曼昆第10版课件mankiw10e-lecture-slides-ch02

TheDataofMacroeconomicsMacroeconomicsN.GregoryMankiw©2019WorthPublishers,allrightsreservedINTHISCHAPTER,YOUWILLLEARN:...themeaningandmeasurementofthe

mostimportantmacroeconomicstatistics:grossdomesticproduct(GDP)theconsumerpriceindex(CPI)theunemploymentrateGrossdomesticproduct:ExpenditureandincomeTwodefinitions:Totalexpenditureondomesticallyproduced

finalgoodsandservices.Totalincomeearnedbydomesticallylocatedfactorsofproduction.Expenditureequalsincomebecause

everydollarabuyerspends

becomesincometotheseller.ThecircularflowValueaddedValueaddedisthevalueofoutputminusthevalueoftheintermediategoodsusedtoproducethatoutputNOWYOUTRY

IdentifyingvalueaddedAfarmergrowsabushelofwheatandsellsittoamillerfor$1.00.Themillerturnsthewheatintoflourandsellsittoabakerfor$3.00.Thebakerusestheflourtomakealoafofbreadandsellsittoanengineerfor$6.00.Theengineereatsthebread.Computethevalueaddedateachstage

ofproductionandGDP.Finalgoods,valueadded,andGDPGDP=valueoffinalgoodsproduced=sumofvalueaddedatallstagesofproductionThevalueofthefinalgoodsalreadyincludesthevalueoftheintermediategoods,soincludingintermediateandfinalgoodsinGDPwouldbedoublecounting.TheexpenditurecomponentsofGDPconsumption,Cinvestment,Igovernmentspending,Gnetexports,NXAnimportantidentity:Consumption(C)Definition:Thevalueofallgoodsandservicesboughtbyhouseholds,including:Durablegoods

lastalongtime.

Examples:cars,homeappliancesNondurablegoods

lastashorttime.

Examples:food,clothingServices

areintangibleitemspurchasedbyconsumers.

Examples:drycleaning,

airtravelU.S.consumption,2016Total(billionsofdollars)PerPerson(dollars)GrossDomesticproduct18,62457,638Consumption12,82139,677Nondurablegoods2,7108,388Durablegoods1,4114,367Services8,69926,922Investment(I)Spendingoncapital,aphysicalassetusedinfutureproductionIncludes:Businessfixedinvestment—SpendingonplantandequipmentResidentialfixedinvestment—SpendingbyconsumersandlandlordsonhousingunitsInventoryinvestment—Thechangeinthevalueofallfirms’inventoriesU.S.investment,2016Total(billionsofdollars)PerPerson(dollars)GrossDomesticproduct18,62457,638Consumption3,0579,461Nonresidentialfixedinvestment2,3167,168Residentialfixedinvestment7062,185Inventoryinvestment35109GovernmentSpending(G)Gincludesallgovernmentspendingongoodsandservices.Gexcludestransferpayments

(e.g.,unemploymentinsurancepayments)becausetheydonotrepresentspendingongoodsandservices.U.S.governmentspending,2016Total(billionsofdollars)PerPerson(dollars)GrossDomesticproduct18,62457,638Consumption3,26810,113Federal1,2313,811Defense7292,256Nondefense5031,555NetExports(NX)NX=exports–importsExports:thevalueofg&s(goodsandservices)soldtoothercountriesImports:thevalueofg&spurchasedfromothercountriesHence,NXequalsnetspendingfromabroadonourg&s.U.S.netexports,2016Total(billionsofdollars)PerPerson(dollars)GrossDomesticproduct18,62457,638NetExports−521−1,613Exports2,2156,854Imports2,7368,647NOWYOUTRY

Anexpenditure-outputpuzzle?Supposeafirm:produces$10millionworthoffinalgoodssellsonly$9millionworthDoesthisviolatetheexpenditure=outputidentity?Whyoutput=expenditureUnsoldoutputgoesintoinventoryandiscountedas“inventoryinvestment”...whetherornottheinventorybuildupwasintentional.Ineffect,weareassumingthatfirmspurchasetheirunsoldoutput.Stocksvs.flowsAstockisaquantitymeasuredatapointintime.Example:

“TheU.S.capitalstockwas$10trilliononJanuary1,2016.”Aflowisaquantitymeasuredperunitoftime.Example:“U.S.investmentwas$2trillionduring2016.”Stocksvs.flows:examplesStockFlowAperson’swealthAperson’sannualsavingsNumberofpeoplewithcollegedegreesNumberofnewcollegegraduatesthisyearThegovernmentdeptThegovernmentbudgetdeficitInvestmentvs.capitalNote:Investmentisspendingonnewcapital.Example(assumingnodepreciation):1/1/2018:

Economyhas$10trillionworthofcapitalDuring2018:

investment=$2trillion1/1/2018:

