Is the Output Growth Rate in NIPA a Welfare Measure?

Jorge Durán and Omar Licandro ()
Authors registered in the RePEc Author Service: Jorge Durán

No 1357, Working Papers from Barcelona School of Economics

Abstract: This paper shows that, for a general family of dynamic general equilibrium models, the rate of real output growth as measured by National Income and Product Accounts (NIPA) reflects changes in welfare in the precise sense of equivalent variation. The main argument is straightforward. In a two-sector dynamic general equilibrium model of heterogeneous households, recursive preferences, and quasiconcave technology, the Bellman equation provides a representation of household preferences over current consumption and investment. When applied to this representation of preferences, a Fisher-Shell true quantity index turns out to be equal to the Divisia index, closely approximated by the Fisher ideal chain index used in NIPA.

Keywords: welfare; growth measurement; quantity indexes; NIPA; dynamic General Equilibrium; equivalent variation; 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)
Date: 2022-09
New Economics Papers: this item is included in nep-dge
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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? (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? (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:bge:wpaper:1357

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