Comments on Peter Martin "Election 2016: GDP growth nowhere near as good as it seems, but it'll do for the prime minister", 1/06/2016
It seems there is a need to incorporate the very different effects on the living standard of changes in the terms of trade in the GDP measure. This is because that changes in the terms of trade is quite qualitatively different from changes in domestic relative prices irrespective they are inflationary or deflationary.
While changes in prices generally have the effects of transfering wealth from one group to another, the effects have quite different impacts if they occur through changes in the terms of trade.
Changes in prices purely domestically, the transfer of wealth is within a country and therefore they total wealth of the nation has not changed.
When changes in the terms of trade, the transfer, however, is between two different nations. As a result, the nation's wealth will increase if the terms of trade increases and it will decrease with the deterioration in the nation's terms of of trade.
To conclude, there should be some measure to distinguish these two kind of changes in relative prices to capture the changes in the terms of trade on a nation's living standard for any given real GSP growth as currently measured.
Showing posts with label GDP measures. Show all posts
Showing posts with label GDP measures. Show all posts
2015-07-08
GDP and employment both are important
Comments on Rajiv Kumar "Job growth not GDP growth matters for India", 8/07/2015
While it is important to have a focus on employment growth, it does not mean that GDP growth is unimportant. Only focusing on GDP without attention to employment is not right, particularly in terms of inclusive growth and equity or income inequality. Equally problematic is that only focusing on employment without due attention to GDP growth. Neither is good for economic policies.
I am not familiar with the Indian economy and its statistics, if the author is correct in relation to GDP and employment growths, it may mean that the GDP growth was not enough to boost employment more significantly.
Alternatively, it reminds us about the US economy back a few years ago when it was labelled as jobless recovery. If that is the case, it may mean that it is only a matter of time for growth in employment to catch up with GDP growth.
While it is important to have a focus on employment growth, it does not mean that GDP growth is unimportant. Only focusing on GDP without attention to employment is not right, particularly in terms of inclusive growth and equity or income inequality. Equally problematic is that only focusing on employment without due attention to GDP growth. Neither is good for economic policies.
I am not familiar with the Indian economy and its statistics, if the author is correct in relation to GDP and employment growths, it may mean that the GDP growth was not enough to boost employment more significantly.
Alternatively, it reminds us about the US economy back a few years ago when it was labelled as jobless recovery. If that is the case, it may mean that it is only a matter of time for growth in employment to catch up with GDP growth.
2015-07-01
Equal weighting for different indicators can be problematic
Comments on Lorenzo Fioramonti "Forget the G7, the world needs a new alliance to lead it in the 21st century", 30/06/2015
I guess there is an issue in weighing different indicators to form an overall indicator or measurement.What are the weights given to the different areas? If it is equal weights, are they reasonable and reflecting their relative importance?
Reply to Lincoln Fung by Lorenzo Fioramonti, Full Professor of Political Economy at University of Pretoria:
These aggregate indices give equal weight to the various underlying dimensions. The key point is not whether these indicators are 'accurate' in their own right, but in the overall picture that they portray. There is a indeed high level of correlation among them. The result is politically relevant: progress in the 21st century is radically different from what it was in the 20th century. This should also be reflected in how our governance is organized.In reply to Lorenzo Fioramonti by Lincoln Fung:
While I cannot state the following in absolute certainty, it is likely that the group of countries that you argue should be the leaders in this century will not be taken seriously by most if not all major world/international leaders. It is likely to fall into deaf ears.
That, to a degree, reflects the significant weaknesses and shortcomings of your approach.
I guess there is an issue in weighing different indicators to form an overall indicator or measurement.What are the weights given to the different areas? If it is equal weights, are they reasonable and reflecting their relative importance?
Reply to Lincoln Fung by Lorenzo Fioramonti, Full Professor of Political Economy at University of Pretoria:
These aggregate indices give equal weight to the various underlying dimensions. The key point is not whether these indicators are 'accurate' in their own right, but in the overall picture that they portray. There is a indeed high level of correlation among them. The result is politically relevant: progress in the 21st century is radically different from what it was in the 20th century. This should also be reflected in how our governance is organized.In reply to Lorenzo Fioramonti by Lincoln Fung:
While I cannot state the following in absolute certainty, it is likely that the group of countries that you argue should be the leaders in this century will not be taken seriously by most if not all major world/international leaders. It is likely to fall into deaf ears.
That, to a degree, reflects the significant weaknesses and shortcomings of your approach.
