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Chapter2_MeasureFacts_011309

Chapter2_MeasureFacts_011309 - How We Measure Facts Juan...

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How We Measure Facts Juan Rubio-Ram°rez Duke University and Federal Reserve Bank of Atlanta January 13, 2009 Juan Rubio-Ram°rez (DUKE) Measure Facts January 13, 2009 1 / 33
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Data Macroeconomics is built around the interface of theory and data. Di/erent sources: 1 National accounting: 1 National income and product accounts (NIPA). 2 Input-Output and industry accounts. 3 Flow of funds account. 4 Satellite Accounts: ±xed assets in the U.S. economy, research and development, regional accounts, international accounts. 2 International comparisons: 1 Summer-Heston Penn World Table. 2 U.N. National Accounts Main Aggregates Database. 3 OECD and IMF data. 3 Micro data: 1 Census data. 2 Survey of Consumer Expenditure (CEX). 3 Panel Study of Income Dynamics (PSID). 4 Survey of Consumer Finances (SCF). 5 Many others .... Juan Rubio-Ram°rez (DUKE) Measure Facts January 13, 2009 2 / 33
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A Guide to NIPA²s What is the goal? When did it begin 1 U.S.: Simon Kuznets (Nobel in 1971). 2 U.K.: Richard Stone (Nobel in 1984) Why? Great depression+Keynesian revolution+Second World War. Constant development of better measures of economic activity. Elaborated by Bureau of Economic Analysis, an agency of the U.S. Department of Commerce: http://www.bea.gov/ Currently, annual data since 1929 and quarterly data since 1947. Juan Rubio-Ram°rez (DUKE) Measure Facts January 13, 2009 3 / 33
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NIPA Framework NIPA is organized around 7 summary accounts and 299 tables: 1 Domestic Income and Product account. 2 Private Enterprise Income Account. 3 Personal Income and Outlay Account. 4 Government Receipts and Expenditures Account. 5 Foreign Transactions Current Account. 6 Domestic Capital Account. 7 Foreign Transactions Capital Account. Juan Rubio-Ram°rez (DUKE) Measure Facts January 13, 2009 4 / 33
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Accounting Principles Comprehensive, coherent, and consistent view of the economy. Integrated with industry, wealth, regional, and Input-Output accounts. Double entry book-keeping: resource and use. Valuation criteria: market value (direct or imputed). Why? Accrual-accounting. Monthly, quarterly, and yearly data. Juan Rubio-Ram°rez (DUKE) Measure Facts January 13, 2009 5 / 33
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Accrual-accounting. versus Cash-accounting Accrual method. Income is counted when the sale occurs, and expenses are counted when you receive the goods. You don²t have to wait until you see the money, or actually pay money, to record a transaction. Cash method. Under the cash method, income is not counted until cash is received, and expenses are not counted until they are paid. Example: Your computer installation business ±nishes a job in November, and doesn²t get paid until three months later in January. Under the cash method, you would record the payment in January. Under the accrual method, you would record the income in November. Example: You purchase a new laser printer on credit in May and pay $1,000 for it in July, two months later. Using the cash method, you would record a $1,000 payment for the month of July, the month when the money is actually paid. Under the accrual method, you would record the $1,000 payment in May, when you take the laser printer and become obligated to pay for it.
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