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Transcript
63rd SPC and 93rd DGINS Conference
19–21 September 2007
Budapest, Hungary
Globalisation and economic
statistics:
a „multifunctional” user’s perspective
Gábor Oblath
National Bank of Hungary
Monetary Council
Why a „multifunctional” user’ view –
personal background and motivations of the topics to be discussed
•
Relationship with economic statistics/statisticians
– Applied macroeconomic research and analysis:
• Former: short and longer-run macroeconomic analysis and projection
• Technical cooperation with the Hungarian CSO
(Consistency of NA – in particular, data on external trade)
• Macroeconomic research (e.g. real convergence)
– Monetary policy: decisions crucially depend on the understanding and careful
interpretation of macroeconomic statistics (e.g. change in GDP – output-gap; BOPdata – risk premium) – importance of expectations
– Education: applied macroeconomic analysis – in particular, handling and interpreting
macro-data 
• economists must understand the logic („architecture”) of macro-statistics;
• search for developments behind headline indicators;
• even if dissatisfied with official statistics, economists should never try to „invent”
statistics (counter-example: „dark matter”)
•
Member (former chair) of the Economic Section of the Hungarian Statistical
Society
– sympathize with statisticians:
– recognise difficulties stemming from the conflicting trends of globalisation
Outline
• Conflicting trends within globalisation:
implications for economic statistics
• Two macroeconomic-statistical issues related to
globalisation
Measuring, interpreting and comparing
• „real income” of nations (real convergence)
• the relative size of external imbalances
– need for caution in reading the headline figures; but
– no need to invent alternative BOP-statistics – a critique of the
notion of a „dark matter” in the current account of nations
• Conclusion: need for closer cooperation
between statisticians and economists
I. Globalisation and economic statistics:
contrasting trends
• Globalisation: increasing openness – intensified interaction and
interdependence among (economic units of) nations. Implications:
• On the one hand: the boundaries between the „home” vs. „external”
economy (ROW) are fading
–
–
–
–
–
multinational companies,
migration,
trade in services (innovations),
off-shore companies etc., etc. 
„residents”/”non-residents”?
• On the other hand: increasing importance of international
– transactions („real” and financial flows)
– assets (equity and debt stocks)
on the home (national) economy
Implications for statistics
• Decreasing importance of national borders from
a microeconomic point of view
 the perspective of economic agents (household and
corporate sector) – suppliers of elementary data
 moreover: incentives to obscure legal borders (e.g. tax
„optimisation”)
• Increasing importance of cross-border
transactions from a macroeconomic perspective
 government policy
 international organisations
 economic analysts
 investors
Users of macro-statistics
Problems for „producers” of statistics
Economic statisticians under double
pressure:
– increasing difficulties involved in collecting,
while
– increasing importance of providing
accurate/comparable data on cross-border
 transactions
 assets/liabilities
Globalisation: problems with users of
statistics
• In a globalised world-economy, analysts and market
participants
– interpret national developments in international comparison
– categorise/group and assess countries according to very few and
very simple (headline) indicators („big picture”)
• Implication for statisticians: importance of
– conceptual and statistical accuracy 
– common international standards: comparability of national data
• Implication for both statisticians and economists:
– „education” of market participants
– more information and increased focus on statistics/indicators
enabling finer analysis
Globalisation and economic statistics – a
personal experience
Globalisation of statistical sources – profound
change due to the internet (a major symbol and
driving force of globalisation)
– Freely accessible huge international databases (e.g.:
Eurostat, AMECO, Groningen, EU KLEMS, PWT, [OECD])
– On-line access to several national statistics in user-friendly
format
– However:
• several inconsistencies between
– national and international databases;
– within international databases
– among international databases
• more coordination would be helpful
II. Economic and statistical issues
related to globalisation
1. „Real” economic/income convergence
2. The size of external imbalances
a) Problems with the CA/GDP indicator
b) An inadequate reaction to statistical
problems due to globalisation: a critique of
the notion of „dark matter”
1. Comparison of macroeconomic
„performance” in a global context
Levels of development („income levels”) and
growth rates in international comparisons
– Relative „income” level: economists’ shorthand for
GDP/capita at PPP; but:
• Output: per capita vs. per person employed (per hour worked)
• GDP not a measure of „real” income – alternative measures
– Growth rates („catching up”): similar problems:
 Interpretation of „income convergence”
The meaning of „real income” in
international comparison
(output vs. income; level vs. change)
 Output: GDP at PPP
• Per person
• Per employed person
• Per hour worked
 Income:
Change
• GDP?
