Trying to glimpse the ‘grey economy’

Charles A.E. Goodhart, Jonathan Ashworth 08 October 2014

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It is a remarkable fact that the ratio of currency to GDP in the UK has been rising, despite the greater use of card and online payments (see Figure 1). The currency-to-GDP ratio now stands at 16.1%, compared to 13.3% in Q4 2007. Currency in circulation per adult person is now equal to around £1,300 in the UK. In some other equivalent cases – e.g. holdings of US dollars, euros, and Swiss francs – this might be because more currency is being hoarded abroad, but this is not likely to be the case for the UK. So what is fuelling this rise in currency usage, if not the grey economy?

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Topics:  Europe's nations and regions Frontiers of economic research Global crisis

Tags:  global crisis, underground economy, shadow economy, hidden economy, grey economy, black economy, measurement, Currency, UK, tax evasion, GDP, GDP measurement, national accounts

Mismeasuring long-run growth: The bias from spliced national accounts

Leandro Prados de la Escosura 27 September 2014

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In April it was made public that Nigeria’s GDP figures for 2013 had been revised upwards by 89%, as the base year for its calculation was brought forward from 1990 to 2010 (Financial Times, 7 April 2014). As a result, Nigeria became the largest economy in sub-Saharan Africa. Though spectacular, this is not an exceptional case. Ghana (2010), Argentina (1993), and Italy (1987) also experienced dramatic upward revisions of their GDP. How should this revision affect GDP time series and, consequently, the country’s relative position?

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Topics:  Development Economic history

Tags:  GDP, GDP measurement, national accounts, statistics, measurement, measurement error, data

Using happiness scales to inform policy: Strong words of caution

Timothy N. Bond, Kevin Lang 04 July 2014

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Economists have long known that GDP is an imperfect measure of well-being. In addition to missing nonmarket transactions, it ignores environmental degradation, the quality of social interactions, and many other outcomes of economic interest. But at least since Easterlin (1974) some economists have gone further, and challenged the view that per capita GDP and well-being are positively related.

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Topics:  Frontiers of economic research

Tags:  happiness, wellbeing, GDP measurement

Why GDP just doesn’t add up

Diane Coyle interviewed by Viv Davies,

Date Published

Mon, 06/09/2014

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Topics

Frontiers of economic research
Tags
happiness, GDP measurement, hedonic price index

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Measuring economic progress A new measure of US GDP
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Measuring economic progress

Diane Coyle 17 February 2014

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The debate about how best to measure economic activity dates back to well before the ‘invention’ of GDP by Richard Stone and others during the Second World War (Stone 1947). The earliest attempt was William Petty’s 1665 estimate of income and expenditure in England and Wales, followed by a variety of other approaches in the 18th and 19th centuries. By the 1930s, partly in response to the demand from policymakers for a better handle on what was happening in the economy, the current approach to national income was taking shape (Coyle 2014).

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Topics:  Frontiers of economic research

Tags:  happiness, GDP measurement, hedonic price index

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