Productivity Versus Welfare: Or GDP Versus Weitzman's Ndp

27 Pages Posted: 26 Sep 2004

See all articles by Nicholas Oulton

Nicholas Oulton

London School of Economics - Centre for Macroeconomics(CFM)

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Abstract

While GDP is the appropriate measure of output, I argue that Weitzman's NDP (WNDP) - nominal net domestic product deflated by the price of consumption - is the appropriate measure of welfare. Total factor productivity (TFP) growth measures the shift in the GDP frontier, and there is an analogous concept for WNDP, which I call total factor welfare (TFW) growth. I calculate and compare WNDP and GDP, and TFP and TFW, for the United States in the 1990s. I find that the acceleration of WNDP post 1995 was as great as that of GDP, even though the aggregate depreciation rate was rising.

Suggested Citation

Oulton, Nicholas, Productivity Versus Welfare: Or GDP Versus Weitzman's Ndp. Available at SSRN: https://ssrn.com/abstract=591624

Nicholas Oulton (Contact Author)

London School of Economics - Centre for Macroeconomics(CFM) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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