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How to determine the contributions of domestic demand and exports to economic growth?

Author

Listed:
  • Henk Kranendonk

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Johan Verbruggen

Abstract

There are two methods in use to determine the contributions of expenditure categories to economic growth. In the conventional 'international method', total imports are deducted from exports, whereas in what is known as the 'Dutch method', final and intermediary imports are allocated to all expenditure categories. Although the Dutch method is a little more complex than the international method, it has the considerable advantage that the contributions of the expenditure categories to GDP growth can be better compared, producing a better understanding of the composition of GDP growth. This memorandum discloses the Dutch method and illustrates the differences in perception which the two methods produced for the years 1999 to 2004. The findings are that the international method underestimates the importance of exports for GDP growth and overestimates the importance of domestic expenditure categories, like private consumption and investments.

Suggested Citation

  • Henk Kranendonk & Johan Verbruggen, 2005. "How to determine the contributions of domestic demand and exports to economic growth?," CPB Memorandum 129, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:memodm:129
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    File URL: https://www.cpb.nl/sites/default/files/publicaties/download/memo129.pdf
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    Citations

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    Cited by:

    1. Henk Kranendonk & Johan Verbruggen, 2008. "Decomposition of GDP growth in European countries; different methods tell different stories," CPB Document 158, CPB Netherlands Bureau for Economic Policy Analysis.
    2. Henk Kranendonk & Johan Verbruggen, 2008. "Decomposition of GDP Growth in Some European Countries and the United States," De Economist, Springer, vol. 156(3), pages 295-306, September.
    3. Martin Mellens & Herman Noordman & Johan Verbruggen, 2007. "Re-exports: international comparison and implications for performance indicators," CPB Document 149, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Henk Kranendonk & Johan Verbruggen, 2008. "Decomposition of GDP-growth in some European Countries and the United States," CPB Memorandum 203.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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