Is the Output Growth Rate in NIPA a Welfare Measure?
Jorge Durán () and
Omar Licandro ()
Working Papers from HAL
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: embodied technical change; Divisia index; growth measurement; quantity indexes; equivalent variation; NIPA; Fisher-Shell index (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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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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