Talk:Gross domestic product

What the heck is this?

"It is sometimes regarded as the sum of profits added at every level of production (the intermediate stages) of all final goods and services produced within a country in a stipulated timeframe, and it is rarely given a monetary value."

How, other than a monetary value, would you express GDP? GDP is always measured in monetary values. —Preceding unsigned comment added by 24.70.210.156 (talk) 20:11, 20 January 2009 (UTC)

I have trouble understanding GDP as sum of various incomes and government spending! I suspect that there are a couple of duplications - for example, wages, tips, etc from W2 include the 'empolyee' cost to the employer. The cost of a product include the employer costs. Also, the government gets taxes from the same employee for its spending. The GDP formula does not make sense. — Preceding unsigned comment added by Pisapatis (talk • contribs) 20:01, 13 February 2011 (UTC)

CIA World Fact Book 2007 ranking of GDP per capita (PPP)

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html

This is the list to modify the map since it has lots of errors. Chile is over Argentina that should be the same color as Venezuela and Mexico, just to point one example of many.

kardrak 21:45, 25 January 2008 (UTC)

It's also worth pointing out that the map of Europe needs to be updated. —Preceding unsigned comment added by Sbw01f (talk • contribs) 20:28, 28 January 2008 (UTC)

Removed from article

The following was still in the source. In case someone wants to use it: -- User:Docu

Rank	Entity	PPP total	PPP/capita	Population
		(U.S dollars)	(U.S dollars)	(2003 est.)
26.	Philippines	356 billion	4,200	210,116,000
27.	Pakistan	311 billion	2,100	210,116,000
28.	Belgium	298 billion	29,000	210,116,000
29.	Colombia	268 billion	6,500	210,116,000
30.	Egypt	268 billion	3,900	210,116,000
31.	Saudi Arabia	242 billion	10,500	210,116,000
32.	Bangladesh	239 billion	1,700	210,116,000
33.	Switzerland	231 billion	31,700	210,116,000
34.	Sweden	227 billion	25,400	210,116,000
35.	Austria	226 billion	27,700	210,116,000
36.	Ukraine	218 billion	4,500	210,116,000
37.	Malaysia	210 billion	9,300	210,116,000
38.	Greece	201 billion	19,000	210,116,000
39.	Hong Kong	186 billion	26,000	210,116,000
40.	Vietnam	183 billion	2,250	210,116,000
41.	Portugal	182 billion	18,000	210,116,000
42.	Algeria	167 billion	5,300	210,116,000
43.	Romania	166 billion	7,400	210,116,000
44.	Czech Republic	156 billion	15,300	210,116,000
45.	Denmark	156 billion	29,000	210,116,000
46.	Chile	151 billion	10,000	210,116,000
47.	Norway	143 billion	31,800	210,116,000
48.	Finland	136 billion	26,200	210,116,000
48.	Hungary	135 billion	13,300	210,116,000
49.	Venezuela	133 billion	5,500	210,116,000
50.	Peru	132 billion	4,800	210,116,000
51.	Israel	122 billion	19,000	210,116,000
52.	Republic of Ireland	119 billion	30,500	210,116,000
53.	Morocco	115 billion	3,900	210,116,000
54.	Nigeria	663 billion	875	210,116,000
55.	Kazakhstan	663 billion	20,138	210,116,000
56.	Singapore	663 billion	20,138	210,116,000
57.	Belarus	663 billion	20,138	210,116,000
58.	New Zealand	663 billion	20,138	210,116,000
59.	Sri Lanka	663 billion	20,138	210,116,000
60.	Burma	663 billion	20,138	210,116,000
61.	Slovakia	663 billion	20,138	210,116,000
62.	Uzbekistan	663 billion	20,138	210,116,000
63.	Tunisia	663 billion	20,138	210,116,000
64.	Syria	663 billion	20,138	210,116,000
65.	Iraq	663 billion	20,138	210,116,000
66.	Dominican Republic	663 billion	20,138	210,116,000
67.	United Arab Emirates	663 billion	20,138	210,116,000
68.	Sudan	663 billion	20,138	210,116,000
69.	Bulgaria	663 billion	20,138	210,116,000
70.	Ethiopia	663 billion	20,	210,116,000
71.	Guatemala	663 billion	20,138	210,116,000
72.	United Arab Emirates	663 billion	20,138	210,116,000
73.	United Arab Emirates	663 billion	20,138	210,116,000
74.	Puerto Rico	663 billion	20,138	210,116,000
75.	United Arab Emirates	663 billion	20,138	210,116,000
76.	Ghana	663 billion	20,138	210,116,000
77.	Ecuador	663 billion	20,138	210,116,000
78.	Libya	663 billion	20,138	210,116,000
79.	United Arab Emirates	663 billion	20,138	210,116,000
80.	Croatia	663 billion	20,138	210,116,000
81.	Nepal	663 billion	20,138	210,116,000
82.	Slovenia	663 billion	20,138	210,116,000
83.	Kuwait	663 billion	20,138	210,116,000
84.	Congo,(DR)	663 billion	20,138	210,116,000
85.	Costa Rica	663 billion	20,138	210,116,000
86.	Kenya	663 billion	20,138	210,116,000
87.	Uganda	663 billion	20,138	210,116,000
88.	El Salvador	663 billion	20,138	210,116,000
89.	Lithuania	663 billion	20,138	210,116,000
90.	Azerbaijan	663 billion	20,138	210,116,000
91.	Cameroon	663 billion	20,138	210,116,000
92.	Zimbabwe	663 billion	20,138	210,116,000
93.	Uruguay	663 billion	20,138	210,116,000
94.	Turkmenistan	663 billion	20,138	210,116,000
95.	Cuba	663 billion	20,138	210,116,000
96.	Serbia and Montenegro	663 billion	20,138	210,116,000
97.	Paraguay	663 billion	20,138	210,116,000
98.	Côte d'Ivoire	663 billion	20,138	210,116,000
99.	Jordan	663 billion	20,138	210,116,000
100.	Tanzania	663 billion	20,138	210,116,000
101.	Oman	663 billion	20,138	210,116,000
102.	North Korea	663 billion	20,138	210,116,000
103.	Bolivia	663 billion	20,138	210,116,000
104.	Latvia	663 billion	20,138	210,116,000
105.	Luxembourg	663 billion	20,138	210,116,000
106.	Cambodia	663 billion	20,138	210,116,000
107.	Lebanon	663 billion	20,138	210,116,000
108.	Afghanistan	663 billion	20,138	210,116,000
109.	Honduras	663 billion	20,138	210,116,000
110.	Panama	663 billion	20,138	210,116,000
111.	Qatar	663 billion	20,138	210,116,000
112.	Angola	663 billion	20,138	210,116,000
113.	Senegal	663 billion	20,138	210,116,000
114.	Guinea	663 billion	20,138	210,116,000
115.	Yemen	663 billion	20,138	210,116,000
116.	Estonia	663 billion	20,138	210,116,000
117.	Botswana	663 billion	20,138	210,116,000
118.	Georgia	663 billion	20,138	210,116,000
119.	Albania	663 billion	20,138	210,116,000
120.	Burkina Faso	663 billion	20,138	210,116,000
121.	Kyrgyzstan	663 billion	20,138	210,116,000
122.	Nicaragua	663 billion	20,138	210,116,000
123.	Armenia	663 billion	20,138	210,116,000
124.	Namibia	663 billion	20,138	210,116,000
125.	Madagascar	663 billion	20,138	210,116,000
126.	Haiti	663 billion	20,138	210,116,000
127.	Trinidad and Tobago	663 billion	20,138	210,116,000
128.	Moldova	663 billion	20,138	210,116,000
129.	Chad	663 billion	20,138	210,116,000
130.	F. Y. Republic of Macedonia	663 billion	20,138	210,116,000
131.	Jamaica	663 billion	20,138	210,116,000
132.	Laos	663 billion	20,138	210,116,000
133.	Bahrain	663 billion	20,138	210,116,000
134.	Mali	663 billion	20,138	210,116,000
135.	Cyprus	663 billion	20,138	210,116,000
136.	Rwanda	663 billion	20,138	210,116,000
137.	Zambia	663 billion	20,138	210,116,000
138.	Niger	663 billion	20,138	210,116,000

---

A fallacy of the GDP is that it doesn't take into account who owns the produced resources. Therefore, some poor countries have an inflated GDP, due to the presence of large foreign corporations. This makes the country seem richer on paper than it really is. As such, it's no way of judging the real standard of living, as much of the money made from the manufacture of items by those companies goes back overseas.

