Measures Of GDP Research Articles

A now-casting model for Canada: Do U.S. variables matter?

We propose a dynamic factor model for now-casting the growth rate of the quarterly real Canadian gross domestic product. We select a set of variables that are monitored by market participants, track their release calendar, and use vintages of real-time data to reproduce the information sets that were available at the time when the forecasts would have been made. The accuracy of the forecasts produced by the model is comparable to those of the forecasts made by the market participants and institutional forecasters. We show that including U.S. data in a now-casting model for Canada improves its predictive accuracy dramatically, mainly because of the absence of timely production data for Canada. Moreover, Statistics Canada produces a monthly real GDP measure along with the quarterly one, and we show how the state space representation of our model can be modified to link the monthly GDP properly with its quarterly counterpart.

Lessons in stabilization and prospects for growth: Russia's economic policy in 2016

Abstract Economic growth is a primary challenge of the political agenda of leading countries, including Russia. This study discusses existing hypotheses that are related to “secular stagnation” and the “productivity paradox”, which include the demand side of the problem (cyclical factors), special features of technological innovations (technological factors), anti-crisis policy that prevents “creative destruction” (political factors), and the irrelevance of the GDP measurement (statistical problems). Limits to growth contribute to a new global policy trend and the emerging of populism; this study discusses the prospects of the transformation from political populism to economic populism. Global challenges provide the basis for a more extensive analysis of Russian economic development and, particularly, the results of the 2015–2016 anti-crisis policy, which helped the Russian economy to adapt to new economic realities of the post-crisis world.

Economic Institutions and Comparative Economic Development: A Post-Colonial Perspective

Summary Existing literature suggests that either colonial settlement conditions or the identity of colonizer were influential in shaping the post-colonial institutional environment, which in turn has impacted long-run economic development. These two potential identification strategies have been treated as substitutes. We argue that the two factors should instead be treated as complementary and develop an alternative and unified IV approach that simultaneously accounts for both settlement conditions and colonizer identity to estimate the potential causal impact of a broad cluster of economic institutions on log real GDP per capita for a sample of former colonies. Using population density in 1500 as a proxy for settlement conditions, we find that the impact of settlement conditions on institutional development is much stronger among former British colonies than colonies of the other major European colonizers. Conditioning on several geographic factors and ethno-linguistic fractionalization, our baseline 2SLS estimates suggest that a standard deviation increase in economic institutions is associated with a three-fourth standard deviation increase in economic development. Our results are robust to a number of additional control variables, country subsample exclusions, and alternative measures of institutions, GDP, and colonizer classifications. We also find evidence that geography exerts both an indirect and direct effect on economic development.

The lessons of stabilization and prospects of growth:Russia’s economic policy in 2016

Economic growth is the key challenge at the political agenda of the leading countries including Russia. This papers discusses existing hypotheses of “secular stagnation” and “productivity paradox” - demand side problems (cyclical factors); special features of technological innovations (technological factors); anti-crisis policy preventing “creative destruction” (political factors); irrelevance of GDP measurement (statistical problems). Limits of growth contribute to a new global policy trend - emerging of populism, and the paper discusses the prospects of transformation of political populism to economic one. Global challenges provide the basis for further analysis of Russian economic development, and particularly the results of 2015-2016 anti-crisis policy, which helped the national economy to adapt to new economic realities of the post-crisis world.

A global analysis of factors controlling VIIRS nighttime light levels from densely populated areas

