Download Global Meltdowns Fall 2012

Global Meltdowns
Workshop on Accounts and Measures: What’s the Right Denominator?
Fall 2012
Here are some data for the U.S. and Brazil:
2001
United States
GDP
Private investment
Personal consumption
Trade balance
Transfers
Investment income balance
Household mortgage debt
Financial debt
Brazil
GDP
Personal consumption
2007
2011
Units
10.3
1.2
7.1
-361.8
-64.6
29.7
20.5
35.2
14.1
1.6
9.8
-696.7
-115.1
101.5
41.4
62.0
15.1 Trillions of $US
1.5 Trillions of $US
10.7 Trillions of $US
-559.9 Billions of $US
-133.1 Billions of $US
227.0 Billions of $US
39.2 Trillions of $US
57.0 Trillions of $US
325.5
206.6
665.3
398.5
1035.C Billions of Real
624.9 Billions of Real
Note: all measurements are in currency units unadjusted for inflation.
For each of the following problems, answer the question, in the process picking the denominators
that do the best job of conveying meaningful information about the economic data in question.
1. US GDP grew by $4.8 trillion between 2001 and 2011. How much of this growth occurred prior
to the onset of the financial crisis in 2007?
2. Does consumption play a bigger or smaller role in the US economy in 2011 compared to 2007?
3. Did consumption play a bigger role in the US than in Brazil in 2007? 2011?
4. Did private investment keep pace with overall economic growth in the US between 2001 and
2011?
5. Is the trade deficit a bigger problem for the US today (2011) than it was in 2001?
6. The US current account deficit would be bigger in all three years were it not for the surplus on
international investment income. Is this effect (of the investment income surplus) bigger in 2011 or
2001? A lot or a little?
7. Whose debt increased more rapidly between 2001 and 2007, financial institutions or household
(in the form of mortgages)? Whose decreased more since 2007?