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Macroeconomic Indicators
Alexis DAJ
Macroeconomics
1. Definition In 1992, a World Bank study estimated that there were at least 33 definitions in the literature - all covering one or more aspects of economic, social, and environmental objectives. The general definition should be one that takes the viewpoint of the economist, with the concerns of the sociologist and ecologist at heart.
Macroeconomics
1. Definition continued This definition fits nicely with the IMFs concept of "high quality growth," which we believe is central to sustainable development. Such growth is defined as "economic growth that brings lasting employment gains and poverty reduction; provides greater equality of income through greater equality of opportunity, including for women; and protects the environment." The third element, "protects the environment," may sound odd coming from an institution so concerned with macroeconomy stability.
Macroeconomics
these objectives must be achieved in ways that allow the simultaneous pursuit of social and ecological objectives. where there are tradeoffs, governments should support the adoption of complementary policies, such as targeted social safety nets, protection of essential public education and health care expenditures, and fiscal and non-fiscal measures to help conserve natural resources and control pollution.
Macroeconomics
2. Link Between Macroeconomics and the Environment At the time of the Rio Earth Summit, the link between macroeconomics and the environment was largely unexplored. NEVERTHELESS Macroeconomics and the environment are inextricably linked:
The old concept of environment as a constraint to development has given way to one of environment as a partner in growth and development. Studies show that macroeconomic stability is a minimum and necessary condition for preserving the environment. Stability enhances growth prospects, increases employment and incomes, and ensures that the right price incentives work to preserve the environment.
Macroeconomics
2. Link Between Macroeconomics and the Environment continued Macroeconomics and the environment are inextricably linked:
Furthermore, any strategy to preserve the environment will be undermined by macroeconomic instability. It is true that macroeconomic policy reforms may hurt the environment, but the only time this occurs is when sound environmental policies are lacking. Thus the answer is not to forgo the necessary macroeconomic policy reforms, but to ensure that sound environmental policies are in place. Environmental problems, including those relating to specific regions and the world as a whole, hurt growth. Human welfare is reduced by ill health and premature mortality caused by environmental problems. Studies also give abundant evidence of lost labor productivity resulting from ill health, forgone crop output from soil degradation, and lost fisheries output and tourism receipts from coastal erosion.
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Macroeconomic Indicators
Macroeconomic Indicators
1. Definition The economic activities which take place within the framework of a national economy are concretized in a wide range of goods and services. This output is reflected with the help of economic indicators. The economic indicator reveals the numeric expression of the quantitative side of the economic phenomena and processes in a certain space and time conditions.
Macroeconomic Indicators
1. Macroeconomic Indicators continued The economic indicator permits to make evident these processes and phenomena quantitatively, structurally and qualitatively and to observe the interdependences between some certain subsystems of the national economy. According to the level these indicators are calculated for, there can be microeconomic and macroeconomic indicators; While microeconomic indicators show the results at the level of individual economic agent, macroeconomic indicators measures the performance at the level of national economy.
Macroeconomic Indicators
Macroeconomic Indicators
National Income Accounting Defined Measures of Output GDP vs Real GDP GDP Per Capita Shortcomings of GDP as a Measure of Economic Well-Being
Macroeconomic Indicators
National Income Accounting refers to the measurement of aggregate economic activity, particularly national income and its components. Aggregate = Total or Gross
Macroeconomic Indicators
Macroeconomic Indicators
The Gross National Product ( GNP) The Gross Domestic Product (GDP) In the two definitions above was mentioned the word final: final output, final goods etc. When we speak about this concept, we refer to the goods and services produced in the course of a certain period of time, and which are no longer used to produce any other goods. In case they are used in an ulterior process of production we speak about intermediary consumption.
Macroeconomic Indicators
The Gross National Product ( GNP) The Gross Domestic Product (GDP) If we add to the Gross Domestic Product the intermediary consumption, we get another indicator, the Gross Aggregate Product. It is important not to include the intermediary consumption into the GDP, in order to avoid the double registering, whose effects are the altered images of the macroeconomic results. The final goods, included in the calculation of GDP, are meant to get directly into consumption, being sold to final consumers.
Macroeconomic Indicators
Gross Domestic Product is the total value of final output produced within a nations borders in a given time period at current market prices Gross Domestic Product is also referred to as
Macroeconomic Indicators
C + I + G + (Xn) = GDP
Households supply business with the factors of production in return for payment in the form of wages, profits, rent, and interest
Adds the increase in value at each stage of the production and distribution process
Macroeconomic Indicators
Same As
Households
(GDP = C + I + G + Xn )
Copyright 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
GDP (Gross Domestic Product) - Depreciation Net Domestic Product - Indirect business taxes and subsidies Domestic Income (DI) = National Income = (W + R + I + P) - Earnings not received + Receipts not earned Personal Income (PI) - Personal Taxes Disposable Personal Income (DPI)
Macroeconomic Indicators
Value of Transactions
$0.12/kg $0.28/kg $0.60/kg $0.75/kg
Value Added
$0.12/kg $0.16/kg $0.32/kg $0.15/kg
Total
$1.75/kg
$0.75/kg
Macroeconomic Indicators
Multiple counting
Only expenditures on final products what consumers, businesses, and government units buy for their own use belong in GDP
Intermediate goods are not counted Used goods are not counted
Transfer payments
Transfer payments are not payments for currently produced goods and services
When they are spent for final goods and services they will go into GDP as consumer spending Financial transactions dont go into GDP
Macroeconomic Indicators
Suppose we invited the same friends to a birthday party each year for four years and purchased one giant pizza each year. We notice that although the giant size pizza doesnt change from year to year, it costs $1 more each year. The pie didnt change, but the dollar value (price) of the pie did If we want to compare GDP from year to year, we need to get rid of the inflation (price) effect!
Macroeconomic Indicators
2004
Nominal GDP (in billions) Change in Nominal GDP Change in Price Level, 2004 to 2005 Real GDP in 2004 dollars Change in Real GDP
$11,734
$11,734
$12,195 $461
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
1.
U. .
Fr nc
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It l
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1.
1.
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Macroeconomic Indicators
For citizens living in the same country over time For comparing standards of living between citizens of different countries
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
20,000
10,000
0 Luxembourg Switz rl n Norway Den rk J n Sing United States Ger any re Belgi Net erlan s
International comparisons for per capita GDP are at least somewhat suspect because of varying national income accounting systems as well as fluctuations of foreign exchange rates