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If companies park their money abroad, is that money part of the GDP? If not, then the Buffett Indicator can grow even further without problems.
by toohotatopic 7y ago
If companies park their money abroad, is that money part of the GDP? If not, then the Buffett Indicator can grow even further without problems.
- ggggtez 7y agoAssuming by "park" you mean just sit on it, then no. Money that isn't spent is not part of GDP. GDP is the total of all private investment + goods + services + government costs, basically. Dividing one number by another number is a meaningless game of numerology.
- BenoitEssiambre 7y agoAlso note that "investment" here is economic investment not financial investment. It does not mean people buying stocks or bonds. It means building factories, equipment, durable goods, infrastructure, anything that lasts for a long time and helps produce more consumption in the future (these are not counted in goods and services). GDP is an aggregate measure. When you buy a financial investment, someone else is selling it. For the aggregate it ads up to zero. "Government costs" here means goods and services and investment that the government pays for. It's not always explicitly separated in the equation. GDP simplifies to goods+services+investment if each variable includes both what is paid for by government and by private individuals.