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Transfer payments are presumably excluded because GDP traditionally excludes transfer payments. Including something in the numerator, but not in the denominato
by amalcon 8y ago
Transfer payments are presumably excluded because GDP traditionally excludes transfer payments. Including something in the numerator, but not in the denominator, is a good way to get weird ratios. E.g. it would be possible (though it would not presently happen in the US) to have a spending:GDP ratio greater than one.
I do agree that it would be better to use some other denominator that does not have this problem, but it isn't a crazy decision to begin with.