2010-06-28
It is per capita growth not headline GDP that matters
Comments on Michael Stutchbury “Playing politics on population”, 28/06/2010, http://www.theaustralian.com.au/politics/opinion/playing-politics-on-population/story-e6frgd0x-1225884963233
Australia could accommodate a big population, there is no question about it.
However, it is not necessarily the best option for Australians to have a big one.
It is important to note that it is productivity and per capita growth that is much more important than the simple headline of GDP growth which includes the effects of population growth.
Australia should focus on productivity growth as the core strategy and optimise population through immigration programs.
The welfare of all Australians are the more important and top priority. Sustainability is and should always be secondary. Purely business considerations for more labour to benefit business profitability should be the last consideration of all.
Economics should make it clear and should not play too much of political economics for business only.
Australia could accommodate a big population, there is no question about it.
However, it is not necessarily the best option for Australians to have a big one.
It is important to note that it is productivity and per capita growth that is much more important than the simple headline of GDP growth which includes the effects of population growth.
Australia should focus on productivity growth as the core strategy and optimise population through immigration programs.
The welfare of all Australians are the more important and top priority. Sustainability is and should always be secondary. Purely business considerations for more labour to benefit business profitability should be the last consideration of all.
Economics should make it clear and should not play too much of political economics for business only.
2010-02-04
China's GDP and international exchange rates - which is worse?
Comments on “The holes in China's accounts”, see Business Spectator's Isabelle Oderberg interview with Hong Kong General Chamber of Commerce chief economist David O'Rear, 4/02/2010, http://www.businessspectator.com.au/bs.nsf/Article/CHina-economy-data-David-ORear-pd20100203-2AVVZ?OpenDocument&src=sph
It is shocking that China's GDP data has a 20% margin of errors.
However, there are differences between the National Bureau of Statistics and Provincial Bureau of Statistics. The former is supposed to have better data and a smaller margin of errors.
Further, 20% margin of errors, though large itself, is not too bad as one might think, given the wild swings in exchange rates.
How much the $US has depreciated against the $A, and especially against the Euro over the last few years? Some may be more than 50%, I'd say.
What does that mean for income comparison internationally?
20% margin of errors is bad. The unwarranted wild swings in key international exchange rates seen in recent years are even worse! The former pales to insignificant in front of the latter!
It is shocking that China's GDP data has a 20% margin of errors.
However, there are differences between the National Bureau of Statistics and Provincial Bureau of Statistics. The former is supposed to have better data and a smaller margin of errors.
Further, 20% margin of errors, though large itself, is not too bad as one might think, given the wild swings in exchange rates.
How much the $US has depreciated against the $A, and especially against the Euro over the last few years? Some may be more than 50%, I'd say.
What does that mean for income comparison internationally?
20% margin of errors is bad. The unwarranted wild swings in key international exchange rates seen in recent years are even worse! The former pales to insignificant in front of the latter!
2009-09-14
Read GDP statistics
Comments on Steven Kates “Read the data: it was a recession”, 14/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26067805-7583,00.html
It would be interesting to see how much government technically propped up the GDP figures by its own direct spendings and the effects of its cash handouts on consumption spendings (not really income producing, or maybe a little in retailing earnings).
Some reports were saying the government spent $160,000 to save one job - a pretty hefty price for jobs just to make the government look good and sound good by saying that it has been doing whatever it could/can to save jobs.
While there needs to be consistency in GDP statistics, the ABS would do a better service in explaining better how likely the Australian economy was in a technical recession, given the differences in the three GDP measures used in the average headline GDP figure.
As Steven Kates demonstrates, the economy was in recession from the other two measures. The ABS has been silent on this and that is not the best the nation’s statistical agency could offer to the public.
It would be interesting to see how much government technically propped up the GDP figures by its own direct spendings and the effects of its cash handouts on consumption spendings (not really income producing, or maybe a little in retailing earnings).
Some reports were saying the government spent $160,000 to save one job - a pretty hefty price for jobs just to make the government look good and sound good by saying that it has been doing whatever it could/can to save jobs.
While there needs to be consistency in GDP statistics, the ABS would do a better service in explaining better how likely the Australian economy was in a technical recession, given the differences in the three GDP measures used in the average headline GDP figure.
As Steven Kates demonstrates, the economy was in recession from the other two measures. The ABS has been silent on this and that is not the best the nation’s statistical agency could offer to the public.
Subscribe to:
Posts (Atom)
Posts