• RGDI (real GDP corrected for the change in the terms of
trade= implicit income transfers from/to RoW)
• GNI = GDP+NFY
• GNDI =GNI+NFTc  Related to the current account (CA= GNDI-C-I)
S
• GNDI + net capital transfers
- Basic macroeconomic
• RGNI
concepts without a name
• RGNDI
- Related to the fundamental concept
of macroeconomic balance, i.e.:
• RGNDI + net real capital transfers
net lending (NL=CA+KA):
„Real income” growth in international
comparison:
two aspects of income growth – more relevant in a globalised world
• A neglected aspect of „income convergence”: the role
of the terms of trade*/
• Recent differences in real growth rates between
–
–
–
–
GDP
GNI,
GNDI
GNDI+cap.transfers**/ (does not exist in SNA/ESA)
• No attempt to combine the two; the major goal is
illustration of some neglected aspects
*/based on AMECO
**/based on Eurostat
(A) RGDI/capita (change)
real domestic income – the actual indicator of incomegrowth (thus of income-convergence)
• Change in real GDP: represents change in the volume of output
• Change in RGDI: change in the real income of a country (output
corrected for the impact of changes in the terms of trade – i.e., effect
of „trading gain or loss”) [RGDI= (GDPt/Pgdp +T) /GDPt-1)]*/
• Is it really „real”?
– are foreign trade price indices accurate?
– transfer pricing ?
• Perhaps: measurement problems of Px and Pm (especially price
index of services), but if so:
– opposite measurement problems in net exports (volumes)
– RGDI: essential indicator of (change in) macroeconomic income
– by definition, its „level” cannot be interpreted at current prices
• All in all: if ToT shows a trend, RGDI is relevant for income growth
*/T=(X-M)/Pxm – (X/Px – M/Pm)
Cumulative differences in RGDI and GDP
growth rates since 1995
0,30
Bulgaria
Czech Republic
Estonia
Latvia
Lithuania
Hungary
0,25
LIT
0,20
Poland
Romania
Slovenia
Slovakia
0,15
RO
0,10
CZ
0,05
0,00
SK
-0,05
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Source: Eurostat, AMECO
-10%
Finland
Sweden
Slovakia
Belgium
Hungary
Ireland
Germany
Poland
Austria
France
Latvia
Italy
Cyprus
10%
Portugal
20%
EU-27
15%
Malta
Slovenia
Greece
United Kingdom
Spain
Netherlands
Estonia
Denmark
Czech Republic
Bulgaria
Romania
Lithuania
Cumulative difference between
RGDI and GDP growth and annual growth rate of GDP:
1995-2006
25%
Percentage points
Cum diff GDI-GDP
GDP growth rate
percent
5%
0%
-5%
The significance of changes in the terms of trade:
number of years (at average GDP-growth) corresponding
to the cumulative difference between RGDI and GDP:
1995-2006
5
4
3
2
1
0
-1
-2
-3
Sweden
Finland
Belgium
Germany
Slovakia
Hungary
Austria
Ireland
Poland
France
Italy
Portugal
Cyprus
Latvia
Malta
Slovenia
Greece
Estonia
Spain
United Kingdom
Netherlands
Denmark
Czech Republic
Lithuania
Bulgaria
Romania
Per capita GDP and RGDI relative levels in
2006 (EU15=100)
80
75
SI
CZ
70
Per capita
GDP at
1995 PPS
and
RGDI at
1995 PPS
65
95_PPS
EE
GDI_95PPS
60
HU
55
LIT
LA
50
SK
PO
45
40
BU
35
RO
Per capita GDP at 2006 PPS
30
30
35
40
45
50
55
60
65
70
75
Two points:
1) differences between constant (1995) and current (06) PPS levels
2) differences between RGDI and GDP levels at prices of 1995
80
GDP/cap (PPS) in 1995 (x) and in 2006;
RGDI in 2006 at 1995 PPS (y)
(EU-15=100)
80
SI
CZ
70
2006
GDP/cap
RGDI/cap
EE
60
HU
LIT
SK
LA
50
2006_PPS
PO
GDI_95PPS
40
RO
BU
30
GDP/cap (PPS) 1995
20
20
30
40
50
60
70
80
Comparison of GDP and RGDI convergence
