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lmm comments on Open Thread, May 5 - 11, 2014 - Less Wrong Discussion
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What's the use of nominal total GDP? I would expect the argument for PPP total GDP to be that it's a more accurate measure of the same thing, but I'm not actually seeing what the use is.
Yes, total GDP is problematic. For utilitarian purposes PPP is better, but why do it one country at a time? (aside from making utility linear in money)
My comment was triggered by the announcement that China is now "the biggest economy" in PPP terms. One thing "the biggest economy" does is set prices. China can afford to buy more steel than India, so much that it drives the world price of steel. But the fact that there is a world price is closely related to the fact China pays for steel in dollars, not Chungking haircuts or Szechuan real estate. So that's what total nominal GDP is good for.