ECON 313 : ECON 313 Lecture Notes
8 Dec 2011
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Gdp: market value of all goods and services produced within a country in a given period of time. Question of how to compare gdp across countries. Use official exchange rates valid only for internationally exchanged goods. Domestic goods may be (much) cheaper in least developed countries (ldc) which have lower cost of living. Account for cost of living by collecting data on domestic prices of 150 categories of goods and services in each country. Construct international prices to be used in ppp (purchasing power parity) gdp. Goods exchanged internationally will have the same price (law of one price) Can correct for different costs of living through the ppp. Only a measure of economic development, not social development. Countries with large informal sectors have artificially lower. Questions of quality of data used to calculate gdp. Domestic labour not included (ie women"s work around the house, goods produced) Relevant for poor people: can buy you the basic needs (food, shelter, security)
