Tuesday, 2 September 2014

Do Natural disasters boost GDP?

I was being abused at  Steve from Brisbane's blog yesterday after I called claptrap on the assertion that minimum wages had exploded under Labor.

One thing that eventuated was the person concerned was totally confused between GROSS domestic product and NET domestic product.

When Saul Eslake rightly claimed that the Canberra fires would boost economic activity it was GROSS activity he was referring to. The expenditure would have negligible effects on net activity.

Some time ago when I was reading up on this topic I found two papers of immense value.
one was from the St Louis Fed and the other more lengthy from The World Bank.

As an added bonus here is the essay on this topic that won first prize in the RBA competition.
Another bonus looking at Denmark and Japan.

Enjoy

Popstscript
 here is an excellent short article on debunking-the-broken-window-fallacy

Really how could any person with brains accept a theory that empirical evidence debunks as we have just seen! Mind you if you accept Say's law and 100% crowding out then you are a few snadwiches short of a picnic anyway!