GDP Accounting Research Articles

Oil and the World Economy: Some Possible Futures

This paper, using a six-region DSGE model of the world economy, assesses the GDP and current account implications of permanent oil supply shocks hitting the world economy at an unspecified future date. For modest-sized shocks and conventional production technologies the effects are modest. But for larger shocks, for elasticities of substitution that decline as oil usage is reduced to a minimum, and for production functions in which oil acts as a critical enabler of technologies, GDP growth could drop significantly. Also, oil prices could become so high that smooth adjustment, as assumed in the model, may become very difficult.

Statistical and econometric analysis of the impact of China's energy, environment on the economic development

Through statistical description and analysis of econometric models of energy consumption, environmental conditions, and their impact on economic development, we draw conclusions that present China's economic growth is at the cost of the huge energy consumption and environmental pollution. To maintain long-term sustainable economic development, and achieve intensive economic growth, it is necessary to take industrial ecology and green GDP accounting approach of management targets.

Noteworthy Discrepancies in China's GDP Accounting

AbstractConsistency is essential in statistical data processing. This paper reports some notable discrepancies in China's GDP accounting, which are unexpectedly found after testing the consistency of GDP accounting and its components. Although these discrepancies are mainly attributed to the revision methodology adopted after the 2004 economic census, the intention to harmonize GDP accounting data, in terms of production and expenditure, also contributes to the discrepancies. Our finding highlights the need for careful checking of consistency and for testing before formal release of any official statistics.

China's “Green GDP” Experiment and the Struggle for Ecological Modernisation

The ongoing conflict between the goals of environmental conservation and economic growth in China is partly a conflict between state agencies charged with these contrasting missions. In recent years, state environmental agencies attempted to implement a green national accounting (green GDP) exercise to publicise the extent to which environment-related costs of economic activity reduce actual GDP, and to promote a more comprehensive and realistic accounting of economic development and of GDP growth. Despite the difficulties and controversies associated with this type of accounting elsewhere, particularly in Europe, Chinese agencies implemented this project in 2006 and 2007. But there was widespread resistance from regional and local governments, apparently allied to proponents of economic growth within the central government. Chinese scholars and many officials have embraced the concept of “ecological modernisation,” but the Party-State is also bound in many ways to the “treadmill of production.” We illustrate this ongoing dynamic conflict through a study of the attempts to implement a green GDP accounting in China.

Crisis or opportunity? Economic degrowth for social equity and ecological sustainability. Introduction to this special issue

This article reviews the burgeoning emerging literature on sustainable degrowth. This is defined as an equitable downscaling of production and consumption that increases human well-being and enhances ecological conditions at the local and global level, in the short and long term. The paradigmatic propositions of degrowth are that economic growth is not sustainable and that human progress without economic growth is possible. Degrowth proponents come from diverse origins. Some are critics of market globalization, new technologies or the imposition of western models of development in the rest of the world. All criticize GDP accounting though they propose often different social and ecological indicators. Degrowth theorists and practitioners support an extension of human relations instead of market relations, demand a deepening of democracy, defend ecosystems, and propose a more equal distribution of wealth. We distinguish between depression, i.e. unplanned degrowth within a growth regime, and sustainable degrowth, a voluntary, smooth and equitable transition to a regime of lower production and consumption. The question we ask is how positive would degrowth be if instead of being imposed by an economic crisis, it would actually be a democratic collective decision, a project with the ambition of getting closer to ecological sustainability and socio-environmental justice worldwide. Most articles in this issue were originally presented at the April 2008 conference in Paris on Economic Degrowth for Ecological Sustainability and Social Equity. This conference brought the word degrowth and the concepts around it into an international academic setting. Articles of this special issue are summarized in this introductory article. Hueting, d'Alessandro and colleagues, van den Bergh, Kerschner, Spangenberg and Alcott discuss whether current growth patterns are (un)sustainable and offer different perspectives on what degrowth might mean, and whether and under what conditions it might be desirable. Matthey and Hamilton focus on social dynamics and the obstacles and opportunities for voluntary social action towards degrowth. Lietaert and Cattaneo with Gavaldà offer a down-to-earth empirical discussion of two practical living experiments: cohousing and squats, highlighting the obstacles for scaling up such alternatives. Finally van Griethuysen explains why growth is an imperative in modern market economies, raising also the question whether degrowth is possible without radical institutional changes.

A method of green GDP accounting based on eco-service and a case study of Wuyishan, China

Green GDP is an effective economic indicator of urban environmental management. This paper introduces a new method of accounting Green GDP, which puts the value of direct ecosystem services into GDP. Direct ecosystem services are weighted by their virtual prices and aggregated in the same way as market goods and services in GDP. They are components of nature, directly enjoyed, consumed, or used to yield human well-being. They belong to ecosystem services. In order to choose direct ecosystem services reasonably, two principles are put forward. That is, when calculating the value of ecosystem services for Green GDP, the differences between services for human beings and services for other living beings must be considered. And the green GDP of Wuyishan city of China is accounted, considering the direct ecological services value of urban ecosystem as environmental benefit. The results show that the value of direct ecosystem services in Wuyishan City in 2005 has reached 2.3 billion yuan RMB, and the green GDP is 15.3 billion yuan RMB.

