and elsewhere, comes from a paper by Kenneth Rogoff of Harvard and Yuanchen Yang of the. Both economists have impeccable credentials. But their number does not count what most people think it counts. The most prominent measure of the most important sector in the universe is widely misunderstood. So how should it be interpreted? To grasp it properly requires a gentle walk through the ins and outs of inputs and outputs.
How would Mr Rogoff and Ms Yang measure the importance of property? Those who have not read their paper might assume their figure is similar in spirit to the first, narrow answer. They may think it refers to the value added by the property sector . People who have glanced at the paper may assume their approach instead conforms to the broad answer. The property sector has tight links with upstream industries.
Why not? Their approach is an unusual attempt to correct for double-counting. If you were to add construction output , steel output and mining output , you could be accused of double- or even triple-counting. You would have counted the steel twice and the ore three times .
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