Do alternative measures of GDP affect its interpretation?

Hobijn, Bart; Steindel, Charles

Journal Article

Do alternative measures of GDP affect its interpretation?

Abstract: Gross domestic product's high correlation with unemployment and inflation makes it a key measure of the U.S. economy. Yet the somewhat arbitrary nature of the GDP construction process complicates interpretation and measurement of the indicator. A study of an alternative measure of GDP designed to address the published series' limitations finds that the adjusted measure differs in its representation of the long-term trend--but not the short-term fluctuations--of GDP. The published series' relevance as an indicator is therefore robust to some of the arbitrariness of its construction.

Keywords: Econometrics; Gross domestic product; Economic indicators;