ecological economics lecture 06 3rd may 2010 tiago domingos assistant professor environment and...
TRANSCRIPT
![Page 1: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/1.jpg)
Ecological EconomicsLecture 06
3rd May 2010
Tiago DomingosAssistant Professor
Environment and Energy SectionDepartment of Mechanical Engineering
Collaboration: Rui Mota
![Page 2: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/2.jpg)
Growth accounting: Short-run sources of growth
• Break down observed growth in GDP, into components associated to changes in factors of production.
• Output growth only happens due to growth in productive inputs, including technology.
• Tehcnological progress is measured indirectly, i.e., as growth not attributed to changes in observable inputs.
• Solow refered to the residual as Total Factor Productivity (TFP)
( ) ( )( ) ( ) ( ) ( )
( ) ( )Y YK YL
K t L tg t t t R t
K t L t
( ) ( ), ( ), ( )Y t F K t A t L t
YY Y g
( )YX
F X
X Y
( ) YA
AR t
A
![Page 3: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/3.jpg)
Growth accounting: Short-run sources of growth
•Solow model explains more than ½ of output growth.
•An important part of growth is attributed to exogenous “inputs”. What is technological progress? (the residual)
– Knowledge, institutions (property rights), education, culture, ...
![Page 4: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/4.jpg)
Total Factor Productivity Growth in Portugal
-0,06
-0,04
-0,02
0
0,02
0,04
0,06
0,08
0,1
0,12
0,14
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
TFP growth
GDP growth [€2000]
Source: AMECO database
![Page 5: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/5.jpg)
National Accounts
• The System of National Accounts is a comprehensive accounting framework within which economic data can be compiled and presented in a format that is designed for purposes of economic analysis, decision-taking and policy-making.
• Integrates a set of macroeconomic accounts, balance sheets and tables based on a set of internationally agreed concepts, definitions, classifications and accounting rules.
• Accounts compiled for a succession of time periods, thus providing a continuing flow of information, indispensable for the monitoring, analysis and evaluation of the performance of an economy over time.
![Page 6: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/6.jpg)
Aggregation
• 5 Sectors:
– Households
– Firms
– Financial Intermediaries (banks, …)
– Governments (national and local)
– Rest Of the World (ROW)
• 4 Markets (Supply and Demand):
– Goods and services
– Resources (labor, land and capital)
– Money (loanable funds)
– Foreign exchange
![Page 7: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/7.jpg)
Circular flow of income
• Factors: Labor, Land, Capital
• Factor payments: Wage, Rents, Interests, Profits – become income.
• Expenditures: on goods and services (output)
• 1 – Income approach: Y = Wage + Rent + interest + operating surplus
• 2 – Output approach: Y = market value of all produced output (Σ VA)
• 3 – Expenditure approach: Y = C
Households
Firms
OutputFactorsFactor payments: Y
Expenditures: C
1 2 3
€€
![Page 8: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/8.jpg)
Circular flow of income
• Balance to:
– Households: Y - Tnet = C + S, Tnet = T- Tr
– Firms: Y = C + I + G + X - M
– Government: ΔGov = Tnet - G
– FI: S + ΔGov + B - L = I
– ROW: X - M = L - B
Households
Firms
C
FIS
I
Gov.
Y
T
Tr
G
ROW
X
M
ΔGov
BorrowLend
- Market for outputs
![Page 9: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/9.jpg)
National Accounts Identity
CIXM
![Page 10: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/10.jpg)
Main Aggregates
National(Residence)
- Primary income - Primary income flows to ROWflows to ROW
Product / Income
+ Primary income + Primary income flows from ROWflows from ROW
Domestic(Territory)
Net
+ Consumption + Consumption Fixed Capital Fixed Capital (CFC)(CFC)
Aggregate X - Consumption of - Consumption of Fixed Capital (CFC)Fixed Capital (CFC)
Gross
X – Domestic produc, Income, Saving, Disposable income, ...
![Page 11: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/11.jpg)
• GNI = GDP + Y’RM . Where Y’RM = Net income payable to non-resident units for production factors.
Domestic Product vs. National Income
![Page 12: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/12.jpg)
• The value added of a firm owned by Portuguese residents and functioning on our economic territory is part of the Portuguese GDP and GNI.
• The wage (or other factor payments) of a resident that during 6 months worked to a firm in Spain is a part of Spanish GDP and Portuguese GNI.
• The operating surplus (profits) – capital remuneration of a firm located in Portugal but owned by Germans – sent to Germany, is part of the Portuguese GDP and the German GNI.
• The income earned by Portuguese emigrants working abroad as residents is not part of the Portuguese GDP and GNI.
Domestic Product vs. National Income
![Page 13: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/13.jpg)
Main Aggregates
GDP
+ Primary income flows from ROW
- Primary income flows to ROW
= Gross National Income (GNI)= Gross National Income (GNI)
+ Current net transfers from ROW
= Gross Disposable Income (GDI)= Gross Disposable Income (GDI)
- Final consumption (Private and Government)
= Gross Saving (S)= Gross Saving (S)
Net Domestic Product (NDP)
= Net National Income (NNI)= Net National Income (NNI)
= Net Disposable Income (NDI)= Net Disposable Income (NDI)
= Net Saving (NS)= Net Saving (NS)
Subtract CFC
![Page 14: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/14.jpg)
Domestic Product vs. National Income
Source: AMECO database
Domestic vs National [euros 2000]
0
20
40
60
80
100
120
140
160
180
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Mil
liard
s e
uro
s
PT Domestic
Ireland Domestic
PT National
Ireland National
![Page 15: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/15.jpg)
Gross Product vs. Net Product [euros 2000]
Source: AMECO database
0
20000
40000
60000
80000
100000
120000
140000
160000
1990 1995 2000 2005
Mil
lio
n e
uro
s
GDP
NDP
![Page 16: Ecological Economics Lecture 06 3rd May 2010 Tiago Domingos Assistant Professor Environment and Energy Section Department of Mechanical Engineering Collaboration:](https://reader036.vdocuments.site/reader036/viewer/2022081416/5697bfe01a28abf838cb35a4/html5/thumbnails/16.jpg)
Gross/Net Saving in Portugal [euros 2000]
Source: AMECO database
-10000
-5000
0
5000
10000
15000
20000
25000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Mill
ion
eu
ros
Gross national saving
Net nation saving
Net Investment