferences and technology, welfare depends on present and future consumption. Indeed, the associated Bellman equation provides a representation of preferences in the domain of current consumption and current investment. Applying standard index number theory to this representation of preferences shows that the Fisher-Shell true quantity index is equal to the Divisia index, in turn well approximated by the Fisher ideal index used in NIPA.

Keywords: Growth measurement; Quantity indexes; Nipa; Fisher-shell index; Embodied technical change (search for similar items in EconPapers)
JEL-codes: C43 D91 O41 O47 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
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Related works:
Working Paper: Is the Output Growth Rate in NIPA a Welfare Measure? (2022)
Working Paper: Is the Output Growth Rate in NIPA a Welfare Measure? (2018)
Working Paper: Is the Output Growth Rate in NIPA a Welfare Measure? (2018)
Working Paper: Is the output growth rate in NIPA a welfare measure? (2015)
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