Remote sensing of nighttime lights has been shown as a good surrogate for estimating population and economic activity at national and sub-national scales, using DMSP satellites. However, few studies have examined the factors explaining differences in nighttime brightness of cities at a global scale. In this study, we derived quantitative estimates of nighttime lights with the new VIIRS sensor onboard the Suomi NPP satellite in January 2014 and in July 2014, with two variables: mean brightness and percent lit area. We performed a global analysis of all densely populated areas (n=4153, mostly corresponding to metropolitan areas), which we defined using high spatial resolution Landscan population data. National GDP per capita was better in explaining nighttime brightness levels (0.60<Rs<0.70) than GDP density at a spatial resolution of 0.25° (0.25<Rs<0.43), or than a city-level measure of GDP per capita (in proportion to each city's fraction of the national population; 0.49<Rs<0.62). We found that in addition to GDP per capita, the nighttime brightness of densely populated areas was positively correlated with MODIS derived percent urban area (0.46<Rs<0.60), the density of the road network (0.51<Rs<0.67), and with latitude (0.31<Rs<0.42) at p<0.001. NDVI values (representing vegetation cover) were found to be negatively correlated with cities' brightness in winter time (−0.48<Rs<−0.22), whereas snow cover (enhancing artificial light reflectance) was found to be positively correlated with cities' brightness in winter time (0.17<Rs<0.35). Overall, the generalized linear model we built was able to explain >45% of the variability in cities' nighttime brightness, when both physical and socio-economic variables were included. Within the generalized linear model, the percent of national GDP derived from income (rents) from natural gas and oil, was also found as one of the statistically significant variables. Our findings show that cities' nighttime brightness can change with the seasons as a function of vegetation and snow cover, two variables affecting surface albedo. Explaining cities' nighttime brightness is therefore affected not only by country level factors (such as GDP), but also by the built environment and by climatic factors.

GDP and Underground Economy (UE): A Literature Review on the Mistaken Significance of Underground Economies

Author(s): Huang, Jessie | Abstract: The significance of undergroundeconomies relative to a country’s calculationof GDP was further examined under theassumption of the inclusion of them whenperforming this computation. Challengingthe current methodology of GDP and howit’s calculated, as done traditionally throughassessing and measuring the followingsectors of a country’s economy: privateconsumption, gross investment, governmentinvestment, government spending, and netexports, the underground economy proves tobe a worthy cause of further analysis, as it’sassignment to any one sector may not beappropriate. Though illicit activitiesconstituting the underground economy provehard to examine with any level of certainty,the substantial benefits of inclusion delivergreat advantages to a country. It is fromthese findings that have surfaced a greaterissue with what is standard practice whencalculating GDP. Though the undergroundeconomy is filled with a great level ofuncertainty, findings suggest including it inthe measure of GDP, but done so withcaution, as there are risks of jumping toconclusions.

The Relationship between FDI outflows, Exports and GDP in India: An Application of the Autoregressive Distributed Lag Model

This study examines the long-run relationship between foreign direct investment outflows, exports and aggregate measure of GDP in India for the time period 1980 to 2014. In order to assess the long-run relationship, ARDL/Bounds testing approach to cointegration has been applied. At the end of the analysis, VAR Granger causality/Block exogeneity Wald test has also been applied to test for the causal relationship between the variables of interest. The results indicate that all the variables are cointegrated when FDI outflows have been taken as a dependent variable. The positive and statistically significant coefficient of export suggests that FDI outflows and export complement each other, both in the long and short-run. GDP is found to have a negative but statistically insignificant impact on FDI outflows. The dummy that is used to incorporate the shift in policy after the economic reforms of 1991 is found to have a positive but insignificant impact on FDI outflows. The results of the Granger causality test indicate a unidirectional causality running from exports to FDI outflows. A similar type of causality is found between exports and GDP running from GDP to exports. The results of the Granger causality test also suggest that there exists chain relationship among the variables i.e., GDP causes exports and exports, in turn,causes FDI outflows. It can be also inferred that export is a precondition for Indian firms to conduct overseas FDI operations.

What Do the Different Measures of GDP Tell Us?

