fagarrido

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What Do GDP Growth Curves Really Mean?

I don't have that much of a problem with using the recent prices. The justification for using prices as a measure of the value of production is that price = marginal benefit (to the consumer), so a drop from $1 to $0.1 per unit of brass from year 0 to year 1 tells us that the marginal use of brass is in year 1 worth 1/10th of what it was worth in year 0. The most recent price gives you a better approximation of the current marginal value of the good.

Probably a bigger (and related) problem is that we don't have a good way to account for new products and services.