| Abstract: | The paper discusses the measurement and interpretation of real GDP in transition economies. It argues that the statistical offices in Eastern Europe, the Baltics and the CIS should place emphasis in the years ahead on improving the mechanism by which estimates of output, consumption, investment and foreign trade are balanced to ensure compliance with standard accounting identities. Improvements to this ‘balancing mechanism’may substantially strengthen the reliability of national accounts data and would not necessarily require a major further financial outlay for the statistical offices. In its discussion of the interpretation of real GDP data, the paper demonstrates that the use of the measured change in output at constant prices as a proxy for the evolution of ‘social welfare’may be particularly problematic in the context of transition economies. |
