GDP vs EVA as an strongEconomicstrong Indicator - mpra.ub.uni-muenchen.de.pdf

MPRA DRAFT GDP VS EVA® AS AN ECONOMIC INDICATOR Nicolas Cachanosky 06-Mar-09 This article discusses the limits and charactristics of GDP as economic indicator and suggests that an Economic Value Added (EVA®) approach would be more accurate and appropriate to measure macroeconomic performance. The main difference is that EVA® takes into consideration the invested capital cost of opportunity, while GDP is focused on quantity of production; an EVA® approach will be focused on the economic result of production activities. A final comment is made on the characteristics and limits of a GDP calculated using the EVA® I would like to thank Martin Krause for his helpful comments. The usual caveats apply. A previous version of this article was presented at the Second International Congress: The Austrian School in the 21 st Century, held in Rosario, Argentina in August 2008. GDP VS EVA® AS ECONOMIC INDICATOR Introduction: The Role of Economic Indicators Interest in economic indicators and measurement of the market gained relevance with the “Great Depression” of 1929; until then there were no such big crises and there were no imperative needs to estimate economic performance. The Great Depression