I think an intuitive idea of (what I think) GDP is supposed to be capturing is this. Imagine that suddenly we have two copies of the world, taken from two different times, that are able to trade. So you could offer a 1960′s person a 2024 smartphone for their house. (They wouldn’t take it, you would be outbid by another 2024-er offering TWO smartphones, plus a laptop). You then work out how much richer the 2024 world is in that shared market.
Interestingly, we can sort of trade between different times. By storing things to sell later. And this possibility kind of undermines the loop example you give. If I know that a price loop like that is taking place I can make a lot of money by buying things on the lows, and re-selling them on the highs. (I buy good A in year 2, sell in year 3. I buy B in year 4, sell in year 5). But, me doing this off course smooths out the bumps and undermines the GDP hack. So you would have to use a perishable good, or a service, if you wanted to do your Escher staircase GPD scheme.
I think an intuitive idea of (what I think) GDP is supposed to be capturing is this. Imagine that suddenly we have two copies of the world, taken from two different times, that are able to trade. So you could offer a 1960′s person a 2024 smartphone for their house. (They wouldn’t take it, you would be outbid by another 2024-er offering TWO smartphones, plus a laptop). You then work out how much richer the 2024 world is in that shared market.
Interestingly, we can sort of trade between different times. By storing things to sell later. And this possibility kind of undermines the loop example you give. If I know that a price loop like that is taking place I can make a lot of money by buying things on the lows, and re-selling them on the highs. (I buy good A in year 2, sell in year 3. I buy B in year 4, sell in year 5). But, me doing this off course smooths out the bumps and undermines the GDP hack. So you would have to use a perishable good, or a service, if you wanted to do your Escher staircase GPD scheme.