Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration: Rui Mota Growth accounting: Short-run sources of growth • Break down observed growth in GDP, Y Y gY into components associated to changes in factors of production. Y (t ) F K (t ), A(t ), L(t ) • Output growth only happens due to growth in productive inputs, including technology. • Tehcnological progress is measured indirectly, i.e., as growth not attributed to changes in observable inputs. • Solow refered to the residual as Total Factor Productivity (TFP) K (t ) L(t ) gY (t ) YK (t ) YL (t ) R(t ) K (t ) L(t ) YX F () X X Y R(t ) YA A A Growth accounting: Short-run sources of growth •Solow model explains more than ½ of output growth. •An important part of growth is attributed to exogenous “inputs”. What is technological progress? (the residual) – Knowledge, institutions (property rights), education, culture, ... Total Factor Productivity Growth in Portugal 0,14 TFP growth 0,12 GDP growth [€2000] 0,1 0,08 0,06 0,04 0,02 0 1961 1966 1971 -0,02 -0,04 -0,06 Source: AMECO database 1976 1981 1986 1991 1996 2001 2006 National Accounts • The System of National Accounts is a comprehensive accounting framework within which economic data can be compiled and presented in a format that is designed for purposes of economic analysis, decisiontaking and policy-making. • Integrates a set of macroeconomic accounts, balance sheets and tables based on a set of internationally agreed concepts, definitions, classifications and accounting rules. • Accounts compiled for a succession of time periods, thus providing a continuing flow of information, indispensable for the monitoring, analysis and evaluation of the performance of an economy over time. Aggregation • 5 Sectors: – Households – Firms – Financial Intermediaries (banks, …) – Governments (national and local) – Rest Of the World (ROW) • 4 Markets (Supply and Demand): – Goods and services – Resources (labor, land and capital) – Money (loanable funds) – Foreign exchange Circular flow of income Households € Factor payments: Y Factors € Expenditures: C Output 2 1 3 Firms • Factors: Labor, Land, Capital • Factor payments: Wage, Rents, Interests, Profits – become income. • Expenditures: on goods and services (output) • 1 – Income approach: Y = Wage + Rent + interest + operating surplus • 2 – Output approach: Y = market value of all produced output (Σ VA) • 3 – Expenditure approach: Y = C Circular flow of income ΔGov S FI Households C G Gov. Lend Borrow Tr X T M Y ROW Firms I • Balance to: – Households: Y - Tnet = C + S, Tnet = T- Tr – Firms: Y = C + I + G + X - M – Government: ΔGov = Tnet - G – FI: S + ΔGov + B - L = I – ROW: X - M = L - B - Market for outputs National Accounts Identity C I X M Main Aggregates National (Residence) - Primary income flows to ROW Product / Income + Primary income flows from ROW Domestic (Territory) Net + Consumption Fixed Capital (CFC) Aggregate X - Consumption of Fixed Capital (CFC) Gross X – Domestic produc, Income, Saving, Disposable income, ... Domestic Product vs. National Income • GNI = GDP + Y’RM . Where Y’RM = Net income payable to non-resident units for production factors. Domestic Product vs. National Income • The value added of a firm owned by Portuguese residents and functioning on our economic territory is part of the Portuguese GDP and GNI. • The wage (or other factor payments) of a resident that during 6 months worked to a firm in Spain is a part of Spanish GDP and Portuguese GNI. • The operating surplus (profits) – capital remuneration of a firm located in Portugal but owned by Germans – sent to Germany, is part of the Portuguese GDP and the German GNI. • The income earned by Portuguese emigrants working abroad as residents is not part of the Portuguese GDP and GNI. Main Aggregates Subtract CFC GDP Net Domestic Product (NDP) + Primary income flows from ROW - Primary income flows to ROW = Gross National Income (GNI) = Net National Income (NNI) + Current net transfers from ROW = Gross Disposable Income (GDI) = Net Disposable Income (NDI) - Final consumption (Private and Government) = Gross Saving (S) = Net Saving (NS) Domestic Product vs. National Income Domestic vs National [euros 2000] 180 160 140 Milliards euros 120 100 80 60 PT Domestic Ireland Domestic 40 PT National Ireland National 20 0 1960 1965 1970 Source: AMECO database 1975 1980 1985 1990 1995 2000 2005 Gross Product vs. Net Product [euros 2000] 160000 140000 Million euros 120000 100000 GDP 80000 NDP 60000 40000 20000 0 1990 Source: AMECO database 1995 2000 2005 Gross/Net Saving in Portugal [euros 2000] 25000 Gross national saving Net nation saving 20000 Net Investment Million euros 15000 10000 5000 0 1960 1965 -5000 -10000 Source: AMECO database 1970 1975 1980 1985 1990 1995 2000 2005