national income accounts: overview and applications
DESCRIPTION
National Income Accounts: Overview and Applications. Thorvaldur Gylfason. The meaning of GNP. Y + Z = C + I + G + X Aggregate supply = aggregate demand Y = C + I + G + X – Z (expenditure) where C = C d + C z , I = I d + I z , etc. Y = C d + I d + G d + X d Y = C + S + T (allocation) - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/1.jpg)
National National Income Income Accounts: Accounts: Overview Overview and and ApplicationApplicationss
Thorvaldur Gylfason
![Page 2: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/2.jpg)
Y + Z = C + I + G + XY + Z = C + I + G + X Aggregate supply = aggregate Aggregate supply = aggregate
demanddemand Y = C + I + G + X – Z Y = C + I + G + X – Z
(expenditure)(expenditure) where C = Cwhere C = Cdd + C + Czz, I = I, I = Idd + I + Izz, etc., etc.
Y = CY = Cdd + I + Idd + G + Gdd + X + Xdd
Y = C + S + T (allocation)Y = C + S + T (allocation) Y = wages+ interest + rent Y = wages+ interest + rent
(income)(income) Y = coffee + tea + ... (production)Y = coffee + tea + ... (production) Four equivalent definitionsFour equivalent definitions of GNP of GNP
The meaning of GNP
![Page 3: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/3.jpg)
I = S + (T – G) + (Z – X)I = S + (T – G) + (Z – X) = private + public + foreign = private + public + foreign
savingsaving (I – S) + (G – T) = Z – X(I – S) + (G – T) = Z – X
Domestic deficit = foreign deficitDomestic deficit = foreign deficit Example: U.S in 1980sExample: U.S in 1980s
Related conceptsRelated concepts NNPNNP GDPGDP GDIGDI GNIGNI
Saving and investment
![Page 4: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/4.jpg)
NNPNNP = GNP – depreciation= GNP – depreciation GNP = C + IGNP = C + Igg + G + X – Z + G + X – Z NNP = C + INNP = C + Inn + G + X – Z + G + X – Z GNP – NNP = IGNP – NNP = Igg – I – Inn = depreciation = depreciation Recall:Recall: I = I = K + K + KK
GDPGDP = GNP – FI= GNP – FI FI = wages + interest (net) earned FI = wages + interest (net) earned
abroad abroad GNP = GDP + FIGNP = GDP + FI GNP is legal concept, GDP is GNP is legal concept, GDP is
geographicalgeographical Turkey: GNP > GDP; Argentina: GNP < Turkey: GNP > GDP; Argentina: GNP <
GDPGDP
Related concepts
![Page 5: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/5.jpg)
GDIGDI = GNP + transfers= GNP + transfers= GDP + FI + TR= GDP + FI + TR
Related concepts
YY X - ZX - Z DefinitionDefinition
GDPGDP Trade balanceTrade balance Goods and Goods and nonfactor nonfactor servicesservices
GNPGNP Current Current accountaccount
Goods and Goods and servicesservices
GDIGDI Current Current account incl. account incl. transferstransfers
Goods and Goods and services plus services plus transferstransfers
![Page 6: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/6.jpg)
GNIGNI = GNP + terms of trade effect= GNP + terms of trade effect GNP = E + X – ZGNP = E + X – Z
where E = C + I + G and X = Xwhere E = C + I + G and X = XNN/P/PXX
GNI = E + X* - Z GNI = E + X* - Z where X* = Xwhere X* = XNN/P/PZZ
TT = GNI – GNP = X* - X = XTT = GNI – GNP = X* - X = XNN/P/PZZ - - XXNN/P/PXX
= (X= (XNN/P/PXX)(P)(PXX/P/PZ Z -1)-1) PPxx goes up goes up GNI goes up for given GNPGNI goes up for given GNP PPzz goes up goes up GNI goes down for given GNI goes down for given
GNPGNP
Related concepts
![Page 7: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/7.jpg)
Allows us to measure GNPAllows us to measure GNP Domestic usesDomestic uses International comparisonsInternational comparisons Measuring growthMeasuring growth
Why important?