Economywillhave$12trillionworthofcapitalNOWYOUTRY

Stockorflow?ThebalanceonyourcreditcardstatementHowmuchtimeyouspendstudyingThesizeofyourMP3/iTunescollectionTheinflationrateTheunemploymentrateAnimportantandversatileconceptWehavenowseenthatGDPmeasures:totalincometotaloutputtotalexpenditurethesumofvalueaddedatallstagesintheproductionoffinalgoodsGNPvs.GDPGrossnationalproduct(GNP):

Totalincomeearnedbythenation’sfactorsofproduction,regardlessofwherelocated.Grossdomesticproduct(GDP):

Totalincomeearnedbydomesticallylocatedfactorsofproduction,regardlessofnationality.GNP–GDP=factorpaymentsfromabroad

minusfactorpaymentstoabroadExamplesoffactorpayments:wages,profits,rent,interestanddividendsonassetsNOWYOUTRY

DiscussionquestionInyourcountry,

whichwouldyou

wanttobebigger:

GDPorGNP?Why?GNPvs.GDPinselectcountries,2012CountryGNPGDPGNP–GDP(%ofGDP)Bangladesh127,672116,3559.7Japan6,150,1325,961,0663.2China8,184,9638,227,103−0.5UnitedStates16,514,50016,244,6001.7India1,837,2791,8585,740−1.2Canada1,821,4241,779,6352.3Greece250,167248,9390.5Iraq216,453215,8380.3Ireland171,996210,636−18.3GNPandGDPinmillionsofcurrentU.S.dollars.Realvs.nominalGDPGDPisthevalueofallfinalgoodsandservicesproduced.NominalGDPmeasuresthesevaluesusingcurrentprices.RealGDP

measuresthesevaluesusingthepricesofabaseyear.NOWYOUTRY

RealandnominalGDP2015:P2015:Q2016:P2016:Q2017:P2017:QGoodA$30900$311,000$361,050GoodB$100192$102200$100205ComputenominalGDPineachyear.ComputerealGDPineachyear,using2015asthebaseyear.NOWYOUTRY

RealandnominalGDP,answersNominalGDP

multiplyPsandQsfromsameyear

2015:$46,200=$30×900+$100×192

2016:$51,400

2017:$58,300RealGDP

multiplyeachyear’sQsby2010Ps

2015:$46,200

2016:$50,000

2017:$52,000=$30×1050+$100×205RealGDPcontrolsforinflationChangesinnominalGDPcanbedueto:changesinpriceschangesinquantitiesofoutputproducedChangesinrealGDPcanonlybeduetochangesinquantitiesbecauserealGDPisconstructedusingconstantbase-yearprices.U.S.nominalandrealGDP,1960–2014GDPdeflatorInflationrate:thepercentageincreaseintheoveralllevelofprices.Onemeasureofthepricelevel:GDPdeflatorDefinition:NOWYOUTRY

GDPdeflatorandtheinflationrateUseyourpreviousanswerstocomputetheGDPdeflatorineachyear.UsetheGDPdeflatortocomputetheinflationratefrom2015to2016andfrom2016to2017.NOWYOUTRY

GDPdeflatorandtheinflationrate,answersUnderstandingtheGDPdeflator,part1ExamplewiththreegoodsForgoodi=1,2,3Pit

=themarketpriceofgoodiinmonthtQit

=thequantityofgoodiproducedinmonthtNGDPt

=nominalGDPinmonthtRGDPt

=realGDPinmonthtUnderstandingtheGDPdeflator,part2TheGDPdeflatorisaweightedaverageofprices.Theweightoneachpricereflects

thatgood’srelativeimportanceinGDP.Notethattheweightschangeovertime.Twohelpfulfactsforworkingwithpercentagechanges,part11.ForanyvariablesXandY, percentagechangein(X

×

Y

)

≈percentagechangeinX

+percentagechangeinYExample:Ifyourhourlywagerises5%andyouwork7%morehours,thenyourwageincomerises

approximately12%.Twohelpfulfactsforworkingwithpercentagechanges,part22.Percentagechangein(X/Y

)

≈percentagechangeinX

−

percentagechangeinYExample:GDPdeflator=100×NGDP/RGDPIfNGDPrises9%andRGDPrises4%,thentheinflationrateisapproximately5%.Chain-weightedrealGDPOvertime,relativepriceschange,sothebaseyearshouldbeupdatedperiodically.Inessence,chain-weightedrealGDP

updatesthebaseyeareveryyear,soitismoreaccuratethanconstant-priceGDP.Yourtextbookusuallyusesconstant-pricerealGDPbecause:thetwomeasuresarehighlycorrelatedconstant-pricerealGDPiseasiertocomputeConsumerpriceindex(CPI)AmeasureoftheoveralllevelofpricesPublishedbytheBureauofLaborStatistics(BLS)Uses:trackingchangesinthetypicalhousehold’s

costoflivingadjustingmanycontractsforinflation(“COLAs”)allowingcomparisonsofdollaramountsovertimeHowtheBLSconstructstheCPI1. Itsurveysconsumerstodeterminethecompositionofthetypicalconsumer’s“basket”ofgoods2. Everymonth,itcollectsdataonthepricesofallitemsinthebasketandcomputesthecostofthebasket3. CPIinanymonthequalsNOWYOUTRY

