Lecture 4

Lecture 4 - Econ101 Lecture4 Today n n n GDPbyIncomes...

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Click to edit Master subtitle style Econ 101 Lecture 4 Measurement of Economic Activities
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Today n GDP by Incomes n Price Indexes n Business Cycle Measurement
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2. GDP by Incomes n A dollar spent by someone is a dollar  earned by someone n Two main inputs in production  n Labor  GDP = sum of   all incomes from production
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2. GDP by Incomes
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2. GDP by Incomes Labor and Capital Income n Some items are clearly capital or labor  income n Labor Income:  n Compensation of Employees n Capital Income: n Corporate Profits n Depreciation n Some items are ambiguous
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2. GDP by Incomes Capital Share  a n What fraction  a  of GDP goes to capital  owners? n Solve for  a n This procedure yields a stable estimate of  a   = 0.32
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2. GDP by Incomes Capital Share  a
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2. GDP by Incomes Capital Share  a n Why is this important? n Politicians think that labor’s share of  income has fallen recently. n Hillary Clinton (May 27, 2007): “In the past, about 75% of net corporate revenues have gone to employee compensation, and only 25% to profits. However, for the past five years, the
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Lecture 4 - Econ101 Lecture4 Today n n n GDPbyIncomes...

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