of CEE-10; 1995-2006
GDP/cap
95
GDP/cap
06
RGDI/cap
06
27,9
33,2
35,8
107,6
Average
Number of
annual speed
years of
of
GDP/cap
convergence*/ convergence to
fill the RGDIConv Conv
GDP gap **/
GDP GDI
1,6% 2,3%
4,5
63,1
71,0
75,6
106,4
1,1%
1,7%
5,7
31,1
27,0
30,0
45,4
36,7
27,2
61,6
40,0
59,6
51,8
51,5
59,6
48,6
31,3
77,1
52,4
60,9
51,7
57,6
58,4
48,2
34,4
77,7
50,8
102,1
99,9
111,8
97,9
99,2
110,1
100,8
97,0
6,1%
6,1%
5,0%
2,5%
2,6%
1,3%
2,1%
2,5%
6,3%
6,1%
6,1%
2,3%
2,5%
2,2%
2,1%
2,2%
0,4
0,0
2,3
-0,9
-0,3
7,6
0,4
-1,3
EU15=100
Bulgaria
Czech
Republic
Estonia
Latvia
Lithuania
Hungary
Poland
Romania
Slovenia
Slovakia
RGDI_06/
GDP_06
*/ log(Y06/Y95)/t; where Y= Yi/Yeu15
**/ log[(RGDI_06)/(GDP_06)]/(Conv_GDP)
(B) The role of capital transfers
• GNDI + capital transfers: not an indicator of „income”,
but:
• in less-developed EU-countries (receiving capitaltransfers from EU-funds): a fundamental indicator of
disposable resources;
• In these countries: GNDI [thus, gross savings (S) and the
CA (=S-I) is a misleading indicator (asymmetry):
– current contributions to the EU-budget decrease GNDI (S), but
– no official macroeconomic aggregate indicating the impact of
capital transfers from the EU to the recipient country
• Need to define/quantify „non-official” macroeconomic
aggregates (statistical indicators based on official
statistics) for macro-analysis, e.g. 
GNDI + capital transfers
(change at constant prices)
• Questions related to the „adequate”
volume index of national income and
disposable national resources
• Deflator of
– Net factor income (GDP or DE deflator)
– Net current transfers (GDP or DE deflator)
– Net capital transfers (GDP or GCF deflator)
GDP, GNI, GNDI and GNDI+captr.
recent annual average volume changes:
an illustration (CZ, HU, PL: 2004-2006)
CZ
HU
6,7%
4,2%
6,6%
4,1%
6,5%
4,1%
6,4%
4,0%
6,3%
4,0%
6,2%
3,9%
6,1%
6,0%
3,9%
5,9%
3,8%
5,8%
3,8%
GDP
GNI
GNDI
GNDI+captr
GDP
GNI
GNDI
GNDI+captr
GNDI
GNDI+captr
PL
• Different „levels” in growth rates
(CZ: >6%; PL 5%; HU 4%),
• different national patterns, but
• a common feature in all 3 countries:
GNDI+captr. growth > than „headline”
indicators of economic growth (GDP/GNI)
5,6%
5,4%
5,2%
5,0%
4,8%
4,6%
4,4%
GDP
GNI
Source: own calculations based on Eurostat
Alternative indicators of „income
convergence”: some lessons
• Globalisation  increase in openness (higher X/GDP and
M/GDP ratios)
– even small changes in ToT (Px/Pm) entail
– large/increasing changes in real income [RGDI (=GDP/Pgpd +T)];
– this aspect of actual „income-convergence” (its cumulative impact) is
mostly neglected (example: CZ vs. SK)
• Globalisation  increasing stocks of NFA/GDP;
– increasing net income flows (recognised by official statistics):
GNI (GNP)
• Within EU  increasing role of unrequited transfers (for NMS)
– Current transfers (minor part): (recognised by official statistics):
GNDI
– Capital transfers (larger part): economists should reconstruct
(GNDI+captr)
II. Economic and statistical issues
related to globalisation
1. „Real” economic/income convergence
2. The size of external imbalances
a) Problems with the CA/GDP indicator
b) An inadequate reaction to statistical
problems due to globalisation: a critique of
the notion of „dark matter”
II/a. Interpreting and comparing
external imbalances
Realated to the problem of measuring and
interpreting levels of income/development,
i.e:
– disposable income vs. disposable resources
(GNDI or GNDI+capital transfers?)
