World Economics

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Measuring Macroeconomic Performance Using a Composite Index
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Julian Gough, World Economics, September 2018
Large quantities of economic data, varying in accuracy and reliability and subject to later revision, are continually produced and published so interpretation using only one data source is subject to risk. The complex world of data can be simplified by combining different measures of economic performance—economic growth, unemployment and inflation into a single composite index. A composite index of cross-sectional data relating to the economic performance of all of the European Union in 2017 puts Ireland, Romania and Malta in the top three positions, while Germany is ranked 12th. Tracking the UK with the composite index using time-series data shows the impact of the financial crisis in 2008–09 with a gradual improvement in performance which peaks in 2015.
Applying Reputation Data to Enhance Investment Performance
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Simon Cole, Mike Brown & Brian Sturgess, World Economics, December 2014
The fact that corporate reputations deliver tangible shareholder value has been recognised by managers for some time. More recently, techniques have emerged that allow them to measure just how much value reputation delivers and identify the driving factors in order to structure communications and corporate messaging accordingly. While these techniques are having a marked affect on how companies are managing their reputation assets their use also has implications for investors. This paper uses reputation data to analyse the share price performance of companies identified as over- or under-valued. Evidence is found that where reputations are such that they suggest the companies are under-valued, that over time their market capitalizations grow at a greater rate than those whose reputations suggest over-valuation. This implies company reputation can be a powerful leading edge indicator to estimate investor returns and thus contribute to fund management.
Maddison and Wu: ‘Measuring China’s Economic Performance’
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Yuri Dikhanov & Eric V. Swanson, World Economics, March 2010
Angus Maddison and Harry Wu (2008) claim that, in 2003, China’s GDP was 73% of that of the United States on a purchasing power parity (PPP) basis. Rejecting the results of the 2005 International Comparison Program (ICP), they construct their own PPP using a 1986 GDP estimate for China (Ren & Chen 1995) which they adjust upwards, and then extrapolate to 2003 using their revised growth rates for China, which they adjust downwards. This note examines the validity of their adjustments and assumptions, and finds them to be inconsistent with recommendations both from the perspective of index number theory and recommended national accounting practices. The 2005 PPP estimates from the ICP, which Maddison and Wu reject, produce a more plausible estimate of the size of China’s economy relative to that of the US (43% in 2005).
Measuring Nations’ Economic Performance
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F. Gerard Adams, World Economics, December 2009
The Report of the Commission on Economic Performance and Social Progress considers the issues of establishing a broader measure of human well-being than the per capita GDP currently used. The report evaluates the possibilities for expanding the GDP concept and other measures of well-being, and for evaluating sustainability. The Commission recognises that it will not be possible to rely on one measure, recommending the use of a dashboard of various measures, including adjusted net saving.
Measuring China’s Economic Performance
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Andreas (Andy) Jobst & Harry X. Wu, World Economics, June 2008
China is the world’s fastest growing economy and is also the second largest. However, the official estimates of the Chinese National Bureau of Statistics exaggerate GDP growth and need adjustment to conform to international norms as set out in the 1993 System of National Accounts (SNA). This paper presents and discusses the necessary adjustments. The two major contributions are new volume indices for the industrial sector and for "non-material" services. Finally, in order to measure the level of Chinese GDP in internationally comparable terms, the authors use a measure of purchasing power parity (PPP) instead of the exchange rate.

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