== You should carry out both theory writing together of PPP and the nominal == Only GDP (PPP) appears in the basic data of each country. However,the argument is divided about the credibility of PPP. Should not GDP (nominal) be written together, either?

Excel-sheet from worldbank

On the website of the worldbank there is an excel sheet (5MB) with all kind of numeric data for all countries from 1960-->1999. Not up to date but very interesting to put things in historical perspective. Could we put this sheet on wikisource??

EU

To allow the EU to enter the PPP index is academically sloppy. PPP index utilizes national borders as a guideline for all calculations -- consider the fact that we are discussing gross DOMESTIC product. The unification of currency systems does not simply permit a group of countries to suddenly be considered as singular economic units -- as much as members of certain economic communities would like it to be. This is a case of proper knowledge of economic definitions, formulae, and qualifications whereby we classify different economic entities under those specific definitions. To be blunt: the EU does not belong on the index, and, do you realize the can of worms you are opening if you start grouping my shared economic characteristics instead of national boundaries? What about the NAFTA nations? What about the nations of the dollar + those that set their currency by the dollar? Let's shift to political realms: I think that NATO nations should be analyzed as an economic block ... or maybe ... members of OPEC. It is sloppy and represents misinformation. --User:144.82.208.113

The EU (especially Eurozone) differs from NAFTA and OPEC in that one of the EU's major goals is single market trading - it behaves economically as a single, internally-borderless nation. Thus it produces a single GDP, and should be included on the list. When it is, the member nations should be removed. But all of this should be noted below the chart. NAFTA and OPEC are a trade agreement and an oil negotiation group, respectively; neither is a unit that behaves as a single market. --Whosyourjudas (talk) 22:18, 18 Oct 2004 (UTC)

Okay, I'll approach this in a more calm manner. If you understand how PPP calculations operate, you'll understand that we calculate PPP based on transnational currency exchange rates. Although there are 20-odd members of the "European Union", there are only 12 members who are functioning along the lines of the euro currency.

Therefore, the proper calculations will group only those twelve (Belgium Germany Greece Spain France Ireland Italy Luxembourg The Netherlands Austria Portugal Finland) as an economic entity when it comes to PPP.

Current academic papers which discuss PPP convergence within the European Union are already a bit disingenuous, as they use a bit of economic 'smoke and mirrors' to replicate the supposed cross-border exchange rates of countries which themselves no longer have recognizable spot rates within the EU.

The bottom line is that the figure which places the EU as the highest on the PPP list is completely incorrect -- someone just aggregated the PPPs of all of the EU member states, regardless of whether they were on the euro or their own internal currency, and put it into this article.

To be done quickly, all I or someone else has to do is aggregate the PPPs of those twelve abovementioned countries -- that is the actual PPP of the European Union -- and then asterisk that to say that the EU PPP is actually in a state of flux because approximately 50% of its members are not on the euro currency, although there are plans for the majority of them to shift to the euro (not the UK I hope to God)

To be done properly, we need to use some econometrics to generate synthetic exchange rates in a retroactive fashion for the current euro-based economies, but, for the sake of this article, I don't think it is necessary (and I don't have the time or anyone currently available to check my work if I did it).

Bottom line: That PPP figure for the EU should be about half, and any source that claims differently is plain wrong.

Check out these two links for evidence as to what I am saying (covering the EU -- if you don't understand PPP calcs, then you shouldn't be messing with this page)

http://www.eurunion.org/legislat/agd2000/agd2000.htm

http://europa.eu.int/comm/economy_finance/euro/our_currency_en.htm

I'm not sure what you're propsing here; we seem to have 3 options:

• Include the EU as a whole, just summed PPPs
• Include just Eurozone countries
• Do not include EU as a whole at all

The first option is inaccurate, apparently. I agree that the current figure is wrong. The second option you seem to support as a "quick" method - are you saying it's wrong? And is it only worth including if done "properly"? I don't think we can leave out the EU entirely, Eurozone or otherwise - it's an important part of current politics and economics. So I think we should add Eurozone, referred to as EU or as Eurozone, with a footnote explaining that the EU on the whole is in flux, but the figure is accurate-as-possible for the Euro countries. Does this work with you?

Thank you for hearing my point. In the short run, I concur with the second option. We need to aggregate the PPP of the EU countries that are currently on the Euro, and include a footnote explaining that purchasing power parity calculations are established via transnational currency comparisons and that, in the coming years, as the number of countries on the Euro goes from 12 to x, the PPP will continue to increase.

The reason that I spoke of a quick/more accurate method was for the following: Even if we are to assume that the PPP for each individual country was properly calculated using retrogressive synthetic exchange rates, when multiple nations go to a single currency unit, it really is a more complex matter than simply summing their PPPs to arrive at the PPP of the new economic group. This is true for many reasons, not least of which is the fact that much of the financial and goods-based exchange between the formerly economically independent nations which factored into their individual PPPs can no longer be taken as pure figures, given that those exchanges (when doing post facto caluclations) now would occur on a single currency set.

The remedy to this (although it isn't a perfect one) involves the formulation of some rather complex econometric models. If I have time, I can look through some e-journals that I have available to me to see if anyone has done this properly. However, for the time being, a close enough estimate would be an aggregation of the PPPs of the 12 nations currently on the euro, which should come out at about ... 7.87 1x10^12 (i.e. trillion) USD. This represents the PPP of the Eurozone or the Euroland (as many people have begun to call it) in rough aggregated figures.

So, in summary, I would reccomend that we remove the EU PPP, as it does not exist. We should add the Eurozone or Euroland PPP with a figure of 7.87 t USD baselined at 2003. And, this entry requires one if not two notations: the first, to explain the composition of the Eurozone as 12 member nations of the European Union who are operating under the same currency head and who therefore can be aggregated to arrive at a specific PPP level, the second, to explain the approximate nature of the 7.87 trillion, how it was arrived at aggregation rather than precise econometric modeling which would take better account of the deviations in transnational exchanges which were reflected in the original PPPs from which the aggregation was done, but which ought to be more properly devalued in a present model.

This figure will have to be updated as more nations shift to the euro.

