Ed Leamer points out that perhaps the most important omission in GDP is consumers’ surplus. GDP does not take into account positive and negative externalities. They include the fact that some purchases are negative indicators–more burglar alarms, for example. There are many problems with using GDP as a measure of economic well-being. GDP is one indicator that you can use to measure PSST, but it is not the best indicator. My alternative is to say that economic activity = PSST, meaning patterns of sustainable specialization and trade. Everything seems to follow logically from that.
As Mark points out, this consists of spending by households, businesses, government, and the foreign sector. The problem with the conventional view is that it is focused on spending, as measured by GDP.
So what we have to do is make them fatter.” I would argue that this is like saying, “Our football team’s players are too small to win in this league. …So there’s very little besides government that can provide the needed boost to the economy in the immediate future. It’s useful to break down the economy into four major sectors - households, businesses, government, and the foreign sector…lower consumption growth will be a substantial drag on the economy…looking to housing to lead the recovery is likely to lead to disappointment….Business investment does not provide much hope either …As for foreign exports, which is one of our best hopes for growth in the long-run, it hard to see that sector leading the recovery since the rest of the world is having troubles too. Mark Thoma articulates the conventional view.
0 kommentar(er)