GDP is key to macroeconomics, yet different ways of defining and measuring GDP have particular purposes. This paper examines how total GDP can be conceptualized, dissected and studied and how these improve our analysis and understanding of the sources of economic growth. While each approach is useful, macroeconomic analysis is shifting from a short-term, recession-driven focus on managing aggregate demand to a long-term, supply-side perspective on the determinants of economic growth. This shift is likely to accelerate in the current environment of concerns about a “new normal” of slow growth, with the debate framed by supply determinants such as an aging labour force and whether technological innovations have been mostly exhausted. How one views GDP has important implications for policymaking. If today’s chronic slow growth is due to deficiency of demand, stimulative fiscal policies might be the proper response, depending on a country’s fiscal capacity to take on more debt. However, if the shortfall in growth is due to a lack of productivity growth, different policies might be appropriate that increase the efficiency of resource use or the rate of innovation. The point is that a more detailed understanding of each measure of GDP leads to better comprehension of why it behaves in a particular way in response to different economic circumstances. This knowledge will allow policymakers to make more informed decisions. The author reviews each of the different ways of looking at GDP and how they evolved in response to the needs of analysts. He summarizes the strengths and weaknesses of each and what can be learned by contrasting and combining them in analysis. In order the six are: • GDP by industry; • GDP by expenditure; • GDP by income; • The quantity equation; • GDP by input/output; and • GDP by factor input. For economists, the different optics for viewing economic activity lead to a more profound understanding of the process of economic growth. Good analysis and policy prescription often depend on finding the right optic to understand a particular problem.

Equality of Opportunity: Theory and Measurement

During the last third of the twentieth century, political philosophers actively debated about the content of distributive justice; the ruling ethical view of utilitarianism was challenged by various versions of equality of opportunities. Economists formulated several ways of modeling these ideas, focusing upon how individuals are placed with respect to opportunities for achieving various outcomes, and what compensation is due to individuals with truncated opportunities. After presenting a review of the main philosophical ideas (section 2), we turn to economic models (sections 3 and 4). We propose a reformulation of the definition of economic development, replacing the utilitarian measure of GDP per capita with a measure of the degree to which opportunities for income acquisition in a nation have been equalized. Finally, we discuss issues that the econometrician faces in measuring inequality of opportunity, briefly review the empirical literature (section 6), and conclude (section 7). (JEL C43, D63, D70, I24)

Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis

This study applies wavelet coherency analysis to examine the relationship between the U.S. per capita real GDP and six income inequality measures over the period 1917 to 2012. Wavelet analysis allows the simultaneous examination of correlation and causality between the two series in both the time and frequency domains. Our findings provide robust evidence of positive correlation between the growth and inequality across frequencies. Yet, directions of causality vary across frequencies and evolve with time. Evidence that inequality leads per capita real GDP at both high- and low-frequencies exists for the Top 1 and 10% measures of inequality with little evidence that real GDP per capita leads inequality. In the time-domain, the time-varying nature of long-run causalities implies structural changes in the two series. These findings provide a more thorough picture of the relationship between the U.S. per capita real GDP and inequality measures over time and frequency, suggesting important implications for policy makers.

A cascading flash flood guidance system: development and application in Yunnan Province, China

Yunnan Province, located in Southwest China, suffers from massive flash flood hazards due to its complex mountainous hydrometeorology. However, traditional flash flood forecasting approaches can hardly provide an effective and comprehensive guide. Aiming to build a multilevel guidance system of flash flood warning for Yunnan, this study develops a Cascading Flash Flood Guidance (CFFG) system, progressively from the Flash Flood Potential Index (FFPI), the Flash Flood Hazard Index (FFHI) to the Flash Flood Risk Index (FFRI). First, land cover and vegetation cover data from MODIS products, the Harmonized World Soil Database soil map, and SRTM slope data are used in generating a composite FFPI map. In this process, an integrated approach of the analytic hierarchy process and the information entropy theory is used as a weighting method. Then, three standardized rainfall amounts (average daily amount in flood seasons, maximum 6 h and maximum 24 h amount) are added to derive FFHI. Further inclusion of GDP, population and flood prevention measures as vulnerability factors for the FFRI enabled prediction of the flash flood risk. The spatial patterns of the CFFG indices indicate that counties in east Yunnan are most susceptible to flash floods, which agrees with the distribution of observed flash flood events. Compared to other approaches, the CFFG system could be a useful prototype in mapping characteristics of China’s flash floods in a cascading manner (i.e., potential, hazard and risk) for users at different administrative levels (e.g., town, county, province and even nation).

