Double Counting of Investment

A-Tier
Journal: Economic Journal
Year: 2021
Volume: 131
Issue: 638
Pages: 2333-2356

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

The national-income accounts double-count investment, which enters once when it occurs and again in present value as rental income on added capital. The double counting implies that GDP and national income overstate sustainable consumption. An alternative measure, ‘permanent income’, equals consumption in the steady state but deviates from consumption outside of the steady state because expensing of gross investment applies to the long-run flow, not the current value. The permanent-income perspective substantially affects measured factor-income shares. When computed in relation to permanent income, the US labour-income share has been reasonably stable, in contrast to the declining share based on GDP.

Technical Details

RePEc Handle
repec:oup:econjl:v:131:y:2021:i:638:p:2333-2356.
Journal Field
General
Author Count
1
Added to Database
2026-01-24