Is the Output Growth Rate in NIPA a Welfare Measure?

Jorge Durán and Omar Licandro ()

No 1840, AMSE Working Papers from Aix-Marseille School of Economics, France

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

Keywords: growth measurement; quantity indexes; equivalent variation; NIPA; Fisher-Shell index; Divisia index; embodied technical change (search for similar items in EconPapers)
JEL-codes: C43 D91 O41 O47 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2018-11
New Economics Papers: this item is included in nep-dge and nep-mac
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Related works:
Journal Article: Is the output growth rate in NIPA a welfare measure? (2025)
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? (2016)
Working Paper: Is the output growth rate in NIPA a welfare measure? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1840

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