ComputetheCPIBasket:20pizzas,10compactdiscsPrices:PizzaCDs2015$10$15201611152017121620181315Foreachyear,compute:thecostofthebaskettheCPI(using2015asthebaseyear)theinflationratefromtheprecedingyearNOWYOUTRY

ComputetheCPI,answersThecompositionoftheCPI’s“basket”UnderstandingtheCPI,part1ExamplewiththreegoodsForgoodi=1,2,3Ci

=amountofgoodiintheCPI’sbasketPit=priceofgoodiinmonthtEt=costoftheCPIbasketinmonthtEb=costofthebasketinthebaseperiodUnderstandingtheCPI,part2TheCPI

isaweightedaverageofprices.Theweightoneachpricereflects

thatgood’srelativeimportanceintheCPI’sbasket.Notethattheweightsremainfixedovertime.WhytheCPImayoverstateinflationSubstitutionbias:

TheCPIusesfixedweights,soitcannotreflectconsumers’abilitytosubstitutetowardgoodswhoserelativepriceshavefallen.Introductionofnewgoods:

Theintroductionofnewgoodsmakesconsumersbetteroffand,ineffect,increasestherealvalueofthedollar.ButitdoesnotreducetheCPIbecausetheCPIusesfixedweights.Unmeasuredchangesinquality:

Qualityimprovementsincreasethevalueofthedollarbutareoftennotfullymeasured.ThesizeoftheCPI’sbiasIn1995,aSenate-appointedpanelofexpertsestimatedthattheCPIoverstatesinflationbyabout1.1%peryear.TheBLSthereforemadeadjustmentstoreducethebias.Now,theCPI’sbiasisprobablyunder1%peryear.NOWYOUTRY

QuestionsfordiscussionIfyourgrandmotherreceivesSocialSecurity,

howissheaffectedbytheCPI’sbias?WheredoesthegovernmentgetthemoneytopayCOLAstoSocialSecurityrecipients?IfyoupayincomeandSocialSecuritytaxes,howdoestheCPI’sbiasaffectyou?IsthegovernmentgivingyourgrandmothertoomuchofaCOLA?Howdoesyourgrandmother’s“basket”differfromtheCPI’s?DoesthisaffectyouranswertoQ4?CPIvs.GDPdeflatorPricesofcapitalgoods:includedinGDPdeflator(ifproduceddomestically)excludedfromCPIPricesofimportedconsumergoods:includedinCPIexcludedfromGDPdeflatorThebasketofgoods:CPI:fixedGDPdeflator:changeseveryyearThePCEdeflatorAnothermeasureofthepricelevel:personalconsumptionexpenditures(PCE)deflator,theratioofnominaltorealconsumerspendingHowthePCEisliketheCPI:

-onlyincludesconsumerspending

-includesimportedconsumergoodsHowthePCEisliketheGDPdeflator:

-the“basket”changesovertimeTheFederalReserveprefersPCE.TheGDPdeflator,CPI,andPCEdeflatorCategoriesofthepopulationEmployed

workingatapaidjobUnemployed

notemployedbutlookingforajobLaborforce

theamountoflaboravailableforproducinggoodsandservices;allemployedplusunemployedpersonsNotinthelaborforce

notemployed,notlookingforworkTwoimportantlabor-forceconceptsUnemploymentrate

percentageofthelaborforcethatisunemployedLabor-forceparticipationrate

fractionoftheadultpopulationthat“participates”inthelaborforce—thatis,isworkingorlookingforworkNOWYOUTRY

ComputinglaborstatisticsU.S.adultpopulationbygroup,June2017Numberemployed=153.2millionNumberunemployed=7.0millionAdultpopulation=255.0millionCalculatethelaborforcetheunemploymentratethelaborforceparticipationrateNOWYOUTRY

Computinglaborstatistics,answersData:E=153.2,U=7.0,POP=255.0Laborforce

L=E+U=153.2+7.0=160.2Unemploymentrate

U/L×100%=(7.0/160.2)×100%=4.4%Laborforceparticipationrate

L/POP×100%=(160.2/255.0)×100%=62.8%NOWYOUTRY

ComputingpercentagechangesSupposepopulationincreasesby1%laborforceincreasesby3%numberofunemployedpersonsincreasesby2%Computethepercentagechangesinthelabor-forceparticipationandunemploymentrates.NOWYOUTRY

Computingpercentagechanges,answersLFPR=L/POPLincreases3%