MACROECONOMIC STATISTICS

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MACROECONOMIC STATISTICS

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MACROECONOMIC STATISTICS

Sponsored by a Grant TÁMOP-4.1.2-08/2/A/KMR-2009-0041 Course Material Developed by Department of Economics,

Faculty of Social Sciences, Eötvös Loránd University Budapest (ELTE) Department of Economics, Eötvös Loránd University Budapest

Institute of Economics, Hungarian Academy of Sciences Balassi Kiadó, Budapest

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MACROECONOMIC STATISTICS

Author: Gábor Oblath

Supervised by Gábor Oblath January 2011

ELTE Faculty of Social Sciences, Department of Economics

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MACROECONOMIC STATISTICS

Week 1

Concepts, sources and applications Introduction

Gábor Oblath

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Outline

• Approach, motivation, questions, goals

• Requirements, conditions

• Two broad topics and subtopics

• Logic and structure

• Preliminary overview of the major statistical sources

• Literature

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Approach

• Pragmatic and practical approach

• Opportunistic: tries to avoid taking position in current debates in macroeconomics

(though offers information, background)

• Relative to Mankiw’s (2006) categories (engineer vs. scientist)

– Observation, description

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Motivation

• A major condition for performing

applied/practical macroeconomic analysis:

• Understanding

– the logic of macroeconomic statistics,

– main concepts, their relevance and limitations

• Unfavourable experiences:

– Great technical expertise +

– Insufficient knowledge of statistics – (We shall offer some examples)

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Characteristics of the course

• On the border of economic statistics, macroeconomics and applied analysis

• Assumes the knowledge of basic macroeconomics

• No textbook, articles and chapters of books are essential parts of the course (see the literature in the Outline)

• Further parts ppp. presentations (handouts)

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Goals

• Provide general knowledge

– on the statistical concepts and sources necessary for macroeconomic analysis,

– ways and means for handling statistics,

• Based on three practical (policy-related) topics, to demonstrate the concepts,

sources necessary for analysing these issues

• The three topics:

– International competitiveness

– Sustainability of macroeconomic imbalances –Economic convergence

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What sort of questions are to be dealt with – some examples

• General:

– What is meant by RGDI, when and why is it important?

– How to interpret reinvested earnings in the BOP?

– What is seigniorage and how can it be measured?

– What is the meaning of the operational fiscal balance and how to measure it?

• Statistical:

– What is the difference between net lending/borrowing and the current balance of a country; why is it

important?

– Alternative ways to measure national savings

– How price indices can be biased, and is the relevance of the possible distortions etc.

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The two main parts of the course

I. The system of national accounts, basic statistical concepts and their relation to basic macroeconomic concepts

II. Practical applications

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Part I

1. Introduction

• Outline

• Discussion of topics on which students can make presentations

• Preliminary review of the major (on-line) statistical sources

– Eurostat, AMECO, UN National Accounts Database,

– CSO

– MNB: (BOP and Financial accounts)

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2. Basic relationships and basic statistics

• Basic concepts/relationships in standard textbooks vs. statistical

concepts/relationships;

• SNA-ESA: basic features;

• FOF (Flow of Funds)

• Financial accounts (FA)

• Balance of payments (BOP)

• Possible uses of these statistics

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3. Quantification of basic relationships and alternative interpretation of ”real” levels and changes

• Attempt at quantifying macroeconomic identities based on

– GDP-statistics (SNA), – BOP

– FA;

• Reviewing inconsistencies, possible reasons

• Alternative interpretations of the term

”real”

• Aggregate real income: GDP corrected for changes in the terms of trade (RGDI)

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4. ”Real” concepts (cont.) + 2 issues related to statistical measurement + the Stiglitz-report

(3 presentations)

• Understanding and measuring the ”real”

(operational) fiscal balance

• Discussion of three topics related to the

interpretation of macro statistics (based of presentations by students):

– The Stiglitz-report on the limitations of GDP – The informal/hidden economy

– Questions related to the measurement of the CPI

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5–6. External and internal balance/imbalance:

conceptual and measurement issues

• The meaning of external balance/imbalance

• The composition of the BOP

• Current, capital financial account

• International investment position

• Relationships between flows and stocks

• Debt and non-debt vs. FDI-non-FDI (flows and stocks)

• Sectoral composition of gross and net debt

• The relevance/irrelevance of the Lawson-doctrine

• Debate on the concept of ”dark matter”

• Problems involved in the comparison of the current account/GDP ratio across countries

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7. International comparison of volumes and structures:

the purchasing power parity (PPP) as a statistical device

• The PPP: conceptual and measurement issues

• Types of PPPs

• Alternative uses of PPPs

• Comparison of

– Volumes – Structures

– Price levels and structures

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8. Recapitulation, practical issues and exercises

• Summary of the first part

• The practice and relevance of chain-linking

• Exercises

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Part II

9–10. International competitiveness

• Alternative interpretations

• Measurement issues

• Real exchange rate (RER) indices

• Case study: Hungary’s international competitiveness in the 2000s

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11. Sustainability

• The interpretation of ”economic

fundamentals” with respect to growth and imbalances

• Alternative interpretations of sustainability

• Debt dynamics: conceptual and statistical/measurement issues

• Case study: sustainability of Hungary’s public finances in 2010

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12. Convergence (catching up)

• The meaning and measurement of economic convergence

• Alternative statistical sources and indicators (beta, sigma)

• Price and wage convergence

• Experiences in Europe, with special regard to the EU-NMS

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13. Topical international issues

• The EMU-crisis: reasons and consequences

• Implications for non-EMU EU-countries

• Former ideas related to joining the euro- zone

• The case for designing domestic criteria for joining the EMU

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Some important statistical sources:

general overview

Important prerequisite for teaching the course:

internet access (to statistical sources) Hungarian:

• Central statistical office (CSO)

http://portal.ksh.hu/portal/page?_pageid=37,115776&_dad=portal&_sc hema=PORTAL

• MNB (National Bank of Hungary) BOP and FA

http://www.mnb.hu/Statisztika/statisztikai-adatok- informaciok/adatok-idosorok

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International

• Eurostat: Economy and Finance

http://epp.eurostat.ec.europa.eu/portal/page/portal/euros tat/home/

• AMECO

http://ec.europa.eu/economy_finance/ameco/user/serie/

SelectSerie.cfm

• OECD

http://stats.oecd.org/index.aspx

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Literature: topic 2–3

National Accounts: A Practical Introduction (A) Income… accounts of the nation [Chapter 3–6 (51–

70. p)]

http://unstats.un.org/unsd/nationalaccount/seriesf_

85.htm

Lequiller, F.–D. Blades (2006) 14–40; 96–149, 233 http://www.oecd.org/dataoecd/37/12/38451313.pdf