GDP—Gross Domestic Product—basically means the sum of the value (in the economic sense) of all goods produced domestically during a given period, e.g. a year.
If you want to measure the “health of the economy”, that’s quite different. You’ll have to define what do you mean by that expression and then decide which measurements do you want to consider. For example, some people might consider the unemployment rate to be one those measurements, or, say, the Gini index, or the median income, or… the possibilities are endless.
Why do people measure the value of all the goods produced domestically during a year?
From Wikipedia: “GDP was first developed by Simon Kuznets for a US Congress report in 1934. … After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country’s economy.”
Yes, the GDP number is, of course, imprecise. By itself it’s not a problem—most of our measurements are imprecise.
I am not sure what are you getting at. Do you think that GDP is useless or cannot be measured or what?
GDP—Gross Domestic Product—basically means the sum of the value (in the economic sense) of all goods produced domestically during a given period, e.g. a year.
If you want to measure the “health of the economy”, that’s quite different. You’ll have to define what do you mean by that expression and then decide which measurements do you want to consider. For example, some people might consider the unemployment rate to be one those measurements, or, say, the Gini index, or the median income, or… the possibilities are endless.
Why do people measure the value of all the goods produced domestically during a year?
If nothing else, there has to be a fudge factor because some of the economy is underground.
From Wikipedia: “GDP was first developed by Simon Kuznets for a US Congress report in 1934. … After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country’s economy.”
Yes, the GDP number is, of course, imprecise. By itself it’s not a problem—most of our measurements are imprecise.
I am not sure what are you getting at. Do you think that GDP is useless or cannot be measured or what?