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Is the Output Growth Rate in NIPA a Welfare Measure?

Jorge Durán () and Omar Licandro ()

Working Papers from HAL

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: embodied technical change; Divisia index; growth measurement; quantity indexes; equivalent variation; NIPA; Fisher-Shell index (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-dge and nep-mac
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01943948
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Related works:
Working Paper: Is the Output Growth Rate in NIPA a Welfare Measure? (2018) Downloads
Working Paper: Is the output growth rate in NIPA a welfare measure? (2016) Downloads
Working Paper: Is the output growth rate in NIPA a welfare measure? (2015) Downloads
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