That sounds good. Going just Eurozone is the best way I think we can feasibly go; if you would like to do the work to create the models for the "real" GDP, be my guest. I'm no economics major; that's over my head. But 7.87 trillion for Eurozone looks good as it stands. I'll remove the EU figure, and add the Euroland figure with notations; but two questions. First, should it be included in the list alongside the countries, or remain at teh top as EU is now? Second, we should remove France, Germany, etc from the list, since they are included in Eurozone, right? I'd say yes, include it in the list, and definitely remove the Eurozone countries. Your thoughts? Regards, Whosyourjudas (talk) 23:57, 19 Oct 2004 (UTC)

Done with addition; how's it look? --Whosyourjudas (talk) 00:13, 20 Oct 2004 (UTC)

Well, a couple of things -- firstly, I'm going to look into the possibility of arriving at a more accurate figure over the next couple of weeks (I told a couple of my colleagues that I got hooked into this wikipedia thing and they thought it was quite amusing). Secondly, the edits which you have made, including the footnote, look quite nice. 3. (I'll switch to numbers) in terms of the rankings, I think it would be appropriate to position the Eurozone (Euroland) where it stands right now, between the US and China. As I said in the earlier post, it would really be doing a disservice to viewers of the page if we were to maintain a PPP for the European Union. I'm not going to keep on repeating myself (no one enjoys that) but, as I've tried to show, you can't have an aggregated PPP for an entity which has more than one currency system. So, let's stick with the Euroland for now. 5. In terms of whether or not to keep Germany, France, etc. its actually a bit more complicated than it would seem, and for reasons not necessarily economic. Technically, Germany no longer has a PPP except as a proportion of Euroland PPP (proportionality coefficients could be calculated). Same goes with France, Belgium, etc. I'm guessing that the calculations which we see for single-nation PPP levels within the Euroland are based on either retogressive synthetic exchange rates via econometrics models or the determination of a variable proportionality constant respective to each individual nation. What's the bottom line: if we want to be economists and sticklers, we should really extricate the 12 euroland nations from the PPP listing. If we want to appeal to the Joe off the street who comes here and wants to learn a bit about PPP and is bothered by the lack of familiar European faces, we might want to keep it on. A nice middle compromise might be to toss up a footnote to the effect of, well, basically, summarizing what I've been saying in my posts. 'given the definition of PPP, individual PPP figures for countries within the Eurozone are, to a certain degree, misleading, as PPP is a function of the unified currency of the Eurozone. However, for the sake of tradition, we have maintained these listings.' To be honest, the economist in me would like to see the complete removal of the 12 individual listings, and perhaps the posting of a footnote explaining why they aren't there. That's another option.

I'll leave it up to an INFORMED consensus decision regarding the four options. I have to say that, the more I think about it, the more I like the fourth option -- removal of the countries, but a good explanatory footnote at the bottom of the table. It's funny - the more we modify this page, the more the table is gaining resemblance to a legitimate economics textbook table -- they are quite full of footnotes, almost to the point of absurdity.

Let me know your thoughts, or, if you feel confident with one of the options, go ahead and execute that one. I'm glad to help.

It's good to hear you're hooked - you've made good suggestions/contributions; please stick around (and get a username!). I've already pulled the 12 nations included in Eurozone, but am rethinking that choice; as you said, we may want to reinclude them for the same of Joe Anyuser. However, I propose that we include them in the table sorted by GDP, but not numbered; give a footnote reference in the rank column. The footnote would say that they are Eurozone, and thus not ranked amongst other countries - like you put it. But we can always put this up at Requests for Comment if we want the opinions of the whole community on the matter; but for now, I think we two can handle it. So as a WP contributor (and not necessarily a stickler economist) should we leave in the "traditiaonal" listings? It seems fitting for approachability, but not exact correctness - but Wikipedia isn't an econ textbook.

If you get a more exact figure for Eurozone, by all means post it; accuracy is our friend. And my humble thanks for the compliments. Cheers, Whosyourjudas (talk) 02:15, 20 Oct 2004 (UTC)

Give me a bit of time to think about this, I'll get back to you soon. I want to see how some of my old intro textbooks dealt with this issue to get some guidance, and I'm going to talk to a colleague who teaches undergrads in terms of whether they struggle for comprehension of the elimination of individual nation PPP when the euro came into play. You're right, it isn't an econ text, but, on the other hand, wiki* is known for its accuracy. Let me get back to you ... (and thanks for the compliments on my contributions -- I really just stumbled upon this site, but I saw a few places where I could help out ...)

Exponents

Do you have to write the exponents for the "trillion (10¹²)", "billion (10⁹)"? - Jerryseinfeld 23:52, 7 Dec 2004 (UTC)

Yes, it's recommended, because of the long scale/short scale difference. See those articles for more for more info - "trillion" means different things to different people. --Whosyourjudas (talk) 01:08, 8 Dec 2004 (UTC)

why not GNP?

why are we taking GDP to account and not GNP?

Am I missing the thrust of this question? Surely, since this is an article about GDP, is should not take GNP into account (other than to say how GDP differs from it). Gross National Product has its own article.

Anyway, I have another question...

(Comment added by other user) This is my first contribution (?) to Wikipedia, I apologize for any inconveniences. I just saw that the Spanish link from the GDP page goes to "Producto Nacional Bruto", but according to the glossary of the IMF, the correspondence appears to be:

GDP = Producto Interno Bruto (PIB) GNP = Producto Nacional Bruto (PNB)

I am no economist (I'm a translator), could someone check it? Thanks.

GNP

GNP and GDP are both measures of National Income, but are slightly different. This article should make that clear. I belive that historicaly (like up to the 80's) GNP was commonly used, and has since been dropped in favor of GDP.

The difference is basicly this (using the US as an example):

GDP = the value of all goods and services produced inside the US. (The goods and services might be produced by European firms at plants in the US.

GNP = The value of all goods and services produced by US firms, no matter where they are located. For example, IBM is a US FIRM, all goods produced by them in India would count twards US GNP, but not in GDP. Toyota makes cars in the US, the value of those cars would count in the US's GDP but not GNP.

I belive the GNP of the US is very similar to the GDP, but for some countries the values are quite different.

Can someone verify that I am right here. If so we should update the article. --Jim Kogler 03:24, 3 November 2006 (UTC)

GNP and GDP are in the US case very similar, and have overtime developed at much the same rate for example from 1969-2009 US GDP increased by 202.23% while GNP increased by 203.25% (the calculation is based on my own calculation and should not be included in the article, it's just here to support the claim). However it should be emphasised the this is not a universal phenomenon, but speficic to the US, Brazil for instance which has more foreign own firms operating in it territory has a larger difference between GDP and GNP.--Bakdal (talk) 12:00, 10 December 2010 (UTC)

With regards to the historical aspect of the change from GNP to GDP use in the US, NIPA shifted from the use of GNP to GDP in 1991, as GDP is supposedly better for tracking short term changes in the US economy --Bakdal (talk) 12:00, 10 December 2010 (UTC)

The above explanation of GDP vs GNP makes more sense than the main article does. I was totally confused by the article's text "The two terms GDP and GNP are almost identical - and yet entirely different".

I learn in school that GNP = GDP + Net Factor Income From Abroad. It's not what the country produces, less the funds that are sent out of the country and funds that are repatriated to the country. i.e. If an American MNC invests in China, the production counts toward China's GDP **and** GNP but the profits that are returned to the US are subtracted from China's GNP and added to US's GNP. Which makes more sense, otherwise economies like Singapore that rely heavily on MNC investments would end up having little or no GNP. ~~ —Preceding unsigned comment added by 218.186.97.115 (talk) 10:31, 14 October 2007 (UTC)

Please explain the policy for adding (and deleting) external links

The link to economic trends was removed (in an article reversion) by User:SimonP, it was correctly labled by User:Gsociology as:

" Brief review of world economic trends includes a description of GDP trends by region, links to data sources, and a brief discussion of GDP measurement issues. "

There is no justification given for this revision, which is confusing to me in itself, but why was this done? Does this link violate some guideline I don't know about? It doesn't appear to be off-topic, ridiculously biased, or repeated elsewhere. Wragge 01:19, 2005 May 9 (UTC)

In the National Measurements section, I deleted China (the link was to Taiwan's national statistical agency), and added Taiwan. Me thinks someone tried to pull a political joke. -- DOR (HK) Dec 10, 2007

Edits of 27 August

I've just made a fairly extensive set of copy editing and correction changes through the whole article. The largest deletions I've made were to remove a couple of sentences that, while interesting, where non sequitors in the context of this article. I've also tried to streamline things a little bit.

