iGDP?

Abstract

We define iGDP, the gross domestic product (GDP) aggregated via a valuation of all finished goods and services produced within a country using a universal numeraire we refer to as iCurrency. We propose 4 criteria for iCurrency: 1) it is not a currency issued (or backed) by any government; 2) it is valued based solely on supply and demand; 3) it is easily transferred across regions and globally accepted as a payment method; and 4) it is algorithmic, with no human intervention. Using the iCurrency concept as a universal numeraire makes iGDP less prone to: 1) erratic FX rate fluctuations; 2) possible government manipulation; and 3) comparative advantage intervention policies. We further ponder the benefits of employing iCurrency as a universal world currency, which could enable more precise estimations of global inflation, global output, global productivity, global labor gains, and other global macroeconomic indicators, and improve overall measurements of our global economy. The article can be freely downloaded from The Journal of Portfolio Management's website.

Keywords: GDP, universal numeraire, FX rates, purchasing power parity, cryptocurrency, supply and demand, universal world currency

JEL Classification: G00