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Politics : Ask Michael Burke
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To: Hawkmoon who wrote (87249)12/20/2000 10:51:51 AM
From: Mike M2  Read Replies (1) of 132070
 
Ron, I'll try to address some of your points in your lengthy reply. Most important hedonic pricing was implemented in 1996 and no other nation uses this technique. You would agree that in order to make a valid comparison over time or between countries one should use the same metrics. Until recently the GDP attempted to measure the aggregate current dollar value of goods and service produced by a nation. Note the use of the word current dollars these are the units of account that are exchanged by consumers and businesses in the US less the deflator ( the component of nominal growth less price inflation) Hedonics attempts to place a dollar value on quality improvements and no one argues that there are not tremendous improvements in quality. The salient point is when current dollars are hedonized the differential does not create any additional national income. MSFT does not report its results nor does it pay it workers in chain weighted GDP dollars - it pays in nominal dollars ( real plus inflation component. I reiterate chain weighted dollars create a component of GDP that is nobody's revenue nor income. I have to check the magnitude but it is a very substantial component of reported GDP growth. With respect to the question of the sustainibility of the trade deficit and the willingness of foreigners to accept our dollars -it has been remarkable how the US has been able to borrow prosperity from abroad but I believe there are limits. I'll add more later. I am unable to type I must hunt and peck unfortunately. mike
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