Groos moneterasied product (GMP) is perhaps a better description than gross domestic product —Preceding unsigned comment added by 121.72.173.204 (talk) 10:16, 15 June 2008 (UTC)

I've also corrected several spots where incorrect definitons were used for various parts of GDP.

If you disagree with any of my edits, please feel free to start a discussion on the change here. I did have a reason for all the edits I did, although I'm always willing to be shown to be wrong about any of them. EcoRat 12:33, 27 August 2005 (UTC)

VOTE!! - HDI in Infobox#Countries|country infobox/template?

The Human Development Index (HDI) is a standard UN measure/rank of how developed a country is or is not. It is a composite index based on GDP per capita (PPP), literacy, life expectancy, and school enrollment. However, as it is a composite index/rank, some may challenge its usefulness or applicability as information.

Thus, the following question is put to a vote:

Should any, some, or all of the following be included in the Wikipedia Infobox#Countries|country infobox/template:

(1) Human Development Index (HDI) for applicable countries, with year;

(2) Rank of country’s HDI;

(3) Category of country’s HDI (high, medium, or low)?

YES / NO / UNDECIDED/ABSTAIN - vote here

Thanks!

E Pluribus Anthony 01:52, 20 September 2005 (UTC)

specific period - yearly

Quote from article:

---

In economics, gross domestic product (GDP) is a measure of the value of economic production of a particular territory in financial capital terms during a specified period.

---

Now, while this may seems obvious to most of you who are into finances and society, it wasn't to me, and it's still not that obvious. I believe when we talk about GDP, we are always talking about it in a year period. But this isn't stated anywhere at all. So, I'll just add that information to the article and I hope that wikipedians will be able to fix my mistakes, whether if I'm right or wrong.

But, If I'm right, please, let me know.--Cawas 05:13, 22 October 2005 (UTC)

• I'm afraid you're not quite right. While it's most common to talk about GDP in a yearly sense (that is, the amount of production in an economy in a year), quarterly or monthly measures of GDP are also used. The annual measure is by far the most commonly used, to the point that when you say 'Canada's GDP', it would almost always mean the annual GDP. The article does note this, so I'd argue for leaving the article as is. While the definition is, unfortunately, not as clear as it would be with this change, it is the most accurate. EcoRat

I see your point (now that I've found that part, reading better, right in the first line on Definition). I would agree with you, but somehow I did manage to miss that text in there. Thinking about it (just now) maybe it was just because I was rushing, although I did read more of the article with the well-known "skip big parts if you're looking for specific information".

So the "Definition" (as in Definition topic) is actually being redundant with the title, and that made me skip that whole sentence. It's not too logical the way it's expressed in there, so, somehow, I think my current reading skills made me just ignore it. So, I will only agree with you if it becomes evident to me that I'm the only one that do that. Or at least minority among readers.

If not, than both lines should come to a re-invention, or "re-organizing of information", or maybe more simplified called "edit".

By the way, thanks so much for your answer! I just wish I could have read it / realize it before!

--Cawas 11:43, 6 November 2005 (UTC)

Broken Windows

Isn't the argument that GDP measures non net growth as product just the broken windows theory? I thought that was debunked.

I can't see how the Broken Windows theory of crime prevention has anything to do with GDP. You can read all about it at Fixing Broken Windows. -- Beland 23:31, 2 June 2006 (UTC)

He's referring to the Parable of the broken window, or the broken window fallacy. I believe the criticism of GDP valuing an oil spill more than housework ignores this argument, but the criticism is widespread nonetheless.--Coanders 00:39, 8 September 2007 (UTC)

Perhaps the reference is to damage (e.g., Sichuan earthquake) being a net positive, i.e., the destruction is not captured in GDP, but the repair work is. DOR (HK) (talk) 03:36, 26 June 2008 (UTC)

the criticism is that the billiona spent to clean up the mess count as part of GDP while the damage to the environment does not.Jgard5000 (talk) 19:22, 24 October 2009 (UTC)jgard5000Jgard5000 (talk) 19:22, 24 October 2009 (UTC)

Capitalization

Currently the capitalization of Gross Domestic Product in the intro sentence does not match the article title. Does anyone know which one is correct? -SCEhardT 21:39, 15 January 2006 (UTC)

Generalised Income

Does anyone have an idea what could be meant by the term "generalised income"? I believe it is GDP, but am not sure. It is used almost nowhere in the net, except for "TRENEN II, Final Report for Publication" p.88

Probably more something like "per capita income", but i am not sure (english is not my mother tongue) --217.185.235.72 21:04, 20 January 2006 (UTC)

• I have never heard that expression. It could be a poor translation of what should be mean or median income, although I am only guessing.—Preceding unsigned comment added by 82.35.171.53 (talk • contribs)

Western goods?

Regarding the part of the article that reads:

"In 'poor' countries, it may just be that everything is cheap, except for a few western goods. So one may have little money, but if everything is cheap that evens out nicely. Thus, the standard of living may be quite reasonable, it's just that there are, say, fewer TV-sets, meaning people have to share them."

I'm a bit puzzled by the "poor countries / western goods" dichotomy. I'd say the situation depicted pretty much matches Argentina (where I live), which I'm not sure if it could be called a "poor" country though we have poor to spare. Our currency went down from a 1:1 relationship to the dollar to 3:1, which made imported goods much more expensive than food, clothes, etc. Still, I wouldn't call TVs, computers and X-Boxes "western goods", since Argentina (as well as Paraguay, Bolivia, Uruguay, and the rest of the south american third world) are as western as it gets.

WE, the people of earth?

On this part of the article:

"A good recent example would be the aftermath of 2005 Katrina hurricane, which is poised to become the most expensive hurricane in history. GDP would capture the rebuilding activity and suggest a rising living standard, but we're only working toward restoring what was lost for the most part."

I'm not sure about the "we're only working toward" thing... since not only is this a "current event", but is written from an American POV.

EDIT:

• I see that this was already fixed.

Poor countries

I removed the following text:

• In 'poor' countries, it may just be that everything is cheap, except for some products principally those imported from First World countries. One may have little money, but if everything is cheap it evens out nicely. Thus, the standard of living may be quite reasonable; it's just that there are, say, fewer TV-sets, meaning people have to share them.

This is why PPP was used as an alternative measure to the exchange-rate method, and that's pretty well covered in the main part of the article. -- Beland 00:15, 3 June 2006 (UTC)

Would be a good idea to mention the Penn Effect somewhere though. 137.222.40.132 17:44, 21 March 2007 (UTC)

Gross State Product

What should happen to the Gross State Product article? Should it be included on the GDP page? Basically, it's the same process, but applied to a smaller area. Please leave a comment. (Eddie 17:27, 8 July 2006 (UTC))

Dispute

I dispute the neutrality of this article.

