Posted to The Age (2/6/2011) on 2/6/2011 at 11:32 AM
Commenting on "Economy takes a hit but it's far from a disaster"
http://www.theage.com.au/national/economy-takes-a-hit-but-its-far-from-a-disaster-20110601-1fgpg.html
Correct me if I am wrong:
GDP = private consumption + gross investment + government spending + (exports - imports)
One of the parameters is private consumption which includes utilities. By discounting the great jump in utility prices through no increase in actual "quantity consumption", how can any economist justifiably comment that there was a GDP increase if of all the natural disasters factors are removed.
One must be very careful in examining all the underpinning components, and not to treat everything as a basket case. For a long time I argue that many economic models are incorrect, in the sense that dollar values are used instead of unit prices. Unit price takes care of and normalises quantity consumption.
Growth in consumption is paramount! Great real!
Commenting on "Economy takes a hit but it's far from a disaster"
http://www.theage.com.au/national/economy-takes-a-hit-but-its-far-from-a-disaster-20110601-1fgpg.html
Correct me if I am wrong:
GDP = private consumption + gross investment + government spending + (exports - imports)
One of the parameters is private consumption which includes utilities. By discounting the great jump in utility prices through no increase in actual "quantity consumption", how can any economist justifiably comment that there was a GDP increase if of all the natural disasters factors are removed.
One must be very careful in examining all the underpinning components, and not to treat everything as a basket case. For a long time I argue that many economic models are incorrect, in the sense that dollar values are used instead of unit prices. Unit price takes care of and normalises quantity consumption.
Growth in consumption is paramount! Great real!
