Broken Windows

[John_James]

@The Bomb19

For example when an earthquake happens i often see economists quoted as saying that this may actually increase GDP in the economy. I don’t see how considering the quantity of money spent is exactly the same regardless of where it is spent. Are they possibly referring to the fact that the multiplier might be bigger (i.e. construction workers are less likely to save their money and thus the multiplier is larger?)

To be honest, there’s any number of ways economists and mathemeticians could build formulas to show almost anything. All you have to do is lump the right sectors of the economy together in the right fashion and give them variables, and assign the right values to them. It doesn’t matter an economy of 310 million people is more complex than that, and that there is a whole process of production and final goods don’t just appear out of nowhere.

So to answer your question, yes, you could show a GDP increase after just about anything if you worked the math a certain way. You literally could show that a decrease in GDP actually causes an increase…in GDP. Not kidding.

“GDP” is meaningless. [1] [2]

Have a look…GDP was increased here:

China's Empty City: government stimulus & central planning at work

(For the record, this was addressed here in this thread.)