Gross (domestic) output – Another government con


  • William Barnett II Bank One Distinguished Professor of International Business and Professor of Economics. Department of Economics. Joseph A. Butt, S.J. College of Business Admin- istration, Loyola University, New Orleans, Louisiana 70118
  • Walter E. Block Harold E. Wirth Endowed Chair in Economics. Department of Economics. Jo- seph A. Butt, S.J. College of Business Administration, Loyola University, New Orleans, Louisiana 70118



The new sheriff in town is Gross (Domestic) Output, or GO. This is a measure that attempts to measure not merely investment, nor final goods, nor consumption, but the quantity and value of intermediate goods. From the vantage point of its proponents, inclusion of this statistic in national income accounts is long overdue. From the perspective of its critics, such as the present authors, it is an invalid statistic, which will create more error and misunderstanding as it is incorporated into official accounts.

Keywords: Gross (Domestic) Output (GO); Gross Domestic Product (GDP); Structure of production.

JEL Code: E2.

Resumen: El nuevo sheriff de la ciudad es la renta (doméstica) bruta. Se trata de una variable que intenta medir no sólo la inversión, los bienes finales, y el consumo, sino la cantidad y el valor de los bienes intermedios. Desde el punto de vista de sus defensores,se debería haber incluido esta estadística en la contabilidad nacional desde hace mucho tiempo. Desde la perspectiva de sus críticos, como los autores del presente trabajo, es una estadística inválida, que creará más errores y malentendidos conforme se incorpore en las cuentas oficiales.

Palabras clave: Producción (doméstica) bruta, Producto interior bruto, estructura de la producción.

Clasificación JEL: E2


ANDERSON, W. (2001): «The Limits of Mathematics» November 29.

— (2002): «Mathematics and Economic Analysis.» April 02.


WESTLEY, C. (2001): «The Microsoft Corporation in Collision with Antitrust Law,» The Journal of Social, Political and Economic Studies, Vol. 26, No. 1, Winter, pp. 287-302.

ARUOBA, S. B., DIEBOLD, F. X., NALEWAIK, J., SCHORFHEIDE, F., and SONG, D., (2013). «Improving GDP Measurement: A Measurement-Error Perspective,» NBER Working Papers 18954. National Bureau of Economic Research, Inc.

ARMENTANO, D. T. (1972): The Myths of Antitrust, New Rochelle, N.Y.: Arlington House.

— (1982): Antitrust and Monopoly: Anatomy of a Policy Failure, New York: Wiley.

— (1989): «Antitrust Reform: Predatory Practices and the Compet- itive Process.» Review of Austrian Economics Vol. 3, pp. 61-74.

— (1999): Antitrust: The Case for Repeal. Revised 2nd ed., Auburn AL: Mises Institute.

ARMSTRONG, D. (1982): «Competition versus Monopoly: Combines Policy in Perspective.» The Fraser Institute: Vancouver, BC, Canada.

BARNETT, W. II. (2003): «The Modern Theory of Consumer Behav- ior: Ordinal or Cardinal?» The Quarterly Journal of Austrian Eco- nomics. 6 (1): 41−65;

— (2004): «Dimensions and Economics: Some Problems.» Quarterly Journal of Austrian Economics. Spring. Vol. 7, No. 1, pp. 95-104;;

— (2008): «Operators are not Parameters, the Dimensions of Oper- ators and Variables Must be Invariant, and Indices may not be Dimensioned: Rejoinder to Professors Folsom and Gonzalez.»

— and BLOCK, W. E. (2005): «Money: Capital Good, Consumers’ Good, or (Media of) Exchange Good?» Review of Austrian Eco- nomics. 18 (2): 179-194;;;

— (2006A): «On Hayekian Triangles.» Procesos De Mercado: Revista Europea De Economia Politica; Vol. III, No. 2, Fall, pp. 39-141;;;

— (2006B): «Rothbard on V shaped average and total cost curves.» Quarterly Journal of Austrian Economics, Vol. 9, No. 3, Fall, pp. 61- 66;

— (2010): «Mises never used demand curves; was he wrong? Igno- rant? No: The Antimathematicality of Demand Curves.» Dia- logue, Vol. 1, pp. 23-31; March;

— and SALIBA, M. (2002): «Neoclassical Theory and the Inconsist- ent Application of Subjectivism.» Proceedings of the Eighth An- nual Austrian Scholars’ Conference.

