Survey
* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project
Download Global Economic Journalism
Document related concepts
Transcript
Global Economic Journalism Week 2: Economies & Indicators - I Jeffrey Timmermans Economic goals of governments ✤ Full employment ✤ ✤ Steady annual growth in output ✤ ✤ or at least as full as possible... without overheating Stable prices (low but steady rise in inflation) Measuring economic performance ✤ Output of goods & services ✤ Changes in prices for goods & services over time ✤ Mood of consumers ✤ Employment ✤ Total supply of money ✤ Trade with other countries ✤ Productivity of workers Major economic indicators ✤ Gross Domestic Product (GDP) ✤ ✤ measures output, not wealth nor well-being Consumer Price Index ✤ measures how prices change (e.g. inflation) ✤ Unemployment ✤ Money Supply What is a recession? 1. Two consecutive quarters of declines in GDP (contraction) 2. Whatever the U.S. National Bureau of Economic Research (NBER) says it is! U.S. Economic Growth (19402010) Source: St. Louis Federal Reserve Bank The Business Cycle Real output Trend line Peak Trough Time The Regulatory Cycle Crisis in un- or underregulated area Recessio n Politicians respond to people’s anger Regulation, followed by quiet period Deregulation Politicians respond to companies Lobbyists/companies seek deregulation Growth Making sense of indicators ✤ A comparison figure (previous year, quarter or month) gives necessary context ✤ Watch market reaction to indicators ✤ ✤ Compare the actual result to expectations ✤ Market prices are news! Talk to “real people” to give life to the data Questions to ask about data ✤ Who is publishing the data, and who compiled it? ✤ What do the data cover, and what is left out? ✤ How reliable are the data? ✤ What is the time period for the data? ✤ Will the data be revised later? ✤ Are the data seasonally adjusted? Adjusted for inflation? Annualized? More questions ✤ Is the data published as an index, or an absolute amount? ✤ If an absolute amount, what units? ✤ What will you use for comparison? Year-earlier period? ✤ Is the indicator lagging, coincident, or leading? ✤ How should you describe the significance of the measure to your reader? Adjustments ✤ Inflation adjusted ✤ Real: effects of inflation are removed ✤ Nominal: no adjustment for inflation ✤ Annualized: “what if” same trend continued for a whole year ✤ Seasonally adjusted ✤ Data “smoothed” using long-term seasonal trends GDP vs. GNP ✤ Gross Domestic Product ✤ ✤ Total value of the output of final goods & services produced within a country’s borders Gross National Product ✤ Total value of output produced by a country’s citizens, no matter where in the world they are Methods of calculating GDP ✤ Value added ✤ ✤ Income ✤ ✤ Adding the value added at each stage of production Adding the total income paid (wages, royalties) Expenditure ✤ Adding up the country’s spending on final goods & services, i.e. goods that aren’t inputs for another good Circular Flow Model Components of GDP Gross Domestic Product = Consumption + Investment + Government spending + (exports - imports) or GDP = C + I + G + (E - I) Factors that impact GDP ✤ Exchange rates ✤ Purchasing-power parity ✤ Interest rates ✤ Inflation (real GDP vs. nominal GDP) ✤ Capital depreciation ✤ Gross domestic product, not net Ways of using GDP ✤ Cross-border comparisons ✤ ✤ Productivity ✤ ✤ Either by value or by % change GDP per hours worked Prosperity ✤ GDP per person Problems with GDP ✤ Doesn’t measure externalities (positive or negative) ✤ ✤ ✤ Pollution, education Doesn’t include a measure of overall quality of life, happiness nor well-being Doesn’t measure income disparity/distribution
