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But what is the accuracy of the computation of GDP?  

IIRC, GDP is not a measurement, per se, but an estimate.  Which is a horse of a different guacamole, epistemologically speaking.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Thu Oct 11th, 2007 at 06:55:03 AM EST
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But at least Nominal GDP is a well-defined concept, in principle, even if it is hard to quantify.

For the thermodynamics buffs, this makes Nominal GDP Growth an exact differential, but Real GDP Growth and Inflation are inexact differentials. This means Nominal GDP is a "state variable" and path-independent, but Real GDP and the GDP Deflator are path-dependent and not state variables.

We have met the enemy, and it is us — Pogo

by Carrie (migeru at eurotrib dot com) on Thu Oct 11th, 2007 at 07:02:04 AM EST
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... something which can be aggregated, a monetary amount, while inflation and/or "real" GDP (whichever comes first ... with a market basket it is the inflation index that comes first and "real" values are imputed from that, with a deflator it is the other way around) are an effort to provide a simple index value to summarize a relationship between vector quantities.

Keynes' basic argument for working in terms of nominal amounts and employment was that the ability of a person to work as unskilled labor if need be provided a connection between various specialized and more restricted skilled labor markets in terms of their renumeration as a multiple of the wage of unskilled labor, providing a quantity that could be aggregated with greater justification than the vector of the amount produced of each and every different type of final product for sale in the economy.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu Oct 11th, 2007 at 02:22:09 PM EST
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