The Macroeconomic Distortion Index (MDI): A Framework for Structural Interpretation

This paper develops the Macroeconomic Distortion Index (MDI) as a framework for the structural interpretation of macroeconomic data. While conventional macroeconomic analysis relies on the examination of individual aggregates, it often lacks an integrated perspective capable of capturing the structural patterns reflected in their joint evolution. The paper identifies three limitations in prevailing approaches: the incomplete integration of structural dynamics related to the functioning and distribution of money, the limited incorporation of institutional information developed by international organisations, and the absence of a structured interpretation of official macroeconomic data that allows for the identification of underlying patterns. The MDI addresses these limitations by reorganising existing macroeconomic aggregates without introducing new variables. By focusing on the joint evolution of key indicators —including wages, corporate profits, and public expenditure— the framework facilitates the identification of patterns consistent with changes in the allocation and distribution of resources at the aggregate level. This paper does not aim to provide causal identification, but to facilitate a more coherent interpretation of macroeconomic outcomes as expressions of broader structural and institutional configurations. In this context, it complements existing analytical approaches by extending the interpretative framework through which macroeconomic data can be understood.