— (2005): «Perfect Competition: A Case of “Market-Failure,”» Cor- porate Ownership & Control. Vol. 2, No. 4, summer, p. 70-75.

— (2007): «Predatory pricing.» Corporate Ownership & Control, Vol. 4, No. 4, Continued–3, Summer; pp. 401-406.

BLOCK, W. (1977): «Austrian Monopoly Theory —a Critique,» The Journal of Libertarian Studies, Vol. I, No. 4, Fall, pp. 271-279.

— (1982): Amending the Combines Investigation Act, Vancouver: The Fraser Institute.

— (1990): «The Discounted Marginal Value Product-Marginal Val- ue Product Controversy: A Note,» Review of Austrian Economics, Vol. IV, pp. 199-207;;

— (1994): «Total Repeal of Anti-trust Legislation: A Critique of Bork, Brozen and Posner», Review of Austrian Economics, Vol. 8, No. 1, pp. 35-70.

— and BARNETT, W. (2009): «Monopsony Theory.» American Review of Political Economy June/December, Vol. 7(1/2), pp. 67-109;;

BOUDREAUX, D. J. and DILORENZO, T. J. (1992): «The Protectionist Roots of Antitrust,» Review of Austrian Economics, Vol. 6, No. 2, pp. 81-96.

BRÄTLAND, J. (2000): «Human Action and Socially Optimal Con- servation: A Misesian Inquiry into the Hotelling Principle.» The Quarterly Journal of Austrian Economics 3, no. 1: 3-26;

BRAUN, S. (2011): Comment on «The Income —and Expenditure— Side Estimates of U.S. Output Growth —An Update through 2011 Q2,» Brookings Papers on Economic Activity, vol. 2, pp. 385- 402.

BUREAU OF ECONOMIC ANALYSIS (2014): «What is gross output by in- dustry and how does it differ from gross domestic product by industry? April 22;


BYLUND, P. (2011): «The “Mystery” of the Endowment Effect.» De- cember 28;

CALLAHAN, G. (2001): «Logical Economics vs. Mathematical Eco- nomics», February 17;

CACHANOSKY, J. C. (1985): La Ciencia Economica vs. La Economia Matematica I. («The pitfalls of Mathematical Analysis in Eco- nomics»). Libertas, 3 (Octubre). Issue: Article:

— (1986): La Ciencia Economica vs. La Economia Matematica II. («The pitfalls of Mathematical Analysis in Economics») Liber- tas, 4 (Mayo). Issue: Article:;

COLANDER, D. (2014): «Gross Output: A New Revolutionary Way to Confuse Students about Measuring the Economy.» Eastern Eco- nomic Journal. Vol. 40, pp. 451–455;

COSTEA, D. (2003): «A Critique of Mises’s Theory of Monopoly Pric- es.» The Quarterly Journal of Austrian Economics. Vol. 6, No. 3, Fall, pp. 47-62;

COUNCIL OF ECONOMIC ADVISORS (2015): «A better measure of eco- nomic growth: gross domestic output (GDO)»; Economic Report to the President.

CROUSHORE, D. and STARK, T. (2001): «A Real-Time Data Set for Mac- roeconomics» Journal of Econometrics 105, pp. 111-130.

CUTNELL, J. D. and JOHNSON, K. W. (2001): Physics, 5th ed. John Wiley and Sons, Inc.

DYNAN, K. E. and ELMENDORF, D. W. (2001): «Do Provisional Esti- mates of Output Miss Economic Turning Points?» FEDS Work- ing Paper, 2001-52.

DALY, M. C., FERNALD, J., JORDA, O., NECHIO, F. (2014): «Interpreting Deviations from Okun’s Law.» FRBSF Economic Letter.

DILORENZO, T. J. (1996): «The Myth of Natural Monopoly,» Review of Austrian Economics, Vol. 9, No. 2, pp. 43-58;

— and HIGH, J. (1988): «Antitrust and Competition, Historically Considered,» Economic Inquiry, Vol. 26, No. 1, pp. 423-435, July.

