Using GDP in Equalization Calculations: Are There Meaningful Measurement Issues?
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Authors
Aubut, Julie
Date
2002
Type
working paper
Language
en
Keyword
Alternative Title
Abstract
The purpose of this paper is to examine how taking into account both the tax status of some parts of the gross domestic product (GDP) and the exclusion of GDP of either some revenues or productive activities modifies the GDP of Canadian provinces. This is of interest since different macro approaches to equalization, such as a modified net product measure, a macro measure with weighted income components, using more than one macro measure, or an adjusted GDP, have been recently proposed by various analysts.' The possible quantitative impact of measurement errors on the appropriateness of these measures has, however, been neglected. The first part of this paper will present the analytical framework, summarizing the different measurement questions raised. The second part will estimate the changes in the GDP of the ten Canadian provinces for one year when the eight relevant issues presented in the first section of this paper are taken into consideration.The year chosen is 1992 since data for the problems quantified were available for that year.This will then allow us to calculate an adjusted GDP and modify estimates of differences in income. The results found in the second part are analyzed in the third and final part of this document.
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© IIGR, Queen's University
Citation
Publisher
Queen's University Institute of Intergovernmental Relations