Coyle, Diane, (2017), “Rethinking GDP”, IMF Finance & Decelopment 54(1), March
Why does economic growth matter? The answer for economists is that it measures an important component of social progress—namely, economic welfare, or how much benefit members of society get from the way resources are used and allocated. A look at GDP per capita over the long haul tells the story of innovation and escape from the Malthusian trap of improvement in living standards that is inevitably limited by population growth. However, GDP is not a natural object, although it is now everyday shorthand for economic performance. It cannot be measured in any precise way, unlike phenomena in the physical world. Economists and statisticians understand, when they stop to think about it, that it is an imperfect measure of economic welfare, with well-known drawbacks.
Relevant Posts
- Eurostat/ GDP up by 0.4% in the euro area and by 0.5% in the EU28/ 14 February 2017
- Graham, Carol, (2016), “GDP growth — is it “good enough” or does it distort policymaking?”, Brookings, 5 October