Keynesian economics is no longer relevant. If you read articles related to GDP from Eurostat, the IMF, the OECD, the UN, and the World Bank, nowhere do they mention Keynes. The gratuitous mention of his name is simply a knee-jerk affirmation of the love Progressives still have for Keynes.

Mentions of Welfare Economics and Income Inequality do not belong in this article. These themes are passions of Progressives, created to obfuscate the fact that governments which consume a higher proportion of GDP (eg, France at 52%) have slower growth rates and higher unemployment, particularly among the young, old, and unskilled, than governments which consume less (eg, the USA at 37%). Thus, GDP growth is depressed in nations where Progressive-style economics (ie, We need to increase the size of government!) rule.

The seemingly undending criticisms of GDP need to be balanced by similar criticisms of Keynes, Welfare Economics, & the non-issue of Income Inequality.

Livefreediefree 22:55, 19 July 2006 (UTC)livefreediefree

Accuracy of Map?

The map implies that China is as rich as the USA. That ain't true by a long-shot. Am I reading this map wrong? Please check your colors.--Mack2 12:52, 1 November 2006 (UTC)

China is fairly comparable with the United States in terms of total GDP based on PPP (purchasing power parity - a generally accepted measuring statistic). If memory serves me, the U.S.'s GDP is about $13-15 trillion and China's is about $8 trillion, based on what data you look at. However, because China's population is so large, its GDP per capita is only about $7,000 (again, using PPP) while the U.S.' is about $45,000. This is why China is considered to be poorer than the U.S. It's GDP may be comparable with the U.S. but that is because there are so many people in China producing and consuming. On a side note (hopefully this doesn't go against Wikipedia's discussion rules in terms of topic discussion and comments - I'm a new user), there is some issue among economists over the use of PPP or the exchange rate to figure out GDP figures. PPP, which I favor when I look at GDP, takes into consideration how much a country's currency converted into U.S. dollars can by a set basket of good, while the exchange rate just takes into consideration what a country's currency would be in U.S. dollars. This has a lot of importance when it comes to looking at the GDP of poor countries in particular. Obviously, one dollar in poorer countries buys a lot more than one dollar would do in richer counties. This has an impact on a country's GDP. Therefore, in my opinion as well as other economists, PPP is a lot more accurate than the exchange rate method. 16:48, 26 January 2007 (UTC) Bngo 26 January 2007

What's the point of using total GDP? Does anybody seriously want to compare tiny states like Luxembourg with China or the US? That is ridiculous. Let's please use GDP/capita instead. --Spitzl 22:06, 1 June 2007 (UTC)

Europe GDP per capita (PPP) 2007

Europe GDP per capita (PPP) 2007 !!! this map (Europe GDP per capita (PPP) 2007) is not correct - that's why I deleted it. Please next time check Eurostat data.

Criticisms - Externalities

The section on criticisms of the GDP says that it doesn't take into account things such as the environment, perhaps this should be expanded to mention it by definition can't account for externalities in general (both good and bad), listing the few prime examples.

Further to this, the statement "..., GDP is a perverse measurement; it treats loss of ecosystem services as a benefit instead of a cost" is opinion and stating it as fact is definitely untrue. Also, the reference links to a subscription service. Unless a good reference can be made, stating that GDP is a measurement of loss ecosystem services, then I'll remove the assertion. Gcmackay (talk) 17:14, 26 October 2010 (UTC)

aggregate expenditure wrong.

I think the comments on Aggregate Expenditure are wrong. I will spend some time looking it up (I might be wrong too).

There are two problems I have with it:

1. AE is C + I_p + G + NX, so rises in inventory are counted as long as they are planned. The difference between AE and GDP lie in what investment was planned and what wasn't. AE distinguishes, and GDP doesnt.
2. AE is not an alternitive measure to GDP. I belive they are used together in Aggregate Expenditure Models to explain where Y (GDP) is being driven. For example, when I_u is 0, then AE = Y, and the GDP is at equilibrium.

GDP Formula

Why does the formula GDP = consumption + investment + government spending + (exports − imports) have the brackets around exports and imports? Mathematically there is no need for them. The need for the brackets may arise when a country imports more than it exports (which can & does happen) thus allowing the possibility of a negative number being added into the GDP equation. It is important to see how this is happening instead of seeing a purely negative or positive number. Knowing the export value relative to the import value, as a trend over time, is critical rather than looking at a blanket net number in determining the true quality of the GDP number.

There is a common convention or habit amongst economists of netting off imports from exports to say the term "net exports"... you will see this terminology if you search. It's quitye common.... this parenthesis biz is probably to emphasis this habiot amongst economits —The preceding unsigned comment was added by Chivista (talk • contribs) 14:09, 12 December 2006 (UTC).

Administration as an element of GDP

Surely GDP must be open to criticism for including the expenditure on administration as Product. If each nation was a corporation, it would live or die according to how well or badly it contained its administrative overhead. Nations do not die in this sense, but for an increasingly governed country like Great Britain to claim that its new public sector salaries are a legitimate increase in Product must be misleading.

All governments include some measure of nationalised industry, whose product clearly belongs under the heading of Consumption. Many corporations (not just in the USA) pay top salaries which must, to some extent, distort their national economies. Has anyone recast the world GDP tables to show annual Product without the costs associated with central and local governments and without commercial and financial Headquarters establishments ? —The preceding unsigned comment was added by Roop1940 (talk • contribs) 23:52, 27 December 2006 (UTC).

Recurrent government expenditure such as salaries, is captured under Government Consumption Expenditure (GVT). Investment by state-owned enterprises should be captured under Gross Fixed Capital Expenditure (CAP). DOR (HK) (talk) 02:18, 30 June 2008 (UTC)

Criticisms of GDP

Upon viewing this section of the page I was surprised that such a large and diverse area was not subdivided. There are several distinct sections under this heading and I believe readers could be awarded a small amount of convenience by this alteration. As this is a rather large article, I am hesitant to alter it in this way without first hearing opinions in support.

Call for detail: is selling a used object included in GDP?

If someone buys a new bike, then sells it after a couple of months (say on eBay), what is the amount included in the GDP for the whole period? The answer to this question may help better define what is meant by "final goods and services".

Eric Le Bigot

My best guess: the whole amount of the new purchase price would be included in that period if it turns around in the given timeframe. For example, assume you buy for $1000 and sell for $800. Your consumption is originally $1000, then reduced by $800. This $800 is offset by the second buyers $800 in consumption. So it "looks like" you consumed $200 and the used purchaser $800. Of course, if you go on to consume the $800 you received that would show up again, but the baseline assumption would be that (if you hadn't sold to the ebay counterpart) he/she would have consumed it anyway. Obviously there could be timing differences, but probably not significant.

