LEC4 the acculation of value

LEC4 the acculation of value - The Global Economy Class...

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The Global Economy Class Notes Macroeconomic Measurement 3: The Accumulation of Value Revised: September 27, 2011 Latest version available at www.fperri.net/teaching/macropolicyf11.htm So far we discussed how a country creates value in a given interval of time. In this lecture we will discuss how value gets accumulated over time creating assets (or liabilities). In particular we will be describing the accumulation of assets of private households vis-vis the government and of a country as whole vis-a-vis the rest of the world. Assets and savings Before we start it’s useful to review the distinction between stocks and flows. A stock is a quantity measured at a point in time (like the end of month balance in your credit card) and a flow is a quantity that is measured over a period of time (like your purchases and payments during the month). The evolution of a stock variable usually depends on past flows plus other conditions. For example your credit card balance at the end of the month depends on the payments and purchases made during the month plus the interest rate charged on the past stock. In the previous lecture we have seen an example of stock and flow with capital and investment. Government Saving and Deficit Account 4 reported in figure 1 (from NIPA) shows the sources of revenues and cur- rent expenditures of the US Government in 2009. The US government, like most governments, receives most of its resources through taxation and most of its current expenditures are public consumption (like paying government employees or military expenses), transfers (like social security or welfare) and interest payments on out- standing government debt. We thus define government net saving S G as government
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Value accumulation 2 35 August 2010 S URVEY OF C URRENT B USINESS Account 4. Government Receipts and Expenditures Account Line Line 1 Consumption expenditures (1–30) ......................................................................... 2,411.5 14 Current tax receipts ............................................................................................... 2,409.3 2 Current transfer payments ...................................................................................... 2,164.9 15 Personal current taxes (3–1) ............................................................................. 1,140.0 3 Government social benefits ............................................................................... 2,112.3 16 Taxes on production and imports (1–6) ............................................................. 1,024.7 4 To persons (3–23) .......................................................................................... 2,096.8 17 Taxes on corporate income (2–13) .................................................................... 231.4 5 To the rest of the world (5–18) ....................................................................... 15.5 18 Taxes from the rest of the world (5–18) ............................................................. 13.2 6 Other current transfer payments to the rest of the world (net) (5–18) ................ 52.7 19 Contributions for government social insurance (3–25 and 5–18) .......................... 975.1 7 Interest payments (3–20) ....................................................................................... 362.0 20 Income receipts on assets ..................................................................................... 162.2 8 Subsidies (1–7) ...................................................................................................... 60.3 21 Interest and miscellaneous receipts (2–2 and 3–20) ......................................... 140.8 9 Less: Wage accruals less disbursements (1–4) ..................................................... 0.0 22 Dividends (3–21) ............................................................................................... 21.5 10 Net government saving (6–14) ............................................................................... –1,271.9 23 Current transfer receipts ........................................................................................ 193.5 11 Federal ............................................................................................................... –1,251.7 24 From business (net) (2–7) ................................................................................. 98.5 12 State and local ................................................................................................... –20.1 25 From persons (3–6) ........................................................................................... 95.0 26 Current surplus of government enterprises (1–10) ................................................ –13.2 13 GOVERNMENT CURRENT EXPENDITURES AND NET SAVING ....................... 3,726.9 27 GOVERNMENT CURRENT RECEIPTS ............................................................... 3,726.9 Account 5. Foreign Transactions Current Account Line Line 1 Exports of goods and services (1–28) ...................................................................
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