The Subjectivity Inherent in Objective Measures of Well-Being

Claims abound that GDP accounting ignores social and ecological problems and misrepresents social well-being. While GDP growth continues to be a policy priority in most countries, it is at best one objective among many in achieving humanity’s “ultimate purpose.” Yet revisions to the income accounts and alternative well-being indicators are also problematic, since they reinforce the illusion that social and ecological impacts on well-being are objectively measurable. Future policy must not only be informed to a greater extent by qualitative and multi-dimensional assessments, but must recognize that any rank-ordering of society’s ultimate ends cannot but be subjective.

Decomposing the contribution of smaller shocks to the stabilization of GDP

Two variance decompositions are employed to identify those factors that account for the enhanced stability of GDP since 1984. Smaller direct shocks to GDP account for most of the stabilization and inventory investment and residential fixed investment exhibit the greatest stabilization.

Research on Shanghai's general growth accounting and green GDP accounting

According to the theory of economic growth and economic growth accounting models(Barro,1999),we conduct a research on the general economic growth accounting for Shanghai,and in order to analyze the sustainable development problems such as green economic growth accounting,we make a study of the green GDP economic growth accounting models(Asheim,2000).Some important results concerning the calculation research on the economic growth of Shanghai are obtained.Firstly,before implementing reform and opening policy,the achievement of Shanghai's economic growth was mostly supported by the input of capital,human resources and labors.And wage policy ensured the input of human resources because of planned economy,but it failed to cause technological progress.After the reform and opening,the achievement of Shanghai's economic growth was benefited from the technological progress caused by some reasons such as institutional innovation and so on,but interfered by the revenue policy.Secondly,Shanghai's green NNP value is far lower than the GDP value,and the latter is at least 2 to 4 times of the former.The ratio between Shanghai's GDP value and green NNP value was maintained more than 3 times that in the 1960s, 1970s and 1980s.In recent years,the ratio reduced to a relatively rational level,being around 2 times between Shanghai's GDP value and green NNP value.This shows that people have awared to pay more attention to the environmental problems and resource wasting problems,and have taken actions to protect environment and reduce resource wasting.Thirdly,at present,we believe that,because of the accounting results of Shanghai's green NNP,green GDP should not be used as a unique index of measuring economic development,but it can be used as an index of measuring the effect on environment and the wasting of resource by economic development as well as a supplement for the GDP index.

Monetary Policy and House Prices: A Cross-Country Study

This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy. We find that real house prices are pro-cyclical - co-moving with real GDP, consumption, investment, CPI inflation, budget and current account balances, and output gaps. House price booms are typically preceded by a period of easing monetary policy, but then diminishing slack and rising inflation lead monetary authorities to begin tightening policy before house prices peak. In a careful reading of official reports, speeches, and minutes, we find little evidence that foreign central banks have reacted to past episodes of rising real house prices beyond taking into account their implications for inflation and output growth. However, central bankers have expressed a range of opinions in the more recent policy debate with some willing in certain cases to raise policy rates to try to stem current and future surges in asset prices while others favor moral suasion or a hands-off approach. Finally, we characterize the risks associated with house-price reversals. Although mortgage lenders in some countries have significant exposure to house prices, the balance of evidence suggests that this exposure does not, in and of itself, pose a significant risk to financial stability. Nevertheless, the co-movement of both property prices and default rates with the business cycle means that losses on mortgage lending are likely to be higher when banks' other lines of business are also performing poorly.

House Prices and Monetary Policy: A Cross-Country Study

This paper examines periods of pronounced rises and falls of real house prices since 1970 in eighteen major industrial countries, with particular focus on the lessons for monetary policy. We find that real house prices are pro-cyclical--co-moving with real GDP, consumption, investment, CPI inflation, budget and current account balances, and output gaps. House price booms are typically preceded by a period of easing monetary policy, but then diminishing slack and rising inflation lead monetary authorities to begin tightening policy before house prices peak. In a careful reading of official reports, speeches, and minutes, we find little evidence that foreign central banks have reacted to past episodes of rising real house prices beyond taking into account their implications for inflation and output growth. However, central bankers have expressed a range of opinions in the more recent policy debate with some willing in certain cases to raise policy rates to try to stem current and future surges in asset prices while others favor moral suasion or a hands-off approach. Finally, we characterize the risks associated with house-price reversals. Although mortgage lenders in some countries have significant exposure to house prices, the balance of evidence suggests that this exposure does not, in and of itself, pose a significant risk to financial stability. Nevertheless, the co-movement of both property prices and default rates with the business cycle means that losses on mortgage lending are likely to be higher when banks' other lines of business are also performing poorly.