The interesting thing (that I don't know the answer to) is what the effect on GDP is of people digging up crap from their basements and selling on ebay. Does this show up as "new" production/consumption? Probably yes, even though it in fact represents people selling off assets that they already owned. Interesting thought experiment.--Gregalton 10:26, 24 July 2007 (UTC)

THe sale of used goods does not count in GDP whether the goods were resold in the year they were produced or a later year. The service component of teh sale would count.Jgard5000 (talk) 19:28, 24 October 2009 (UTC)Jgard5000Jgard5000 (talk) 19:28, 24 October 2009 (UTC)

Removed savings comment

I've removed this comment/criticism: "* If a nation does not spend, but saves and invests overseas, its GDP will be diminished in comparison to one that spends borrowed money; thus accumulated savings and debt are not taken into account so long as adequate financing continues." This is not correct. For simple explanation, imagine a nation that consumes nothing and invests nothing, but continues to produce. Effectively, all of GDP will collapse into the net exports term - which will either be official reserves or savings abroad. The mistake here is to believe that GDP is effected by where the consumption occurs - the GDP is simply calculated using domestic consumption. The same analysis holds in reverse: a nation that produces nothing by defintion only consumes from abroad, and therefore consumes only imports. Imports and consumption cancel each other out, meaning that GDP is still zero. So the conclusion that a nation that saves overseas has GDP diminished compared to one that spends borrowed money is simply incorrect.--Gregalton 05:17, 24 July 2007 (UTC)

Government

"G is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government"

Are you sure this is right? It seems contrary to the idea of GDP to include salaries of bureaucrats and soldiers into it, they have nothing to do with creation of goods. If public servants' salaries are included, why not salaries paid by private companies? Furthermore, if we're including cash payouts made by the government to federal employees, why not include social security distributions as well? --Itinerant1 06:09, 22 August 2007 (UTC)

Your interpretation is correct, but note the proviso before the formula in the article: this is the way GDP is commonly measured. The inclusion of government here is as government consumption - it does not assume that government produces anything. Likewise, social security distributions (or other transfers) would be captured by the individuals' consumption. Note that the other elements in the definition are also consumption oriented, save imports/exports and investment - i.e. none of these elements measure production directly. For example, when you "consume" a cake, you are not understood to necessarily have produced anything - but you (or someone else) must have done for the cake to be available for consumption (unless it was imported).

To make an analogy to your personal income: I could measure your income directly, or I could measure your income as your consumption (expenditures) plus your savings (taxes would be an expenditure). If done correctly, the two numbers should be equal (assuming I haven't left anything out in this simplistic reduction).--Gregalton 09:51, 22 August 2007 (UTC)

I do think that the remark by Itineranti is very much to the point. If government expenditure would include salaries of public servants, a part of these salaries would be counted twice: 1. on the goverment side 2. on the consumption side. Public servants who spent their salaries on food, would give rise to the the GDP and were counted twice. Tis cannot be correct. —Preceding unsigned comment added by 217.132.0.174 (talk) 22:42, 17 March 2008 (UTC)

Government consumption expenditures are the services produced by public servants for collective consumption—services such as defence, public order and safety, and transportation. Because these services are not bought and sold on the market, their value must be inferred from their cost of production, which is the reason that salaries of public servants are included in the measure of GDP. There is no double count—when the spending of public servants is included in household final consumption expenditures, that spending represents the food, housing, and other goods and services that public servants and their families purchase for their own use. Cournot (talk) 23:16, 17 March 2008 (UTC)

The Government is just another consumer. To exclude what it consumes would be wrong. Any government department COULD be farmed out to private business and the service purchased under contract instead. In that case the salaries of the private "servants" would be part of the purchase cost. —Preceding unsigned comment added by 75.165.45.103 (talk) 20:18, 10 January 2009 (UTC)

Important question about how GDP growth is reported

Today (30 Aug 2007) the media is reporting that "United States GDP grew at an annual rate of 4.0% in the second quarter of 2007."

What the media never reports is whether these growth rates are adjusted for inflation. This is an extremely important question to answer. For example, if the reported growth rate is not adjusted for inflation, and inflation ran at an annual rate of 3.9% during this same period, wouldn't the inflation nullify nearly all of the GDP growth, leaving a net growth of about 0.1%? (Which is a far cry from 4%!)

Hopefully the answer to this question will be added to this Wikipedia article. GPS Pilot 20:10, 30 August 2007 (UTC)

• The simple answer is no. You can't just net this year's inflation from this year's GDP. The inflation adjustment is based on a benchmark year from say, 1980. I'll see if I can't find a good link and just add that to explain this.--10stone5 17:10, 13 September 2007 (UTC)

Common practice in all media articles (assuming econliteracy) is to cite growth rates in real terms, and economic size or economy per capita in nominal terms. What really gets up my nose is when articles don't tell you if the real percent change is year-on-year, year-to-date or quarter-on-quarter. Sloppy. DOR (HK) (talk) 02:21, 30 June 2008 (UTC)

Sorry, but some of the lingo used above is unfamiliar to me. Does this mean the GDP is (somehow) adjusted for inflation? It would seem that such an adjustment would be essential.Esker7 (talk) 15:26, 1 August 2009 (UTC)

Merger proposal

The one-sentence stub about Real GDP should be merged into this main GDP article and expanded. —Preceding unsigned comment added by Nick2588 (talk • contribs) 18:36, 5 September 2007 (UTC)

• IMO it should not be merged. There are good reasons why Real GDP is distinctive economic measure and should thus be treated with a separate analysis and profiling for Wikipedia purposes. If the article is currently a stub does (or should) NOT mean it is unimportant. —Preceding unsigned comment added by 125.236.61.178 (talk) 03:17, 8 October 2007 (UTC)

The Real GDP article does not make clear what is a "real GDP". "Real GDP growth" or "real GDP evolution" is a clear concept (the GDP evolution corrected by the price evolution). But "real GDP" is not. Is it considered real in reference to a previous GDP? Should we convert today current GDP into one calculated with past prices?). Until this is not clarified, better not think about a merger that would only create confusions in the GDP article. --Pgreenfinch 15:20, 15 October 2007 (UTC)

I would disagree on a merger as well. Better to just fix up the Real GDP article to avoid any potential confusion. matt91486 05:27, 23 October 2007 (UTC)

• IMHO the Real GDP article should not be merged. GDP and Real GDP are two separate topics. riverguy42 15:40, 11 November 2007 (UTC)

Data sources

This article does not mention GDP data gathering at all. It mentions data in the abstract, like private and government consumption, but how does the BEA get all this incredibly complex transactional data from private and public organizations?

GDP does not equal to real GDP, then why merge it? Why then not add nominal GDP and others?

A discussion of real GDP does more to confuse the average reader than it does to aid their understanding of economics. The average individual hear the news media talk about the dollar only being woth $.37 or some such thing and then repeats it without having any idea what that means. Greybrain (talk) 18:57, 9 December 2007 (UTC)

GDP article

I do favor the categorizing of the article - as someone else has already mentioned - due to the complexity, "choatic systems" sense - and to the intricate self-weaving of arguments. Additionally, there are some very good "examples", "illustrations" which might be beneficial as "models" for some who would prefer to avoid the entirely too academic [old school] approach to language, presentation & "facility" of immediate understanding of Global Studies! Adding to a more enlightened, colorful, and picturesque "view" of these dynamics [historically & in real-time], I feel that it is now also helpful to look at this multi-level, muti-dimensional "view" with the addition of a "layer" which will provide us [& automated learning systems] with that display of FIRST WAVE, SECOND WAVE, & THIRD WAVE information. It is extremely important to make 3rd Wave distinctions - as Information Services AND Personal Services are "key" here! [Food Services-especially in terms of quality controls, nutrition, high-performance lifestyles, and "tools" for perfection of mind & body - Goal of Yoga - fall in between these Global Services]. Intellectual Property, "Virtual Reality Entities" and other "classified" "Domains" of the Invisible Mental Worlds are yet to be adequately measured, counted, - or even assessed by Wall Street, Washington, others -mostly due to the incredible light speed of the many, many "Information Explosions" which are occuring during this Period. With some 365+ accounting systems in the Federal Government, as well as the new SIC codes put in place since NAFTA, there are certainly many "old" designations to "shunt" new "breakthrus" into - however, this does not do justice to the ever-increasing "contributions" which are currently beyond the reach of those doing the accounting, the estimating, the "Fuzzy Approximations".

