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Day 1 Some Basic Reminders (1) There is simply too much information to understand our world around us (2) Economic theory can be useful, but is incomplete.

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Presentation on theme: "Day 1 Some Basic Reminders (1) There is simply too much information to understand our world around us (2) Economic theory can be useful, but is incomplete."— Presentation transcript:

1 Day 1 Some Basic Reminders (1) There is simply too much information to understand our world around us (2) Economic theory can be useful, but is incomplete - intuition is almost always wrong (3) The structure of the economy is always changing and this is because of competition (4) We can only model the data, since that is all we have; but data are very imperfect (5) Don't think about economics exclusively by yourself, it is easy to become confused

2 Major Themes or Empirical Conclusions (Stylized Facts) about the World Economy 1. Slow and/or Erratic Rates of Economic Growth 2. Declining Rates of Inflation and Even Deflation 3. Relatively High Asset Valuations 4. Extremely Low Interest Rates 5. High Debt/GDP Ratios 6. Low Rates of Productivity and Wage Growth 7. Slow Population Growth and General Aging of the Population 8. Low Rates of Labor Force Participation 9. Low Energy and Commodity Prices 10. Declining Velocities of Money

3 Let's Simplify and Break the World into Four Parts - The US, Euro Area 19, Japan, and China These four areas together constituted nearly 50% of World GDP in 2014 US (17%) China(17%) Euro Area (12%) and Japan (4%) Roughly 20 countries (out of 190) make up 75% of the world economy The calculations are made using PPP or GK international dollars

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5 (34%)(10%)(23%)(9%)

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9 Recent Developments in the US Economy (1) Real Economic Growth and Productivity (2) Unemployment and Labor Market Conditions (3) Inflation and Asset Prices (4) Trade and Manufacturing

10 Summary of the US Economy March 2016 (1) US Real Economic Growth and Productivity Growth

11 (2) US Unemployment and Labor Market Conditions

12 (3) Inflation and Asset Prices

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14 (4)-a US Trade and Manufacturing

15 (4)-b US Trade and Manufacturing (continued)

16 Recent Developments in the EA-19 Economy (1) Real Economic Growth and Productivity (2) Unemployment and Labor Market Conditions (3) Inflation and Asset Prices (4) Trade and Manufacturing

17 Summary of the EA-19 Economy March 2016 (1) EA Real Economic Growth and Productivity

18 (2) EA -19 Unemployment and Labor Market Conditions

19 (3) EA Inflation and Asset Prices

20 (4) EA Trade and Manufacturing Growth of EU-19 Industrial Production

21 (4) EA Trade and Manufacturing (continued)

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