The Impact of Financial Frictions on a Small Open Economy: When Current Account Borrowing Hits a Limit

The evidence of the last 20 years of recurring output busts and rapid reversals of the current account in emerging markets indicates that domestic agents may not be able to borrow in international capital markets to fully insure themselves against internal and external shocks. This paper models this phenomenon as a form of excess volatility by introducing a financial friction into a stochastic model of a small open economy. The financial friction limits the current account deficit to a fixed fraction of gross domestic product. The paper shows that conditional volatility and asymmetry are significant statistical characteristics of the GDP and current account that reflect the excess volatility and the current account reversals. The economic model can explain the conditional volatility and asymmetry of Mexican GDP and the current account.

Evaluation of ecological services of Jilin Province, Northeast China

The main purpose of this study is to give evaluation of ecological services of Jilin Province, Northeast China. To take this value into decision-making and GDP accounting system is considered to be one of the economic solutions for ecological problems. The evaluation is based on the methods proposed by COSTANZA et al., and some modifications about unit value of forest and cropland system were made according to the real characters of ecosystem, climate, natural conditions etc., in Jilin Province. Total value of ecosystem services is about 554.404×109 yuan (RMB)/a, which is about 4.9 times of GDP of the corresponding period. The results of this study could be used as a fundamental work for the construction of ecological province, which was carried out from 2001, and could provide ecological information for decision-making. Furthermore, the necessities for the further studies on the evaluation of ecological services and natural capital were discussed.

The Impact of Financial Frictions on a Small Open Economy: When Current Account Borrowing Hits a Limit

The evidence of the last 20 years of recurring output busts and rapid reversals of the current account in emerging markets indicates that domestic agents may not be able to borrow in international capital markets to fully insure themselves against internal and external shocks. This paper models this phenomenon as a form of excess volatility by introducing a financial friction into a stochastic model of a small open economy. The financial friction limits the current account deficit to a fixed fraction of gross domestic product. The paper shows that conditional volatility and asymmetry are significant statistical characteristics of the GDP and current account that reflect the excess volatility and the current account reversals. The economic model can explain the conditional volatility and asymmetry of Mexican GDP and the current account.

A method for valuing global ecosystem services

The goal of this paper is to provide an investigation of several approaches to valuing ecosystem services and to contribute additional techniques which may be used in evaluating ‘green’ GDP accounts. Our estimates focus on the ecosystem as a productive economic input, not a stock which is depreciated or depleted over time; as such, it differs with other concepts more frequently employed in green GDP accounting. Most of our results are derived from the analytical fiction that a single owner of the biosphere establishes a market for all ecological resources. This monopolist then appropriates all rents from the human population. The maximum amount the monopolist charges is first assumed to be world gross product less the global human subsistence level. In addition, we examine the excess rents available in factor markets using the assumption of weak complementarity between factor inputs and ecosystem services. We also provide more conservative estimates of the value of ecosystem services by investigating the sustainable price the monopolist could charge the global population and by exploring the effects of compensating wage differentials and a non-monopolist owner of the ecosystem.

Public expenditure management in asian countries(1)

Expenditure management practices in Asia shows that these vary from the ]still-in-transition’ China, to the colonial concerns of compliance in the South Asian countries, to more advanced experiments in Singapore. Budgetary practices in many of these countries are characterized by incremental and bottom-up budgets, across-the-board cuts in times of fiscal stress, and little or no analysis of costs and outputs. At the same time, resource allocation as a percentage of GDP and accrual accounting are being tried in some other countries. The paper suggests that the institutional changes now underway in these countries and the imperative need to control expenditure could bring meaningful changes.

Default Risk on Finnish Government Foreign Currency Debt

This paper is a study of default risk on Finnish government debt. The objectives of the study are to estimate the size of the default risk and to shed some light to the causes of default risk, using simple regression runs.To estimate the Finnish government default risk premium, we measured the interest rate differential on Finnish government DEM- and USD-denominated bonds compared to respectively German and US government bonds over the period October 1991 February 1995.For the sake of comparison, we also measured the interest rate differential between Finnish government FIM-denominated bonds and German government bonds.Our results indicate that for the period studied the default risk premium on the Finnish government foreign-currency denominated debt was quite small, but by no means trivial and clearly not constant.The default risk premium on DEM-denominated debt was a small fraction of the differential for FIM-denominated debt.Our results provide strong evidence that the default risk premium was mainly determined by the level and growth rate of government debt and was not related to the general economic indicators (GDP and current account).

The Future of the World Economy: Economic Growth and Structural Change

Economic growth and structural change - the future of the world economy - is analysed in this book. Conditional forecasts are given for the economic development of the most important world market countries till the year 2000. The driving forces of economic growth are identified and forecasted, in connection with collaborating scholars in most of these countries and with international organizations. This information is used in solving a coherent world model. The model consists of linked growth models for each country (or groups of countries). The solutions show that the inequality in international income distribution will further increase and that the CMEA and OECD countries will approximately keep their relative positions, with some changes within these groups. Structural change is also analysed. Additionally separate forecasts prepared by each collaborating country group are given and may be compared with the forecasts by the world model. The book closes with chapters on special features of the future economic development: on the international debt problem, on long waves, on structural change in the world trade, on the emergence of service economics and on the comparison of GDP and NMP national accounting.