Double-Counting of Investment

Robert Barro

No 25826, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The national-income accounts double-count investment, which enters once when it occurs and again in present value as rental income on added capital. The double-counting implies over-statement of levels of GDP and national income. Across countries, those with higher propensities to invest artificially look richer gauged by per capita GDP. There is also exaggeration of capital-income shares. An alternative measure involves a form of full expensing of gross investment. In the steady state, revised product and income correspond to consumption. Outside of the steady state, the measure deviates from consumption because full expensing applies to the long-run flow of gross investment.

JEL-codes: E01 E22 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-acc, nep-bec and nep-mac
Note: EFG
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Citations: View citations in EconPapers (3)

Published as Robert J Barro, 2021. "Double Counting of Investment," The Economic Journal, vol 131(638), pages 2333-2356.

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Related works:
Journal Article: Double Counting of Investment (2021)
Working Paper: Double-counting of investment (2019)
Working Paper: Double-counting of investment (2019)
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