World Economics

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CPI in the Time of Coronavirus
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Kam Yu, World Economics, June 2020
The spread of the COVID-19 around the world started in January 2020. Many countries implemented an activity lockdown after the World Health Organization announced pandemic status. Businesses have been ordered by governments to impose severe restrictions on their activities and transactions. Office workers shift their work home, schools are closed, and many factories are shut down. Just before economic lockdown and social distancing policies were announced, total consumer expenditures ?rst spiked, owing to panic buying, and then collapsed after about two weeks. These large ?uctuations in shares of relative expenditure have a profound impact on data collection and calculation of official statistics. This short article focuses on the consumer price index (CPI).
Measuring Argentina’s GDP Growth
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Ariel Coremberg, World Economics, March 2014
The main purpose of this paper is to report on the results of an exhaustive reworking of Argentina’s output growth by industry realized by the ARKLEMS+LAND Argentina Productivity and Competitiveness Project. The aim was to reproduce a GDP time series since 1993 using traditional Argentinean national accounting methodology in order to check economic growth against official statistics produced after political intervention in the work of the National Statistics institute since 2007. The reproduced ARKLEMS GDP series closely approximates to official GDP between 1993 and 2007 at macro and industry level. But after 2007, Official series showed a higher growth than ARKLEMS reproducible (29.4% Official GDP vs. 15.9% ARKLEMS GDP for 2007–2012). However, the gap between the series is not related to the use of biased CPI deflators, but it is due to the abandoning of traditional methodology followed by Argentinean national accounts prior to its intervention. The paper shows that Argentina’s recent growth episode of 2002–2012 was similar to the previous positive growth cycle period of 1990–1998. Argentina was not the growth champion of the Latin America region during the later period, but it has one of the highest rates of volatility of GDP across Latin America. Argentine official GDP data has been subject to the so-called ‘Pandora’s Box’ effect as a result of the political intervention in the production of official statistics.
Poor Economic Statistics Fuel China’s Low Consumption Myth
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Jun Zhang & Tian Zhu, World Economics, June 2013
The generally held belief that China’s consumption is too low is a myth based on inadequate theory, a misreading of official statistics and the use of market exchange rates for making international comparisons. Chinese official statistics underestimate consumption expenditure on housing, they omit consumption paid for as benefits by the corporate sector, and there are a number of problems with the household expenditure surveys employed. An adjustment for statistical issues suggests that the rate of consumption is 60–65% of GDP, not the 48% based on the widely quoted official statistics figures, and is quite similar to the level experienced by other East Asian economies.
Measuring African GDP
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Joe Downie, World Economics, June 2011
There is much speculation about the growth potential of African economies. But in the light of unreliable official statistics and the highly selective information often presented by investment companies with an incentive to highlight the positive, this article aims to provide some extra analysis to add to the recent widespread comments on high growth rates within the continent. Problems are noted with official economic data and the strengths of Purchasing Power Parity (PPP) measures for GDP comparisons are noted. GDP figures for Africa and five other major economic areas are analysed for the three decades to 2010 in terms of GDP growth and GDP level by decade. These figures are then viewed in per capita terms, drawing attention to significant population growth within the continent, and therefore less impressive per capita figures. A closer look at the location and distribution of economic activity within the African continent highlights the high concentration of economic activity within a small number of countries. However, it is concluded that the future prospects for African growth are still generally positive. Despite the heavy reliance on oil exports in some countries, headline GDP figures also reflect incidences of broad-based growth which looks set to continue so long as Asian demand remains high and good economic policies are pursued.
The Black Economy - Benefit frauds or tax evaders?
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Jim Thomas, World Economics, March 2000
One answer to the question "How Rich are We?" is to compare levels of National Income either across countries or for a single country over time. However, the relevance of this approach depends on how accurately National Income measures the output of goods and services of a country. While it is difficult to measure, the Black Economy represents the output of goods and services that is not generally captured in the National Income Accounts. This article discusses the problems of measuring the size of the Black Economy and speculates on the questions of who is involved and how. The relative importance of Tax Evasion versus Benefit Fraud is discussed.

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