Sunday, December 23, 2012

Interest Payments On The Debt Are Not Counted As GDP

So says this guy, here, discussing government spending for GDP purposes:


d. Interest paid on government bonds is NOT counted as part of GDP; the argument is that the interest is not usually for a loan purchasing capital equipment, and therefore is not connected to production; whereas net business interest typically is for a loan used to purchase capital equipment and is counted as part of GDP since it is related to production.