measurement

measurement - Part I Measuring the Economy UCLA Winter 2009...

Info iconThis preview shows pages 1–12. Sign up to view the full content.

View Full Document Right Arrow Icon
Part I Measuring the Economy UCLA Winter 2009 Professor Mark Wright
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
In the words of Sherlock Holmes … It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to fit facts.
Background image of page 2
Alternative Title for Part I: How to Lie with Economic Statistics There are three kinds of lies: Lies, damned lies and statistics - Benjamin Disraeli (1804 – 1881) Get your facts first, and then you can distort them as much as you please - Mark Twain (1835 - 1910) Facts are stubborn things, but statistics are more pliable - Laurence J. Peter (1919 - 1988)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Plan for Part I z Measuring living standards Problems with using income as a proxy for living standards z National Income & Product Accounting Gross Domestic Product (GDP) Three ways to compute GDP Three Example Economies Facts about GDP and Income Gross National Product (GNP) Problems with GDP as a measure of income z Adjusting GDP for inflation Real GDP Example Economy Problems with measuring real GDP Chain indexed GDP Quantity indexes and welfare z Price Indexes CPI and GDP deflator Boskin Report Thought experiment on accuracy of price indices z Calculating Growth Rates
Background image of page 4
Goal for Part I z By the end of this part of the course, you should 1. Know how different economic statistics are constructed a. Gross domestic product b. Real gross domestic product c. Consumer price index 2. Know how politicians misrepresent these statistics to suit themselves 3. Know how you could misrepresent statistics to suit yourself!
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Readings z textbook Chapter 2 z Optional readings on class website http://www.sscnet.ucla.edu/09W/econ102-1/
Background image of page 6
Gross Domestic Product Measuring Living Standards
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Measuring Living Standards z Hard to measure “happiness”, “wellbeing” or “living standards” z Start with national income z Even if we could measure national income perfectly, this is not a perfect measure of living standards. z It excludes Leisure The environment and other forces affecting “happiness” Externalities and public goods Distribution of income Doesn’t value changes in stocks correctly z For example, excludes borrowing and lending z As we will see, national income is not even measured perfectly (but it seems to be reasonably well approximated).
Background image of page 8
National Income & Product Accounting (NIPA) Two definitions: Total expenditure on domestically-produced final goods and services. Total income earned by domestically-located factors of production. Expenditure equals income because every dollar spent by a buyer becomes income to the seller. Expenditure equals income because every dollar spent by a buyer becomes income to the seller.
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Our First Model: The Circular Flow of Income: Households Firms Goods Labor Expenditure ($) Income ($)
Background image of page 10
Gross Domestic Product z The value of GDP refers to a flow of income (or expenditure) over a given period of time typically a year, or quarter of one year
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 12
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 84

measurement - Part I Measuring the Economy UCLA Winter 2009...

This preview shows document pages 1 - 12. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online