A Nowcasting Model for Canada: Do U.S. Variables Matter?

We propose a dynamic factor model for nowcasting the growth rate of quarterly real Canadian gross domestic product. We show that the proposed model produces more accurate nowcasts than those produced by institutional forecasters, like the Bank of Canada, the The Organisation for Economic Co-operation and Development (OECD), and the survey collected by Bloomberg, which reflects the median forecast of market participants. We show that including U.S. data in a nowcasting model for Canada dramatically improves its predictive accuracy, mainly because of the absence of timely production data for Canada. Moreover, Statistics Canada produces a monthly real GDP measure along with the quarterly one, and we show how to modify the state space representation of our model to properly link the monthly GDP with its quarterly counterpart.

Study on the Negative Effects of Plants in Urban Green Planning Based on the Experts and Public\'s View

Plants are an essential factor for urban green planning to play the role of ecological service function. Along with many kinds of important positive ecological effects, plants in urban green planning also produce a wide variety of negative effects and shows many problems. Surveys and assessment studies on the negative effect indexes of plants in urban green planning and their importance are conducted in this study through studying on super-large samples from the perspective of experts and the public. The result has shown that the important of these three indexes like “noxious, thorny or sick plants”, “causing allergy”, “broken and disorderly landscapes” are regarded as “important”, while the importance of these three indexes like “hiding dangerous animals”, “destructive extension of root system and branches”, “withered branches and leaves influencing public health” are regarded as “normal”. This research has positive inspiration and referential significance for performing the ecological service function of urban green planning better, directing the planning and construction of urban green planning and functional assessment better as well as promoting the green GDP measurement and the sustainable development of urban ecological environment.

Does Regulatory Bank Oversight Impact Economic Activity? A Local Projections Approach

Existing research generally finds that the magnitude of the effect of supervisory rating shocks on real economic activity is small and short-lived. This is puzzling because corrective actions addressing weaknesses in underwriting and other practices frequently include lending restrictions and thus would be expected to have a stronger effect on real activity. As supervisory actions curb poorly underwritten or uneconomic loans, transmission of macroprudential policy throughout the macroeconomy should be evident in the dynamic responses of the real GDP and other measures of real activity. We use the local projections approach to estimate impulse responses from a vector autoregression (VAR) model. We show that the effect of supervisory stringency shocks is larger than the one estimated with the standard Cholesky structural VAR approach. We find that the effects are asymmetric: bank downgrades lead to a pronounced decline in real activity, while upgrades do not result in its increase. This would follow if the decrease is driven by poor lending practices that would not be expected to resume when the bank is upgraded. The linear framework averages out these effects, overstating the impact of upgrades, and understating that of downgrades. Furthermore, we document the presence of nonlinear effects for the downgrade shocks, as their impact increases disproportionately with its size. Such effects are not observed for upgrade shocks. Finally, we demonstrate that our results are robust to the inclusion of a variety of controls and additional endogenous variables.

Causality between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis

This study applies wavelet coherency analysis to examine the relationship between the U.S. per capita real GDP and six income inequality measures over the period 1917 to 2012. Wavelet analysis allows the simultaneous examination of correlation and causality between the two series in both the time and frequency domains. Our findings provide robust evidence of positive correlation between the growth and inequality across frequencies. Yet, directions of causality vary across frequencies and evolve with time. In the time-domain, the time-varying nature of long-run causalities implies structural changes in the two series. These findings provide a more thorough picture of the relationship between the U.S. per capita real GDP and inequality measures over time and frequency, suggesting important implications for policy makers.

Does the post-crisis weakness of global trade solely reflect weak demand?