– The general problem of international
comparisons: implications of differences in the
level and structure of national prices
Interpreting external imbalances (cont’)
•
•
•
•
Globalisation involves increasing cross-country gross and net capital
flows
Net capital flows involve external imbalances
Lazy (too busy) economic analysts observe (internationally compare) a
single indicator of external (im-)balance: the current account/GDP ratio
(CA/GDP)
This is supported by rules of thumb:
–
•
if CA/GDP above -(3-5)%: dangerous
However, this „wisdom” is misleading; there are problems with both the
– numerator (CA) and the
– denominator (GDP)
•
We focus at the economic-statistical problems of this popular indicator
•
There are some more fundamental economic problems with the CA/GDP ratio as well – these
are not covered here, but a hint:
–
–
How deficits are financed (debt or FDI)
Domestic counterpart:
• private vs. public
• consumption or investment
Interpreting external imbalances:
problems with the numerator of CA/GDP
1. Relevance of the „capital account” of the
BOP (involving capital transfers)
2. Interpretation of reinvested earnings
3. Interpreting changes in NFA (capital
gains/losses on NFA)
4. NEO
Problems with the numerator: the
relevance of CA+KA (1)
• Several analysts missed the change in the
concepts of the BOP:
Present structure
•
•
•
•
•
Current account (CA)
Capital account (KA) [ former capital account]
Financial account (= former capital account)
NEO
dR
Net financing
requirement
• A practical problem: for less developed countries
of the EU:
– transfers from the EU: (mostly) in the KA
– transfers to the EU: in the CA
Problems with the numerator (1):
CA and KA+CA in % of GDP
(average of 2000-2005)
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
-8%
CA/GDP
-9%
(CA+KA)/GDP
-10%
CZ
EST
Source: Eurostat
HU
PL
SK
GR
ESP
PT
IRL
USA
CA vs. CA+KA (in % of GDP): CZ, HU, PL
HU
CZ
0%
0%
-1%
-1%
-2%
-2%
-3%
-3%
-4%
-4%
-5%
-5%
CA+KA
-6%
CA+KA
-6%
CA
CA
-7%
-7%
2005
2005
2006
2006
PL
0,0%
The role of capital transfers is
increasing; most visibly for
Poland
-0,5%
-1,0%
-1,5%
-2,0%
CA+KA
-2,5%
CA
-3,0%
-3,5%
-4,0%
2005
2006
Problems of the numerator (2):
reinvested earnings – a special expenditure
• FDI income consists of two parts:
– repatriated vs.
– reinvested earnings
• Reinvested: recorded as „outflow” in the CA, but
– no actual transaction takes place;
– remains in the country (a potential source of
investment);
– „finances” itself: same item in the current and financial
account (does not affect the foreign exchange market)
• Should be treated differently
Problems of the numerator (2): reinvested
earnings in % of GDP
(average of 2000-2005)
0%
-2%
-4%
-6%
CA/GDP
-8%
(CA+KA)/GDP
(CA+KA+IRE)/GDP
-10%
(CA+KA+NRE)/GDP
-12%
CZ
EST
HU
PL
ESP
PT
USA
Problems with the denomiator
of the CA/GDP ratio
• According to the received wisdom: the denominator
of the CA/GDP-ratio „standardizes” the size of
external balances – it corrects for differences in the
size of national economies
• This notion is mistaken:
– CA measured at international prices,
– GDP measured at domestic prices
• The relative price level of GDP (PPP/exchange rate)
is an increasing function of the level of real
development (GDP/cap at PPP): Balassa-Samuelson
effect (traded vs. non traded prices)
GDP/capita and relative GDP price
levels (average 2000-2005)
100
CY
GDP relative price
90
GR
80
ES
PT
70
MT
60
SL
EE
LV
HU
PL
50
LT
CZ
SK
40
40
50
60
70
Per capita GDP (PPS)
80
90
100
Problems with the denomiator of the
CA/GDP ratio (cont.)
• In less developed countries – because of the low
level of non-traded (service) prices, the CA/GDP
overstates the relative size of external
imbalances
– E.g.: extremely low relative price of
collective/government services in NMS of EU has no
implication whatsoever for the relative size of external
imbalances
• How to handle the problem?
