Probing GDP, employment and unemployment: A Little Forensic Macroeconomics

Abstract

The paper examines the behavior of the growth rates of real GDP, employment and unemployment in the recent past decade and a half based on the estimates of levels taken from the National Income and Product Accounts (NIA) and the Labor Force Surveys (LFS). Real GDP per worker exhibits extreme volatility and seems to deviate from its expected pro-cyclical nature. When linked to the monetary accounts, real per capita GDP suggests a surprisingly low elasticity of money demand with respect to real GDP. Moreover, the recently revised method for determining the employed and unemployed in the labor force tends to exclude a significant number of the working age population from the labor force. The findings suggest revisiting the estimation procedures with the end in view of improving the accuracy of the NIA and the LFS.

JEL classification: E01, E24