Global trade growth over the past few years has appeared extraordinarily weak, even in relation to weak global GDP growth. This paper shows that the apparent breakdown in the relationship between global trade and global GDP growth is largely explained by two factors: an inappropriate measurement of global GDP and extraordinary demand weakness in the euro area. As a measure of demand for traded goods, global GDP at market exchange rates is more appropriate than the conventional purchasing power parity-based measure. Moreover, extraordinary demand weakness in the euro area – which is a particularly trade intensive region – has had a substantial negative effect on intra-euro area trade flows, which are commonly counted towards global trade. When global GDP is measured at market exchange rates and intra-euro area flows are removed from the measure of global trade, econometric estimations suggest that over the past 15 years the long-term elasticity of global trade to GDP has been similar to that of the 1990s. Indeed, the overwhelming part of postcrisis trade weakness can be attributed to weak global demand rather than structural changes, according to the econometric estimations in this paper and supporting evidence on changes in global investment, international production fragmentation and protectionism.

Fiscal multipliers and unreported production: evidence for Italy

This paper analyzes the effects of fiscal policy in Italy by defining a regular GDP measure constructed as GDP net of government expenditure and evaded VAT base. Within a VEC framework, two alternative approaches are used in order to identify fiscal policy shocks: on the one hand, the standard Cholesky identification, and on the other hand, the “agnostic sign restriction” approach. The results reveal that we cannot rely upon the estimates of fiscal policy multipliers in countries with a sizeable unreported production, unless the dynamics of the hidden and regular components of the GDP are disentangled. Changes in public spending and the tax rate generate a reallocation from underground to the regular economy which contributes to obscure the spending and tax effect on total GDP. In addition, the restrictive policy harms economic growth for the perverse effects that impinge on the regular–irregular dynamics of the GDP, highlighted by our model. Finally, the interaction between regular and unreported production demonstrates that the link between the two sectors is very harmful in the long term, since there is strong evidence that shocks to the unreported production have long-lasting negative effects for the regular economy.

Does It Matter Where You Came From? Ancestry Composition and Economic Performance of U.S. Counties, 1850-2010

The United States provides a unique laboratory for understanding how the cultural, institutional, and human capital endowments of immigrant groups shape economic outcomes. In this paper, we use census micro-sample information to reconstruct the country-of-ancestry distribution for US counties from 1850 to 2010. We also develop a county-level measure of GDP per capita over the same period. Using this novel panel data set, we investigate whether changes in the ancestry composition of a county matter for local economic development and the channels through which the cultural, institutional, and educational legacy of the country of origin affects economic outcomes in the US.Our results show that the evolution of the country-of-origin composition of a county matters. Moreover, the culture, institutions, and human capital that the immigrant groups brought with them and pass on to their children are positively associated with local development in the US. Among these factors, measures of culture that capture attitudes towards cooperation play the most important and robust role. Finally, our results suggest that while fractionalization of ancestry groups is positively related with county GDP, fractionalization in attributes such as trust, is negatively related to local economic performance.

National Accounting and the Valuation of Ecosystem Assets and Their Services

There has long been interest in integrating the value of environmental stocks and flows into standard measures of economic activity and wealth, in particular through the development of adjusted measures of GDP and extended measures of national wealth. This paper examines how the valuation of ecosystem services and ecosystem assets can be undertaken in an integrated national accounting setting. We clarify the relevant valuation principles, most significantly the need to apply the concept of exchange values, and explain why the integration of ecosystem services necessitates an extension of the standard production boundary used in economic measurement. The main implications of an accounting approach are discussed including the need to distinguish benefits from services, the need for valuation methods that exclude consumer surplus, and the importance of aligning measures of income and degradation. Remaining challenges include the treatment of low or negative rents, accounting for ecosystem disservices, and the derivation of values for ecosystem assets. Meeting these challenges and advancing work in this area should be the joint focus of economists, ecologists and accountants.

Reconsidering National Accounting and Depreciation

This paper clarifies many misunderstandings around national account. When GDP measures both output revenue and input spending, it commits the double counting mistake. Though both GDP and NI are measuring mostly spending, they contain completely different, non-overlapping, entries. This paper re-organizes their appropriate items into a new measure, gross domestic spending or GDsP. It also shows that the traditional measures treat all spending with 100% depreciation, and that some less-than-100% depreciation rates reduce the size of measure. If all depreciation were deducted from GDsP, there would be nothing left for NI. Spending is not income.