Identify flaws in the estimation of GDP.

Purpose In this activity we are going to study National Income and Product accounts (NIPA). These are statistics kept by the U.S. Department of Commerce. The main account is Gross Domestic Product (GDP).It is an estimate of the output produced in the economy during a given year, valued at market prices. For our purposes, the main flaws of this accounting process is that it does not take into consideration most of the work done by women. The United Nations has estimated that if the work performed by women were to be included, the value of GDP could be as high as three times the reported value (UNDP, 1995 Human Development Report). The other important account is the Gross National Income (GNI).

Objectives

1. To get to know the NIPA as estimated by the U.S. Department of Commerce.
2. To identify flaws in the estimation of GDP.

Readings & Presentations
The corresponding chapter on National Income and Product Accounts from any textbook on Principles of Macroeconomics. If you need a reference, the pdf file of Chapter 5 of the book Economics: Principles and Tools, 5th edition, by O’Sullivan and Sheffrin, published by Prentice Hall, is included below.

An excellent source for information on NIPA: “A Guide to the National Income and Product Accounts of the United States”
Chapter 5 – Economics: Principles and Tools

Film: “Who is counting? ” by Marilyn Waring (94:03)

Assignments
After watching the video “Who is Counting?” and reading the corresponding chapter from the textbook of your choice, answer the following questions and submit your answers to the Assignment Dropbox.
1. What is GDP? Explain which are the main components of GDP? What is the difference between nominal and real GDP? What is GNI? What are the main differences between GDP and GNI?

2. Based on the video ‘Who is counting?’ discuss major deficiencies of GDP as a measure of welfare.

3. Give the latest estimated values of GDP, of GDP per capita, and of GNI, in the U.S., as reported by the US Department of Commerce, in both real and nominal values. Provide the most recent estimates of the rates of growth of GDP, in both real and nominal terms.