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The new economy and the measurement of GDP growth

Author

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  • F. LEQUILLER

    (Insee)

Abstract

In connection with a surge in the 'new economy' that is statistically difficult to measure, doubts have been cast both on European growth and its comparability with that of the United States. This article explores measurement problems in the French case. The data at current prices seem to be reliable, but information by product is becoming increasingly difficult to establish. Contrary to widely held belief, the differences in the application of the famous "hedonic methods" have only a small impact on the French data. On the other hand, there seems to be a difference in the treatment of data between France and the United States, or rather between several European countries and the United States, regarding the distinction between final consumption and intermediate consumption of IT products. The United States national accounts record more gross fixed capital formation in software, ceteris paribus, and this automatically produces a higher measure of GDP in recent years. The difference may be the result of different industrial processes, but it cannot be ruled out that it may be merely the result of applying a different statistical convention. In that case, one might then speak of a comparability bias. The method most widely used in Europe -- and which therefore preserves intra-European comparability -- maintains consistency with the results of private accounting, whereas the American method diverges from it. The use of "net domestic product" instead of the usual "gross domestic product" improves comparability with the United States. Taking net domestic product reduces the growth differential between France and the United States in 1999 by half a point.

Suggested Citation

  • F. Lequiller, 2001. "The new economy and the measurement of GDP growth," Documents de Travail de l'Insee - INSEE Working Papers g2001-01, Institut National de la Statistique et des Etudes Economiques.
  • Handle: RePEc:nse:doctra:g2001-01
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    File URL: https://www.bnsp.insee.fr/ark:/12148/bc6p06zqqdx/f1.pdf
    File Function: Document de travail de la DESE numéro G2001-01
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    Citations

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    Cited by:

    1. Ladislav Hájek, 2003. "Daňové zatížení v zemích OECD a v České republice [Tax burden in OECD countries and in the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2003(5), pages 714-725.
    2. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2004. "The Case of the Missing Productivity Growth, or Does Information Technology Explain Why Productivity Accelerated in the United States but Not in the United Kingdom?," NBER Chapters, in: NBER Macroeconomics Annual 2003, Volume 18, pages 9-82, National Bureau of Economic Research, Inc.
    3. Susanto Basu & John G. Fernald & Nicholas Oulton & Sylaja Srinivasan, 2003. "The Case of the Missing Productivity Growth: Or, Does Information Technology Explain why Productivity Accelerated in the US but not the UK?," NBER Working Papers 10010, National Bureau of Economic Research, Inc.
    4. Alessandra Colecchia & Paul Schreyer, 2002. "ICT Investment and Economic Growth in the 1990s: Is the United States a Unique Case? A Comparative Study of Nine OECD Countries," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(2), pages 408-442, April.

    More about this item

    Keywords

    national accounts; new economy; GDP; international comparison; information and communication technologies;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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