Reconsidering National Accounting and Depreciation

Abstract

This paper clarifies many misunderstandings around national account. When GDP measures both output revenue and input spending, it commits the double counting mistake. Though both GDP and NI are measuring mostly spending, they contain completely different, non-overlapping, entries. This paper re-organizes their appropriate items into a new measure, gross domestic spending or GDsP. It also shows that the traditional measures treat all spending with 100% depreciation, and that some less-than-100% depreciation rates reduce the size of measure. If all depreciation were deducted from GDsP, there would be nothing left for NI. Spending is not income.