Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55661
Authors: 
Basu, Susanto
Inklaar, Robert
Wang, J. Christina
Year of Publication: 
2008
Series/Report no.: 
Working paper series // Federal Reserve Bank of Boston 08-4
Abstract: 
Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result, much of bank output has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic risk is not part of bank output. We apply these models and find that between 1997 and 2007, in the U.S. National Accounts, on average, bank output is overestimated by 21 percent and GDP is overestimated by 0.3 percent. Moreover, compared with current methods, our new estimates imply more plausible estimates of the share of capital in income and the return on fixed capital.
JEL: 
E01
E44
O47
Document Type: 
Working Paper

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