Quantifying the Digital Revolution
The Digital Revolution and the proliferation of digital economy goods and services have been truly astonishing. However, what seems evident in daily life is not reflected in the nation’s GDP statistics. The value of “free goods” companies like Google, Facebook, and Amazon produce is not included in GDP, which understates their contribution to economic welfare. As a result, true economic growth is also understated and the rate of inflation overstated. Policy makers rely on these important indicators to formulate monetary and fiscal policy.
New research by Charles Hulten and Leonard Nakamura addresses this issue, explaining that many of the benefits of the information available over the internet are targeted directly at consumers and therefore bypass GDP. Thus, conventional measures of GDP miss much of the consumer welfare created by such technological innovations.
- Ana Aizcorbe, Senior Research Economist, US Bureau of Economic Analysis
- Carol Corrado, Senior Advisor and Research Director, Economics Program, The Conference Board
- Shane Greenstein, Martin Marshall Professor of Business Administration, Harvard Business School
- Charles Hulten, Professor Emeritus of Economics, University of Maryland, and Adjunct Senior Fellow, Technology Policy Institute
- Leonard Nakamura, Vice President and Economist, Federal Reserve Bank of Philadelphia