FIXLER, D. J., GREENAWY-MCGREVY, R. and GRIMM, B. T. (2014): «The Revisions to GDP, GDI, and Their Major Components.» Survey of Current Business August 2014, p. 1-23.

FLEISCHMAN, C. A. and ROBERTS, J. M. (2011): «From Many Series, One Cycle: Improved Estimates of the Business Cycle from a Multi- variate Unobserved Components Model.» FEDS Working Pa- per, 2011-46. 9.

GARRISON, R. W. (2001): Time and Money: The Macroeconomics of Cap- ital Structure. London: Routledge.

GWARTNEY, J., LAWSON, R. and BLOCK, W. E. (1996): Economic Freedom of the World, 1975-1995. Vancouver, B.C. Canada: the Fraser Insti- tute.

HANKE, S. H. (2014): «Move over, GDP. Gross output is here: In a blow to Keynesian thinking, the U.S. will now officially meas- ure supply.» June 24;

HAYEK, F. A. (1935): Prices and Production. 2nd, rev’d and enlarged ed. George Routledge & Sons, Ltd.

HENDERSON, D. R. (2013): «The Robber Barons: Neither Robbers nor Barons.» Library of Economics and Liberty. March 4;

HERBENER, J. M. (1996): «Calculation and the Question of Mathemat- ics,» Review of Austrian Economics, 9(1), pp. 151-162.

HIGH, J. (1984-1985): «Bork’s Paradox: Static vs Dynamic Efficiency in Antitrust Analysis,» Contemporary Policy Issues, Vol. 3, pp. 21- 34.

HOLDREN, A. E. (2014): «Gross Domestic Product and Gross Domes- tic Income: Revisions and Source Data» BEA Briefing, June 2014. HULL, G., ed. (2005): The Abolition of Antitrust. New Brunswick, NJ: Transaction Publishers.

HULTEN, C. R. (1992): «Accounting for the Wealth of Nations: The Net versus Gross Output Controversy and Its Ramifications.» The Scandinavian Journal of Economics. Vol. 94, Supplement. Pro- ceedings of a Symposium on Productivity Concepts and Meas- urement Problems: Welfare, Quality and Productivity in the Service Industries, pp. S9-S24.

ISCHBOLDIN, B. (1960): «A critique of econometrics,» Review of Social Economy, Vol. 18, No, 2, September.

JABLECKI , J. (2007): «How Many Traders Can You Fit into a Model?» August 23.

LANDEFELD, S. J., SESKIN, E. P. and FRAUMENI, B. M. (2008): «Taking the Pulse of the Economy: Measuring GDP.» Journal of Economic Per- spectives 22(2), pp 193-216.

— (2010): Comment on «The Income —and Expenditure-Side Measures of Output Growth,» Brookings Papers on Economic Ac- tivity, vol. 1, pp. 71-106.

LEONI, B. and FROLA, E. (1977): «On mathematical thinking in eco- nomics,» The Journal of Libertarian Studies, Vol. 1, No. 2, Spring, pp. 101-110.

MCCHESNEY, F. (1991): «Antitrust and Regulation: Chicago’s Contra- dictory Views,» Cato Journal, Vol. 10.

MCCULLA, S. H. and SMITH, S. (2015): «Preview of the 2015 Annual Revision of the National Income and Product Accounts.» Survey of Current Business (June 2015), pp 1-8.

MCGEE, J. S. (1958): «Predatory Price Cutting: The Standard Oil (New Jersey) Case,» The Journal of Law and Economics, October, pp. 137-169.

MENGER, K. (1973): «Austrian Marginalism and Mathematical Eco- nomics,» Carl Menger and the Austrian School of Economics. J.R. Hicks and Wilhelm Weber, eds., Oxford: Clarenden Press.

MISES, L. V. (1977): «Comments about the mathematical treatment of economic problems,» The Journal of Libertarian Studies, Vol. 1, No. 2, Spring, pp. 97-100.

— [1949] (1998): Human Action, Scholars’ Edition. Auburn: Mises Institute.;

MOULTON, B. (2015): «Harmonizing BEA’s Measures of GDP, GDI, and Value Added: Update Session» Presentation at the May 8, 2015 BEA Advisory Committee Meeting.

