Is the output growth rate in NIPA a welfare measure?

Jorge Durán and Omar Licandro ()

No 2015/18, Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

Abstract: National Income and Product Accounts (NIPA) measure real output growth by means of a Fisher ideal chain index. Bridging modern macroeconomics and the economic theory of index numbers, this paper shows that output growth as measured by NIPA is welfare based. In a dynamic general equilibrium model with genreral recursive preferences and technology, welfare depends on present and future consumption. Indeed, the associated Bellman equation provides a representation of preferences in the domain of current consumption and current investment. Applying standard index number theory to this representation of preferences shows that the Fisher-Shell true quantity index is equal to the Divisia index, in turn well approximated by the Fisher ideal index used in NIPA.

Keywords: Growth measurement; Quantity indexes; NIPA; Fisher-Shell index; Embodied technical change. (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-dge, nep-mac and nep-pbe
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https://www.nottingham.ac.uk/cfcm/documents/papers/cfcm-2015-18.pdf (application/pdf)

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? (2022)
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)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcfc:15/18

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