![Page 8: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/8.jpg)
Does not include nonmarket Does not include nonmarket activityactivity Work at homeWork at home
Does not distinguish between Does not distinguish between rising vs. falling incomesrising vs. falling incomes equal vs. unequal distributionequal vs. unequal distribution stocks vs. flowsstocks vs. flows
environmentenvironment resources (natural and human)resources (natural and human)
right vs. wrong exchange ratesright vs. wrong exchange rates work vs. leisurework vs. leisure
Qualifications
![Page 9: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/9.jpg)
NIA: SNIA: S – I = G – T + X – Z – I = G – T + X – Z BOP: BOP: R = X – Z + R = X – Z + DDFF
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
MS: MS: M =M = D + D + R = R = DDGG + + DDPP + + RR
Linkages
![Page 10: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/10.jpg)
NIA: SNIA: S – I = G – T + – I = G – T + X – ZX – Z BOP: BOP: R =R = X – ZX – Z + + DDFF
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
MS: MS: M =M = D + D + R = R = DDGG + + DDPP + + RR
Linkages
![Page 11: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/11.jpg)
NIA: SNIA: S – I = – I = G – TG – T + X – Z+ X – Z BOP: BOP: R = X – Z + R = X – Z + DFDF GFS:GFS: G – TG – T = = B + B + DDGG + + DDFF
MS: MS: M = M = D + D + R = R = DDGG + + DDPP + + RR
Linkages
![Page 12: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/12.jpg)
NIA: SNIA: S – I = G – T + X – Z – I = G – T + X – Z BOP:BOP: RR = X – Z + = X – Z + DDFF
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
MS:MS: M =M = D +D + RR = = DDGG + + DDPP + + RR
Linkages
![Page 13: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/13.jpg)
NIA: SNIA: S – I = G – T + X – Z – I = G – T + X – Z BOP: BOP: R = X – Z +R = X – Z + DDFF
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
MS:MS: M =M = D + D + R = R = DDGG + + DDPP + + RR
Linkages
![Page 14: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/14.jpg)
NIA: SNIA: S – I = G – T + X – Z – I = G – T + X – Z BOP: BOP: R = X – Z + R = X – Z + DDFF
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
MS: MS: M =M = D + D + R =R = DDGG + + DDPP + + RR
Linkages
![Page 15: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/15.jpg)
GFS: G – T = GFS: G – T = B + B + DDGG + + DDFF
NIA: INIA: I – S = – S = DDPP - - M - M - BB G – T + I – S = G – T + I – S = D + D + DDFF - - MM
= = DDFF - - RR
= X – Z= X – Z Therefore, Therefore, R = X – Z + R = X – Z + DDF F
= X – Z + F= X – Z + F
We can use NIA and GFS to derive We can use NIA and GFS to derive BOPBOP
Application
![Page 16: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/16.jpg)
Y = ALY = ALaaKK1-a1-a
where A = E(K/L)where A = E(K/L)aa
Y = EKY = EK Y/Y = Y/Y = A/A + a(A/A + a(L/L) + (1-a)(L/L) + (1-a)(K/K)K/K) Y/Y = q + a(Y/Y = q + a(L/L) + (1-a)(sY/K - L/L) + (1-a)(sY/K - )) g = q + (2/3)0.015 + (1/3)((0.21(1/3) – g = q + (2/3)0.015 + (1/3)((0.21(1/3) –
0.04)0.04) = q + 0.01 + 0.01= q + 0.01 + 0.01
g = 0.03 g = 0.03 q = 0.01q = 0.01 So, US growth can be traced to labor, So, US growth can be traced to labor,
capital, and technology in roughly equal capital, and technology in roughly equal proportionsproportions
Growth accountingRecall:Recall: I = I = K + K + KK
![Page 17: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/17.jpg)
Growth accounting g = sE - g = sE - = 0.06= 0.06 E = 0.30E = 0.30 E = 0.40E = 0.40 E = 0.50E = 0.50
s = 0.10s = 0.10 g = -g = -0.030.03
g = -g = -0.020.02
g = -g = -0.010.01
s = 0.20s = 0.20 g = 0.00g = 0.00 g = 0.02g = 0.02 g = 0.04g = 0.04
s = 0.30s = 0.30 g = 0.03g = 0.03 g = 0.06g = 0.06 g = 0.09g = 0.09
s = 0.40s = 0.40 g = 0.06g = 0.06 g = 0.10g = 0.10 g = 0.14g = 0.14
![Page 18: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/18.jpg)
Country Country AA
Country BCountry B
A Tale of Two Countries
![Page 19: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/19.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
A Tale of Two Countries
![Page 20: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/20.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%
A Tale of Two Countries
![Page 21: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/21.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%Export ratioExport ratio 58%58% 23%23%
A Tale of Two Countries
![Page 22: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/22.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%Export ratioExport ratio 58%58% 23%23%Primary export Primary export ratioratio
33%33% 80%80%
A Tale of Two Countries
![Page 23: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/23.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%Export ratioExport ratio 58%58% 23%23%Primary export Primary export ratioratio
33%33% 80%80%
InflationInflation 10%10% 18%18%
A Tale of Two Countries
![Page 24: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/24.jpg)
Country Country AA
Country BCountry B
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%Export ratioExport ratio 58%58% 23%23%Primary export Primary export ratioratio
33%33% 80%80%
InflationInflation 10%10% 18%18%Growth per capitaGrowth per capita 3%3% -2%-2%
A Tale of Two Countries
![Page 25: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/25.jpg)
And the countries And the countries are:are: MauritiusMauritius MadagascMadagasc
arar
Girls at primary Girls at primary schoolschool
100%100% 72%72%
Investment ratioInvestment ratio 25%25% 11%11%Export ratioExport ratio 58%58% 23%23%Primary export Primary export ratioratio
33%33% 80%80%
InflationInflation 10%10% 18%18%GrowthGrowth 3%3% -2%-2%
A Tale of Two Countries
![Page 26: National Income Accounts: Overview and Applications](https://reader034.vdocuments.mx/reader034/viewer/2022042718/56813aab550346895da2a76e/html5/thumbnails/26.jpg)
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Madagascar
Mauritius
Madagascar and Mauritius:GNP per capita 1964-99
Current US$,Atlas method