Keronians wrote:I put on Fox News and I see them talking about what a substantial boost this will be to the Japanese economy and how Japan's economy should show massive increases thanks to this tsunami and earthquake.
Well, the damage done is to the stock of stuff ("capital") in Japan. GDP measures what is being produced over a period, which is a flow of stuff. So the initial destruction doesn't actually reduce GDP at all. However, the fact that right now in the immediate aftermath stuff is not being produced will. Over time however, the rebuilding will cause more investment in the production of stuff than would otherwise have been the case, leading to a boost to GDP in the period of rebuilding.



. This is all I can say.