Macroeconomic Indicators

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Presentation transcript:

Macroeconomic Indicators Uses of National Income Data

Terms - explain Gross Domestic Product (GDP) Gross National Product (GNP) National Income (NI) Non-monetised sector Purchasing Power Parity (PPP) Human Development Index (HDI) Human Poverty Index (HPI) Measure of Domestic Progress (MDP) Misery Index

Problems with the data GDP does not fully measure output Non-monetised sector Unpaid labour DIY Parenting ‘black’ economy GDP does not account for quality

BBC-B Computer £400 (£1200) I-pad £329

Problem with the data Distribution of income Value of Leisure Externalities What is produced Defence or consumer goods? Differences between countries PPP How accurately is the data collected?

Alternatives in measuring welfare (you need to know at least one of these!) HDI Standard of living (GDP per capita) Life expectancy at birth, in years Educational attainment (literacy and enrolment) Maximum value =1, the closer the better. Use ‘The Economist in Figures’ to research countries which differ in ‘performance’ Can you explain why they differ?

Alternatives in measuring welfare HPI Longevity Knowledge Economic provision Social inclusion

Alternatives in measuring welfare MDP Social and environmental cost of growth Crime Family breakdown Benefits of unpaid work household labour Measure of domestic progress

Alternatives in measuring welfare Misery Index Adding the unemployment rate to the rate of inflation High unemployment and high inflation = higher economic and social costs

Sustainable Economic Growth You need to know the issues Resource depletion Market mechanism Higher prices Greater efficiency in use Greater supply (cost effective to research) Investment in substitutes Environmental damage Global warming Koyoto Protocol 1997; World Summit 2015 Developing countries exempt (China, India, USA!)

Index of Sustainable Economic Welfare ISEW = personal consumption + public non-defensive expenditures - private defensive expenditures + capital formation + services from domestic labour - costs of environmental degradation - depreciation of natural capital

A recent EU survey reported that income per head was significantly lower in Greece and Portugal than in the Netherlands and Ireland. Evaluate the view that living standards must therefore be higher than those in Greece and Portugal (25 marks)