MURPHY, R. P. (2008): «Austrian Realists.» July 17;

—, WUTSCHER, R. and BLOCK, W. E. (2010): «Mathematics in Econom- ics: An Austrian Methodological Critique.» Philosophical Investi- gations, January, Vol. 33, No 1, pp. 44-66;

NALEWAIK, J. J. (2011): «The Income —and Expenditure— Side Esti- mates of U.S. Output Growth —An Update through 2011 Q2,» Brookings Papers on Economic Activity, vol. 2, pp. 385-402.

— (2010): «The Income —and Expenditure— Side Measures of Output Growth,» Brookings Papers on Economic Activity, vol. 1, pp. 71-106.

— (2012): «Estimating Probabilities of Recession in Real Time us- ing GDP and GDI,» Journal of Money, Credit and Banking, vol. 44, no. 1, pp. 235-253.

RIZZO, M. (1979): «Praxeology and Econometrics: A Critique of Pos- itivist Economics,» New Directions in Austrian Economics, Louis Spadaro, ed., Kansas City: Sheed Andrews and McMeel, pp. 40- 56.

ROTHBARD, M. N. (1961): «Statistics: Achilles’ Heel of Government.» Freeman, June, pp. 4044. Reprinted in Essays On Liberty VIII. New York: Foundation for Economic Education, 1961, pp. 255261. Reprinted in The Logic of Action Two: Applications and Criticism from the Austrian School. Glos, UK: Edward Elgar Publishing Ltd., 1997, pp. 180-184;

— (2004 [1962]): Man, Economy and State, Auburn AL: Ludwig von Mises Institute, Scholar’s Edition;

— (1988): «Chaos Theory: Destroying Mathematical Economics from Within?» The Free Market. Vol. VI, No. 3;

— (1993): Man, Economy, and State, 2 vols., Auburn, AL: Ludwig von Mises Institute.

— (2011A): «Daniel Bernoulli and the Founding of Mathematical Economics.» February 10;

— (2011B): «Praxeology: the Methodology of Austrian economics.» Chapter 4 in Economic Controversies. Auburn, AL: Mises Institute.

SEARS, F. W., ZEMANSKY, M. W., and YOUNG, H. D. (1987): University Physics. 7th ed. Addison-Wesley Publishing Company, Inc.

SHOSTAK, FRANK. (2002): «What is Wrong with econometrics?» April 17.

SHUGART II and WILLIAM F. (1987): «Don’t Revise the Clayton Act, Scrap It!,» 6 Cato Journal, 925.

SKOUSEN, M. (1990): The Structure of Production. New York University Press.

— (1991): Economics on Trial, Homewood, IL: Irwin.

— (2010): «Consumer Spending Drives the Economy?» Septem- ber 22;

— (2013): «Beyond GDP: Get Ready For A New Way To Measure The Economy.» November 29;

— (2014A.): ac- cessed April 29, 2016.

— (2014B.): «Professional Journal Publishes First Academic Arti- cle on Gross Output.» December 15;

— (2016): «Third quarter gross output and b2b index reports sharp slowdown in us economy.» January 21;

SMITH, A. [1776] (1979): An Inquiry into the Nature and Causes of the Wealth of Nations, Indianapolis, IN: Liberty Fund.

SMITH, JR., FRED L. (1983): «Why not Abolish Antitrust?,» Regula- tion, Jan-Feb, 23;

TUCKER, J. (1998A.): «Controversy: Are Antitrust Laws Immoral?» Journal of Markets & Morality. Vol. 1, No. 1, March, pp. 75-82;

— (1998B.): «Controversy: Are Antitrust Laws Immoral? A Re- sponse to Kenneth G. Elzinga.» Journal of Markets & Morality. Vol. 1, No. 1, March, pp. 90-94;

WOLFERS, J. (2015): «Why You Can’t Put Faith in Reports of First-Quarter Economic Slumps.» New York Times April 23, 2015.

— (2015): «Dueling Views on the First-Quarter Slump.» New York Times May 19

WOLFRAM MATHWORLD: Accessed May 25, 2016.

WUTSCHER, R. (Unpublished): «Foundations in economic methodol- ogy: The use of mathematics by mainstream economics and its methodology by Austrian economics.»




How to Cite

Barnett II, W. ., & Block, W. E. . (2016). Gross (domestic) output – Another government con. REVISTA PROCESOS DE MERCADO, 13(2), 13–39.