Wednesday, August 31, 2005

Katrina on GDP

What does a natural disaster like Katrina do to GDP? If GDP is supposed to be a measure of national income, it should go down. Income is the change in wealth, and Katrina has destroyed quite a bit of wealth. But I'm not sure if they calculate these kinds of losses into GDP. If they don't, GDP could increase, because of the "broken window" effect, or decrease, since incomes on the Gulf Coast have been severely curtailed. (As well as oil price effects.)

UPDATE: Also see this Crooked Timber post.


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