Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Document
Document related concepts
Transcript
Unbalanced Industry Demand and Supply Shifts: Implications for Economic Growth in Canada and the United States Anik Dufour, Jianmin Tang, and Weimin Wang Presentation to The 2008 World Congress on National Accounts and Economic Performance Measures for Nations May 12–17, 2008 MEPA/APME Introduction: motivation Real GDP is non-additive Y i y r r i r or A proxy ~r r Y i y i MEPA/APME or r i hi y Y i H H hi ~r r Y hi yi i H H hi 2 Introduction: how does an industry influence real aggregate GDP in the chained-Fisher index? MEPA/APME – Real industry output – Industry output prices 3 Introduction: what drive a change in industry output and price? MEPA/APME – Supply shift, and – Demand shift 4 Introduction: supply shifts and demand shifts are often unbalanced across industries. MEPA/APME – Positive supply shifts: • more for the manufacturing • less for some services industries – Positive demand shifts: • More for services • Less for goods 5 Introduction: production resources will be reallocated under unbalanced industry demand and supply shifts MEPA/APME 6 Objective • What are the industry contributions to MEPA/APME – aggregate GDP growth, or – aggregate labour productivity growth? 7 Real GDP Vr v i i P v y i mi Pv piy y ir pim mir i v P y r m r ~ ~ p y p m i i i i , i V , V r and P v as nominal GDP, real GDP and GDP deflator. vi be industry nominal value added. y i , y ir and piy are industry nominal gross output, the real gross output, and the gross output deflator mi , mir and pim are industry nominal intermediate inputs, the real intermediate inputs, and the intermediate input deflator y ~ pi and ~ pim are the industry real prices of gross output and the intermediate inputs, defined as ~ p y p y /P v and ~ p m pm / Pv i MEPA/APME i i i 8 Real GDP growth from year z to year t V r z t Vt r V zr 1 V zr V zr 1 V zr ~p y y iz r it ~p y it y itr ~ pizy y izr ~ pitm mitr ~ pizm mizr i y izr ~ pity ~ pizy y itr y izr ~ pity ~ pizy y izr i 1 m r r m m r r m m r ~ ~ ~ ~ ~ p m m p p m m p p m iz it iz it iz it iz it iz iz V zr i ~ pizy y izr y itr y izr ~ pity ~ pizy y itr y izr ~ pity ~ pizy ~y r r r y ~ V z y iz piz y iz piz i ~ pizm mizr mitr mizr ~ pitm ~ pizm mitr mizr ~ pitm ~ pizm r r m r m ~ ~ V z miz piz miz piz i y iz r m y z t ~ p zyt y zrt ~ p zyt iz m zrt ~ p zmt m zrt ~ p zmt Vz i Vz , x z t is the growth rate of variable x over the period from z to t MEPA/APME 9 Industry contributions to real GDP growth y iz r miz r y iz ~ y miz ~ m CPCi y z t m z t p z t p z t Vz Vz Vz Vz y iz r ~ y miz r ~ m y z t p z t m z t p z t . Vz Vz 1st term: pure quantity effect 2nd term: pure price effect 3rd term: the interaction of the first two effects. MEPA/APME 10 Major desirable properties Consistent with real GDP in the chained-Fisher index Additive for any long period Invariant to base-year MEPA/APME 11 Canada: industry contribution to aggregate GDP growth 1981-2000 MEPA/APME 12 US: industry contribution to aggregate GDP growth 1981-2000 MEPA/APME 13 Aggregate labour productivity yi mi r V V Xr V i V H P H P H piy yir pim mir piy hi xiy pim hi xim V V P H P H i i i hi ~ y y ~ m m pi xi pi xi li ~ piy xiy ~ pim xim H i ~ s yxy ~ s m xm , i i i i i H is total hours worked; X r is labour productivity hi is industry hours worked xiy and xim are industry real gross output per hour worked and real intermediate input per hour worked ~ si y ~ piy li is industry gross output relative size ( l i hi H and ~ piy being real gross output price) ~ si m ~ pim li is industry intermediate input relative size ( l i hi H and ~ pim being real intermediate input price). MEPA/APME 14 Aggregate labour productivity growth from year z to year t X zvt X tv X zv 1 X zv X zv 1 X zv ~ s x y iz y it ~ s y it xity ~ sizy xizy ~ sitm xitm ~ sizm xizm i xizy ~ sity ~ sizy xity xizy ~ sity ~ sizy xizy i 1 m m m m m m m m m m ~ ~ ~ ~ ~ s x x s s x x s s x iz it iz it iz it iz it iz iz X zv i ~ sizy xizy xity xizy ~ sity ~ sizy xity xizy ~ sity ~ sizy ~y v y y y ~ X z xiz siz xiz siz i ~ sizm xizm xitm xizm ~ sitm ~ sizm xitm xizm ~ sitm ~ sizm ~m v m m m ~ X z xiz siz xiz siz i y iz y m x z t ~ s zyt x zyt ~ s zyt iz x zmt ~ s zmt x zmt ~ s zmt Vz i Vz MEPA/APME . 15 Industry contributions to aggregate labour productivity growth y iz y miz m y iz ~ y miz ~ m CPCi x z t x z t s z t s z t Vz Vz Vz Vz y iz y ~ y miz m ~ m x z t s z t x z t s z t . Vz Vz 1st term: the pure productivity effect 2nd term: the relative size effect 3rd term: the interaction of the first two effects. MEPA/APME 16 Major desirable properties Consistent with real GDP in the chained-Fisher index Additive for any long period Invariant to base-year MEPA/APME 17 Relative size by industry in Canada and the U.S. MEPA/APME 18 Canada: industry contribution to aggregate labour productivity growth, 1981-2000 MEPA/APME 19 U.S.: industry contribution to aggregate labour productivity growth, 1981-2000 MEPA/APME 20 Conclusions 1. This paper provides a decomposition technique to study industry contribution to aggregate output and labour productivity growth. The technique is consistent with real GDP in the chained-Fisher index and has several desirable properties. 2. The framework distinguishes the industry contribution from changes in the industry output and changes in industry’s output price. It shows that over the period 1981-2000, the service sector was the major contributor to both real GDP growth and aggregate labour productivity growth. 3. The estimate of the contribution for the service sector is much higher than estimates using traditional methods that focus only on the quantity effect. By ignoring the price effect, traditional methods underestimate the contributions of service industries with rising real output prices to real GDP growth and aggregate labour productivity growth. MEPA/APME 21 MEPA/APME 22
