Abstract
Abstract The national-income accounts double-count investment, which enters once when it occurs and again in present value as rental income on added capital. The double counting implies that GDP and national income overstate sustainable consumption. An alternative measure, ‘permanent income’, equals consumption in the steady state but deviates from consumption outside of the steady state because expensing of gross investment applies to the long-run flow, not the current value. The permanent-income perspective substantially affects measured factor-income shares. When computed in relation to permanent income, the US labour-income share has been reasonably stable, in contrast to the declining share based on GDP.
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