– CA/GDP(PPP)
– CA/foreign receipts
• CA/Xgs
• CA/CA_total receipts
Relative GDP price levels and the relative price level of
goods, total services and government services
(average of 2000-2005)
100
GR
90
MT
80
LT LV
70
HU
ES
CY
SL PT
EE
SK
CZ PL
60
Goods
50
Services
40
Gov. services
30
GDP relative price level
20
40
50
60
70
80
90
CA+KA in % of
GDP, exports of goods and services and total
current revenues
(average of 2000-2005)
0%
-5%
-10%
-15%
(CA+KA)/GDP
(CA+KA)/Xgs
-20%
(CA+KA)/CFR
-25%
-30%
CZ
EST
HU
PL
SK
GR
ESP
PT
CA+KA in % of
GDP at current prices and GDP at PPP
(average of 2000-2005)
0%
-1%
-2%
-3%
-4%
-5%
-6%
-7%
(CA+KA)/GDP
-8%
(CA+KA)/GDP_PPP
-9%
CZ
EST
HU
PL
SK
GR
ESP
PT
IRL
USA
Summing up problems of international
comparison of external imbalances
• External imbalances are natural in a globalised world
economy
• However: sudden shifts in „risk appetite”  perception of
the size of external imbalances
• The standard indicator (CA/GDP) - suffers from (at least)
two weaknesses
– CA: economically unsound indicator of external imbalance;
relevance of
• KA
• Reinvested earnings
– GDP (at current prices) does not correct for differences in the size
of economies
• However, if CA/GDP applied by many analysts, it effects
perceptions of the public  it may become a driving force
of expectations
II. Economic and statistical issues
related to globalisation
1. „Real” economic/income convergence
2. The size of external imbalances
a) Problems with the CA/GDP indicator
b) An inadequate reaction to statistical
problems due to globalisation: a critique
of the notion of „dark matter”
The notion of „dark-matter” (DM) in the
BOP of nations: claims
• H-S*/ claim: BOP statistics are false: US has no
CA deficit
• Why? Because US NII continuously positive 
NFA and ΔNFA (CA) also „has to be” positive
• „Implied” CA balance reconstructed in two steps
– Capitalising NII by an arbitrary 5% (P/E: 20)
– Annual change in capitalised NII  „implied” CA
• Difference between actual and implied CA:
exports of „dark matter” (intangible capital)
*/R. Hausmann - F. Sturzenegger: Global imbalances or bad accounting? The missing dark
matter in the wealth of nations (May, 2006): http://200.32.4.58/~fsturzen/dark_matter_may06.pdf
US net international investment income
(NII = net profits and interest)
(million USD)
70 000
60 000
50 000
40 000
30 000
20 000
10 000
0
90 9 91 9 92 9 93 9 94 9 95 9 96 9 97 9 98 9 99 0 00 0 01 0 02 0 03 0 04 0 05 0 06
19
1
1
1
1
1
1
1
1
1
2
2
2
2
2
2
2
US: CA and two components: net exports (NX) and
net investment income (NII)
(% of GDP)
1%
0%
-1%
-2%
-3%
-4%
-5%
NII/GDP
CA/GDP
NX/GDP
-6%
-7%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
US: net investment income (NII), the CA, and NFA
(at current cost and market value) in % of GDP
2%
0%
-2%
-4%
-6%
-8%
-10%
-12%
NII/GDP
CA/GDP
NFA_market/GDP
NFA_curcost/GDP
-14%
-16%
-18%
-20%
-22%
-24%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
The world according Hausmann-Surzenegger
Implication: no global imbalances
Rate of return on market value of US
foreign assets (FA) and liabilities (FL)
9%
8%
7%
6%
5%
4%
iFL_market
3%
iFA_market
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
19
89
2%
The notion of „dark-matter”: some critical
remarks in defence of statistics
• If BOP statistics inaccurate: why just NII right, if both CA and
NFA wrong
• Several plausible/relevant explanations for differences in rates
of return on FA and FL: no need to „invent” new BOP statistics
• Dangerous precedent:
– if your story/theory does not fit the facts
– or statistics (apparently or actually) contradict one another
– you can simply construct data corresponding to your preferred
interpretation
• Having said this,
– exports and imports of intangible capital (not covered by statistics) is
quite possible under conditions of globalisation,
– identifying and measuring it – constitutes a major challenge for both
economists and statisticians
Globalisation and economic statistics:
some conclusions
• Need for cooperation between economists and statisticians
• Education of the public and professional users of statistics:
common task
• Economists should be
– more tolerant and be aware of the difficulties of supplying accurate
statistics in the era of globalisation;
– should express their dissatisfaction with statistics in constructive forms
• Statisticians could be more open
– to criticisms regarding inconsistencies,
– to suggestions regarding
• the importance of potential un- (or -mis-) recorded aspects of economic activity
(e.g. intangible capital)
• publishing non-traditional indicators of economic development and external
balances
– in revealing their specific problems related to the accuracy of statistics