Advanced Session on Using the RAP: Macroeconomic ILO Training Workshop: “Social Protection: Assessment, Costing and Beyond” Faculty of Economic, Chulalongkorn University, Bangkok, 18 October 2012 Thaworn Sakunphanit Deputy Director, Health Insurance System Research Office Health System Research Institution, Ministry of Public Health

Structure of the RAP LABOUR MARKET MODEL MACROECONOMIC MODEL GENERAL GOVERNMENT OPERATIONS MODEL BENEFITS COSTING EXERCISE SUMMARY AND RESULTS DEMOGRAPHIC LABOUR MARKET

Macroeconomics Concerned with the performance of entire economy Using “aggregate” variables to reflect development of economy in term of: Production Value = volume x price Distribution and redistribution Consumption and wealth of nation FLOW STOCK In Year t STOCK In Year t+1

The Example: Available Source for Macroeconomic Statistic / Projection In Thailand: There are many institutions, which regularly produce statistics and projections National Economic and Social Development Board (NESDB): System National Account (National Income) Bank of Thailand Economic and financial indicators Ministry of Commerce: Official Price Index Ministry of Finance Revenue, budget and spending of the Government Short term economic projection Research Institutions/Universities such as Thailand Development Research Institute (TDRI) Short term and long term economic projection Related researches In Thailand, there are many organizations or institutions which produce specific statistics and projections

Gross Domestic Product (GDP) Aggregate measure of production Projection of GDP have to separate Volume effect Price effect Usually growth rate of volume and Price are different

Macroeconomic Projection There are 2 alternative ways: Using an projection from research institutes or authorities in your country or international organisations Project it by yourself! My recommendation is searching for an official population projection from an authority in your country, and use it. If it is necessary to do the population projection by yourself. There are many method to project population from simple method to complexity method. The cohort component method is which is a popular one.

Using Forecast from Research Institutes Source: Somchai Jitsuchon (2012)

Projection from RAP: Basic Formula 1 GDP at Current Price (value) GDP At Constant Price (volume change) GDP deflator (Price change) = x

Projection from RAP: Basic Formula 2 GDP at constant price (Currency Unit) = Productivity (Currency Unit / Person) x Employment (Person) Employment = GDP Productivity Note: Productivity is efficiency of production. It is usually measured in terms of output per worker or per hour

Projection from RAP: Basic Formula 3 Unemployment Employment Economic Active Population - =

Basic Formula 5: Consumer Prices Usually economic growth lead to inflation of price of product. Price Change of goods and services, which households consume is called “Consumer Price Index” (CPI in percentage) We can assume that CPI = GDP deflator

GDP at constant Population Activity Rates Employed prices Labour - M, F Age 15 to 65 (t) to ( n) Activity Rates 5 year age groups t) Employed By sector GDP at constant prices t ) to (n) Economically Active Population to ( Labour productivity t+1) to (n) t+1) to (n) Unemployed (t+1) to (n) growth rates Labour productivity

Thank you for your attention Q&A