The Income of Nations: Measurement with (What?) Theory

Michael Harris ()
Additional contact information
Michael Harris: Department of Economics and Finance, La Trobe University

Working Papers from School of Economics, La Trobe University

Abstract: Extensive activity is underway to revise the construction and measurement of national income statistics. However, the underlying definitions of income are not settled. At the broadest level, there is a conflict between income as an economic concept (consumption-related, inter-temporal) and an accounting concept (output-related, atemporal). More specifically, the distinction between ex ante income (maintainable consumption) and ex post income (actual consumption plus capital accumulation) is often blurred, for example. This raises the issue of the rationale for including capital in measures of income, and the possible interpretations of such measures as returns to wealth I identify two distinct rationales for adding capital to consumption in an economically meaningful measure future consumption postponed versus current consumption foregone, which differ due to the effect of diminishing returns in production and argue that they lead to two distinct interpretations of income: the stationary- equivalent of future consumption interpretation versus the stationary-state- equivalent interpretation. I argue that the choice of one or other of these interpretations has implications for a raft of national accounting issues, such as the treatment of capital gains, the pricing of investment goods, and the treatment of technological change.

Pages: 58 pages
Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.latrobe.edu.au/__data/assets/pdf_file/0004/130882/2001.09.pdf First version, 2001.09.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.latrobe.edu.au/__data/assets/pdf_file/0004/130882/2001.09.pdf [301 Moved Permanently]--> https://www.latrobe.edu.au/__data/assets/pdf_file/0004/130882/2001.09.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ltr:wpaper:2001.09

Access Statistics for this paper

More papers in Working Papers from School of Economics, La Trobe University Contact information at EDIRC.
Bibliographic data for series maintained by Stephen Scoglio ( this e-mail address is bad, please contact ).