A. “GDP is the best possible measure of well-being since it measures the value of all goods and services produced in the economy.” View this (youtube) video Joseph Stiglitz: Problems with GDP as an Economic Barometer (https://www.youtube.com/watch?v=QUaJMNtW6GA) and respond whether you agree or disagree with this statement. Why?
Q#1. Answer one of the following questions (answer either question A or B):
A. “GDP is the best possible measure of well-being since it measures the value of all goods and services produced in the economy.” View this (youtube) video Joseph Stiglitz: Problems with GDP as an Economic Barometer (https://www.youtube.com/watch?v=QUaJMNtW6GA) and respond whether you agree or disagree with this statement. Why?
B. According to The Economist’s “The Irish economy: Fitter yet fragile Ireland’s success in attracting foreign investment has its drawbacks” (January 3, 2013), (http://www.economist.com/news/finance-and-economics/21569049-irelands-success-attracting-foreign-investment-has-its-drawbacks-fitter-yet%20) foreign presence in Ireland is now a “towering one”: “[h]elped by a low corporate-tax rate of 12.5%, Ireland continues to attract foreign direct investment (FDI), especially from American firms and particularly in pharmaceuticals, information technology and financial services. The number of new FDI projects in 2012 has been similar to that in 2011, itself the highest for a decade, says Barry O’Leary, the boss of Ireland’s inward-investment agency”. But Ireland’s reliance on foreign firms may have undesirable effects, e.g., “Irish GNP is lower than GDP because of the big profits made by foreign firms [and t]he gap between the two has been widening, from 14% in 2007 to 20% in 2011”. Why is this a problem? Explain using your own words.
Q#2. In their 2009 working paper Unemployment, Market Work and Household Production (http://ftp.iza.org/dp3955.pdf), Michael Burda (Humboldt University, Germany) and Daniel Hamermesh (University of Texas) examined how U.S. workers who lost their jobs between 2003 and 2006 spent their time. They discovered that, during the period they were unemployed, the decline in the number of hours of paid word done by these workers was almost the same as the increase in the number of hours these workers devoted to household production. Do Burda and Hamermesh’s findings allow us to draw any conclusion about whether total production in the economy–whether that production is included in GDP or not–fell when these workers became unemployed?
Hint: Does your answer depend on whether the household production they carried out while unemployed involved activities that the workers had been paying other people to perform they lost their jobs, e.g., child care?
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