   In the case, where "Natural Laws", formulas,

etc are used to show direct, indirect relationships of unknowns, we still do not seem to have [at hand, in use] that "tool" which will provide: 1. The correct value - we are looking for - in order to obtain - a "symbol" which will "let us know our current and future condition" - in order to further perfect our status. AND 2. a "tool" which will also provide that clarity - which takes us out of established methods of cyclic pattern-analysis - in order to prepare us for the extremely Great Change which is the Precession of the Equinox - back into Aquarius - due near DEc 31, 2012 - which is so completely different from all that we have known, that our forecasting and planning agencies are nowhere near capable of handling!

   As Artificial Intelligence steadily improves the quality of life for mankind, and as these benefits are not translated into Quality Lifestyles for the Middle Class & Lower Classes, our "production" of infinitely

superior and speedier "benefits" is "observed", and whether "counted" immediately - or not - the morale either increases - or decreases. And, when the morale is up, the finances are up, when the finances are up, the morale is up! —Preceding unsigned comment added by 4.238.235.18 (talk) 21:59, 9 November 2007 (UTC)

Minor Issues

There seems to be a fragment of a sentence at the end of the introductory section. I'm unfortunately not good enough at economics to guess where the author was going with his/her thought. Perhaps "... is essentially problematic"?

Hejincong (talk) 11:39, 22 November 2007 (UTC)

Table

I was wondering if we could please put it into order , or in a table so we could see who's 1st , 2nd etc. (easier) please , i know it's a big project , but it must be done. —Preceding unsigned comment added by 81.153.180.50 (talk) 16:15, 29 March 2008 (UTC)

Subsistence production

The article currently states that subsistence production is not included in GDP. That seeems to be wrong. See the following quote from [1]: "Among the 48 developing countries covered, the share of non-monetary value added in total GDP ranges from over 40 percent for the poorer countries of Africa to 5 percent or less for the more advanced countries of Latin America and Southern Europe. In countries where rural living standards are much below those in urban areas, non-monetary activities may be very important to the well-being of a large number of people, even though they form only a small part of GDP, and it is still important to make realistic estimates for subsistence output. Agriculture is obviously the main item in non-monetary production, accounting often for over 80 percent of the total. Most countries use some kind of "producers' prices" for valuing agricultural output. Few countries now publish separate figures for non—monetary activities. For many countries, doing so would involve a considerable amount of extra work, but for a number of planning purposes it does seem important to distinguish subsistence activities separately".

If nobody has any objections, I will delete the aforementioned statement. Olegwiki (talk) 09:49, 30 April 2008 (UTC)

-It is my understanding that subsistence production is not included in GDP. If you grow your own oranges to eat, it's not included, although of course any tools or materials you purchased to achieve this would be counted. If you pay someone to grow oranges for you, it is. This is easier to grasp on a more personal level - think about mowing your lawn. If you mow your lawn yourself, you are not contributing to the GDP (this seems intuitive). If you pay someone to mow it, you are purchasing a final service, which is included under consumption. For the same reason, the efforts of homemakers aren't included in GDP, however valuable they may be. The quote you provide never explicitly says that subsistence farming should be included in GDP. My interpretation of it is that it is simply revealing that some of a country's GDP may come from these "non-monetary activities," which would be bartering or trading, and that it is important to make estimates about subsistence output precisely because those numbers aren't included in GDP. Even if my interpretation is incorrect, that source certainly doesn't provide enough backing to support the removal of the original Wikipedia content. 129.59.43.82 (talk) 20:18, 11 June 2008 (UTC)

As this is not dubious but simply true, I will delete the dubious tag.Ithaka84 (talk) 03:17, 13 March 2009 (UTC)

Also the German, French and Spanish versions of Wikipedia explain that subsistence production, unpaid works or "auto-production (ou auto-consommation)" are not included in the GDP. —Preceding unsigned comment added by Drylexx (talk • contribs) 10:24, 30 September 2008 (UTC)

Unaffected

"If the renovation involves the purchase of a chandelier from abroad, that spending would also be counted as an increase in imports, so that NX would fall and the total GDP is affected by the purchase." Shouldn't that be UNaffected? —Preceding unsigned comment added by 85.225.94.182 (talk) 17:28, 25 June 2008 (UTC)

It will be negatively affected since it will increase the imports but not the exports.Ithaka84 (talk) 02:43, 19 March 2009 (UTC)

GDP vs GNP

GDP is concerned with the region in which income is generated. It is the market value of all the output produced in a nation in one year. GDP focuses on where the output is produced rather than who produced it. GDP measures all, disregarding the firms' nationality.

I am guessing at least one of these is meant to be GNP but not totally sure which. --86.164.126.9 (talk) 11:36, 13 September 2008 (UTC)

Nope, The whole thing is correct, it just clarifies the point that GDP concerns location of production rather than what the nationality of the producing companies are (and therefore where profits may be transfer to).--Bakdal (talk) 12:05, 10 December 2010 (UTC)

Exogenous Government Spending

In reference to end of introduction- modern economics does not take government spending as exogenous. This was popular 30 years ago, but no longer. I do not have time to edit the intro right now.

136.152.170.253 (talk) 17:49, 19 November 2008 (UTC)

GDP Question

If a company producing bicycles buys $1000 parts in order too produce a bicycle and then sells the bicycle for $1500, what sum is included in GDP: $1500 or $1000 + $1500 = $2500? -- Xktytob (talk) 10:51, 7 March 2009 (UTC)

You forgot labor in the information you provided. But assuming it costs the company 1000$ for producing one bicycle and it sells it for 1500$, and assuming that there are no taxes or subsidies on production, then the profit is 500$, and this is added to the calculation of GDP with the income method. Keep in mind that those parts are NOT capital, and they can not be considered in the expenditure method as they are not investment in fixed capital.Ithaka84 (talk) 03:12, 13 March 2009 (UTC)

measure

GDP can be measured with a base year dollar, or chained dollar. but what is chained dollar. Some clarification will be good. Jackzhp (talk) 23:39, 18 March 2009 (UTC)

Alternate Formula

I believe the article should also present the alternate formula for GDP:

GDP = C + S + T

C being Consumption expenditure, S is Saving and T is net taxes. —Preceding unsigned comment added by 113.10.71.228 (talk) 11:10, 11 April 2009 (UTC)

One definition of GDP

Are you sure that GDP is "equal to the total expenditures for all final goods and services produced within the country in a stipulated period of time"? —Preceding unsigned comment added by 216.118.136.82 (talk) 00:00, 19 May 2009 (UTC)

The GDP concept is misleading the public.....

or is biased when leading the public....

BECAUSE

it only measures the quantity of the goods and services without considering the quality of them. This kind of measurement is inevitably bring to the consequence of seeking profit and ignoring the social responsibility--222.64.20.44 (talk) 02:05, 19 June 2009 (UTC)

I call for the economists to consider the measurement of both the GDP quantity and GDP quality. If GDP qulaity is difficult to measure, the statistics of product recalls, consumer complaints, goods and services return rates, or something similar are easy to measure--222.64.20.44 (talk) 02:11, 19 June 2009 (UTC)

Quality is contained within the price, so yes, GDP measures quality as well as quantity.24.158.175.78 (talk) 00:00, 20 March 2011 (UTC)

"Real final sales"

what is that, please? It was mentioned in a discurrsion of GDP the other day, and it sounded like a component of GDP. I'll give you the context: "Real final sales, which exclude the change in private inventories, decreased -0.2% in the period versus a -4.1% decrease in Q1." Sounds somewhat like the sum of what the consumer bought, in real terms; for the final owner of a ware is the consumer, isn't he? But it is kept separate from PCE ("Personal consumption expenditures (...) fell at an annualized rate of -1.2% and subtracted 0.88 percentage points from the change in real GDP. In the first quarter, PCE added 0.44 percentage points to real GDP.") So the difference is said to be the private inventories. Does that mean e. g. the number of cans of spam that you hold in your cellar for a stock? So if you bought 4 new cans but only ate 3 last quarter: would the contribution to PCE be just 3 cans, because you actually only CONSUMED 3, but the contribution to real final sales would be 4 cans, because 4 were SOLD to you? Is there really a noticeable difference? Wouldn't it middle out in statistics? Or do I get it wrong?

