Can potential mismeasurement of the digital economy explain the post-crisis slowdown in GDP and productivity growth?

The digital economy has created some new measurement challenges for macroeconomic statistics and may have exacerbated some older ones, raising some concerns about the scope and estimation of GDP. Against a backdrop of slowing rates of measured productivity growth, this has raised questions about the conceptual basis of GDP and output, and whether current compilation methods are adequate to capture them (known as the mismeasurement hypothesis). In response to these concerns the international statistics community has reinforced efforts to investigate these concerns, chiefly under the vehicle of OECD-IMF collaboration and a newly formed Advisory Expert Group working under the auspices of the OECD’s Committee for Statistics and Statistical Policy. This paper is intended to provide momentum to these on-going efforts and to address immediate concerns about the potential scale of GDP mismeasurement in key areas where mismeasurement is often suspected. Notwithstanding the need for further work in some areas, notably with regards to cross-border transactions as well as potential mismeasurement in other macro-economic statistics, such as the consumer prices index, this paper concludes that even if mismeasurement is occurring, its scale is not sufficient to explain the widespread slowdown in measured GDP growth or multi-factor productivity growth. Nevertheless it’s important to note that this is a backward looking exercise. Even though the distortionary impact of any potential mismeasurement is currently thought to be small the growing size of digitised transactions could point to larger impacts in the future.