Would you please explain? (in simple words, please; I am neither an economist nor a native English speaker.) - dysenfysen, 149.225.64.62 (talk) 16:16, 3 August 2009 (UTC)

Effect of aid and remittances on GDP

I am trying to develop an understanding of GDP for my own Country (St.Helena) and I have been unable to work out how to deal with three major elements of national income that we rely on, namely Grant in Aid (recurrent budgetary grant contributions from the UK), Development Aid (granted funds for specific development projects) and remittances from overseas (all of which are effectively incomes obtained against the sale of no product or service). It seems to me that including the use of such income in the Consumption element creates a false picture of how much economic activity we really have. In the extreme, if we produced absolutely nothing and performed no commercial services at all, but were entirely dependent on hand-outs, it would seem that we nevertheless have a non-zero GDP. Could someone clarify for a non-economist such as myself? Schizolocal (talk) 04:12, 18 September 2009 (UTC)

GDP and standard of living

The article reports that GDP is not a perfect indicator of people's salaries. It has some data that GDP increased over the last 16 years by more than salaries. What explains why GDP doesn't accurately measure salaries? It would be good to have some explanation of this, if only a few points. —Preceding unsigned comment added by 166.205.130.162 (talk) 00:59, 16 November 2009 (UTC)

The reference was wrong, anyway, as the tables listed didn't refer to GDP or income. I deleted it. —Preceding unsigned comment added by 24.158.175.78 (talk) 23:48, 19 March 2011 (UTC)

Gross Domestic Product Mythology Dispute

While all economists accept the existing mythology there is extremely strong evidence that it is a measure that distorts growth and size of the economy. The mythology includes some components twice. This measure was conceived in the early 1930s and never put to a test for meeting accounting principles. The computation is basically a consolidation of financial components and it is the intention that only final sales be included so as to avoid reporting product twice. What happens is that taxes that are taken out of sales are not defined individually as a component of a sale and expenditures made from taxes are again reported as a component of GDP.

When taxes are paid, they do in fact result in a purchase of a good or service. Unlike the purchase by a retailer of a defined product or service, expenditures made from taxes are not defined at the time they are paid. Taxes paid, if broken into components would included such things a roads, police protection, street lights and even an army. By allowing the tax included in a sale to again be reported as an addition to GDP the results are both fallacious and misleading.

The GDP computation (GDP = private consumption (C) + gross investment (Inv) + government spending (G) + (exports − imports), is not universally accepted as being mathematically accurate. For example, C represents total consumer sales, except for residential construction, and includes state and local sales tax[25] collections. Government Spending (G) represents all expenditures made by government (Federal, State and Local) except transfer payments such as social security. Thus both sales tax receipts and the spending of the receipts are included in the total for GDP. If Private Consumption (C) is broken down into its parts, as would be in a consolidated financial statement, costs would include all taxes paid by businesses and individuals receiving income out of these sales such as salaries, dividends, interest, profits of sole proprietorships, etc. These taxes should not also show up as additions to GDP when said monies are spent. The GDP calculation thus reflects both the receipts and expenditures of government.

Additionally, Gross Investments (Inv) includes businesses investments. The profits included in the Private Consumption (C) may be applied toward these investments and would therefore be accounted for with some adjustment necessary for excess profits or additional invested capital. The adjustment would need to be somewhat like that made for the inventory included in the GDP computation.

The Income Method appears to support the current GDP calculation. It is calculated as a comparison to the GDP as follows. GDP = compensation of employees + gross operating surplus + gross mixed income + taxes. This computation has similar mathematical errors by including wages, profits, income from sources such as interest and dividends and undistributed profits. Those items other than wages would often have been paid out in wages. Here, as in the GDP method, there are double inclusions.

The effect is to significantly overstate the GDP and understate percentages when comparing components of the GDP to GDP. In particular, taxes as a percentage of GDP would be grossly understated. Neither computation has been subjected to an accounting audit to verify the mythology. The creation of the GDP and Income Method would need to comply with the requirements for preparing consolidated financial statements just as these requirements are applied when computing Private Consumption (C).

There are other questionable totals created when GDP is computed. Taxes and government spending, for example, may not be totally representative of the true amounts. Such things as regulation, mandated spending, pseudo private sector businesses controlled by government, off balance sheet financing, receipts for services traditionally paid out of other tax collections such as toll roads, amounts paid out from escrows and other items that are not reflected. These anomalies created by governments on all levels need to be studied for possible inclusion. —Preceding unsigned comment added by Ededelow (talk • contribs) 17:11, 23 December 2009 (UTC)

History of the GDP construct

I think the article is lacking in that it doesn't describe how GDP was developed at the first place. I would write about it, but I'm not proficient. I wish somebody knowledgeable would do that... Theoharis (talk) 20:07, 19 April 2010 (UTC)

Contradictory figures

Recently, China surpassed Japan as the second largest economy. According to many notable references including August 30, 2010 TIME magazine issue, China's GDP is $1.33T and Japan's is $1.28T. However our GDP figures in Wikipedia show totally different numbers whether it's PPP or nominal. As far as I know China's GDP PPP was around $8T and its GDP nominal was around $5T (according to Wikipedia). Could someone explain this to me please. And if all the numbers are correct, what kind of GDP does TIME magazine refer to then?-- And Rew 21:48, 22 August 2010 (UTC)

China's GDP is $1.33T and Japan's is $1.28T --> The figures are only for the recent quarter. —Preceding unsigned comment added by 204.40.1.129 (talk) 17:40, 27 August 2010 (UTC)

That's what I thought, but in TIME, America's GDP was $14T which is probably the whole 12 months while those of Japan and China were only for one quarter which seems a weird thing to do.-- And Rew 21:51, 1 September 2010 (UTC)

GDP Trick Questions

Hello all, I'd appreciate some help with a couple of questions about GDP. 1) If a U.S. corporation builds a production plant in China, is that part of the "I" of U.S. GDP? Or is it excluded? 2) Transfer payments are not part of "G" but are they essentially in "C"? For example, U.S. "C" went down in 2009 by about $250 billion, but is since at record levels while "G" is pretty flat despite a $1.6T deficit. So do I interpret C as really being boosted by massive transfer payments, recorded in C instead of G? In other words, is government spending keeping C up or is it something else?Farcaster (talk) 05:36, 9 November 2010 (UTC)

My recent edit to opening sentences

This is a fairly good -- if perhaps too exhaustive -- overview of GDP. But I found the opening sentences to be mushy and vague, and surely not helpful to the average reader who wants a quick and workable definition of the term. As they were the sentences did what so many of my economist friends tend to do in their writing, which is to cover all bases and hedge all bets at the same time. IMO :)

Anyway, I'm a new editor, and if my changes go too far, so be it. That's how I learn. Shaun courtice (talk) 00:24, 19 February 2011 (UTC)