Mohr & Fourie: Chapter / Hoofstuk 4

ECON111_2013

Outcomes Uitkomstes What do we measure?

◦ Goals◦ Concepts◦ Definitions

How do we measure? Why do we measure?

◦ Evaluation◦ Comparison

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Wat meet ons?◦ Doelwitte◦ Begrippe◦ Definisies

Hoe meet ons? Waarom meet ons?

◦ Evaluasie◦ Vergelyk

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The path forward Die pad vorentoe Today

◦ Theory - objectives

Monday◦ Calculations

3 Methods CPI

Wednesday◦ Calculations

GDP Unemployment

Vandag◦ Teorie - doelwitte

Maandag◦ Bereken

3 Metodes VPI

Woensdag◦ Bereken

BBP Werkloosheid

What to measure Wat om te meet

Macro Economic Goals (5)1. Economic growth

(4.2+4.3)

2. Full employment (4.4)

3. Price Stability (4.5)

4. External Stability (4.6)

5. Equitable Distribution of Income (4.7)

Makro doelwitte (5)1. Ekonomiese groei

(4.2+4.3)

2. Volle indiensname (4.4)

3. Prysstabiliteit (4.5)

4. Eksterne stabiliteit (4.6)

5. Regverdige inkome verdeling (4.7)

Econ.-Growth Ekon.-Groei

Economic growth

◦ What is it?◦ How do we measure it?◦ How does it look? (PPC)

What is RSA’s GDP growth rate?

• Ekonomiese groei

▫ Wat is dit?▫ Hoe meet ons dit?▫ Hoe lyk dit? (PMK)

• Wat is RSA se BBP groei koers?

Other indicators

Indicator ValueLatest period

Real GDP growth rate 2.6% Sep, 2010Gross saving as % of GDP 16.7% Sep, 2010Foreign Debt as % of GDP 27.8% 2009National government balance as % of GDP (Fiscal year) -6.2% Dec, 2009Current account balance (R millions, seasonally adjusted at annual rate) -79234.00 Sep, 2010M3 8.19 Jan, 2011Claims on the domestic private sector 5.01 Jan, 2011Import cover (weeks) 19.37 Sep, 2010

Source: South African Reserve Bank , 2011

GDP BBP Definition ...

4 NB Concepts◦ total VALUE of...◦ all FINAL G&S produced◦ Within a specific TIME

PERIOD◦ within the BORDERS of a

country

◦ GDP @ Market prices Factor prices

Definisie ...

4 NB konsepte◦ totale WAARDE van

◦ alle FINALE G&D geproduseer

◦ in ‘n sekere TYDPERK

◦ binne die GRENSE van ‘n land

◦ BBP @ Mark prys (besteding b) Faktor koste (inkome b)

Nominal vs. Real Nominaal vs. Reël

NOMINAL prices ...◦ The price NOW◦ Current prices◦ Inflation INcluded

REAL prices ...◦ RELATIVE to a base year◦ Constant prices ...◦ Inflation EXcluded

NOMINALE

pryse ...

◦ wat NOU gevra word

in die winkel

◦ Huidige pryse ...

◦ Inflasie INgesluit

REëLE pryse ...

◦ RELATIEF tot ‘n basisjaar

◦ Konstante pryse ...

◦ Inflasie UITgesluit

GDP C+I+G+(X-Z)

GDE C+I+GNI GNI

BBPBBBNIBNI

Full employment Volle indiensname

Full employment◦ Ideal?◦ Unemployment rate?

◦ NB! Economic growth does not equal full employment.

Volle indiensname ◦ Idiaal?◦ Werkloosheids koers?

◦ NB! Ekonomiese groei is nie gelyk aan volle indiensname nie.

Price Stability Prys stabiliteit

Price Stability◦ What is it?◦ How do we measure it?

Nominal Real CPI-basket

Prysstabiliteit ◦ Wat is dit?◦ Hoe meet ons dit?

Nominaal Reël VPI-mandjie

CPI VPI

INDEX Based on “typical”

average use

INDEKS Gebaseer op ‘tipiese’

gemiddelde verbruik

CPI VPI

Prices vs. Purchasing Power

Inflation erodes PP Real value of money =

Purchasing Power Nominal value of money

= PRICE Definition ...

Pryse vs. Koopkrag Inflasie vreet koopkrag

op Reële waarde van geld =

Koopkrag Nominale waarde van

geld = PRYS Definisie ...

1978

External Stability Eksterne Stabiliteit

What is it? Why NB?

Wat is dit? Waarom NB?

BoP

Current AccountTrade Balance (Gds +X,-M)+ net gold (commodity gold)+ net income (receipts – pmnts)+ net service (receipts – pmnts)+ Current transfersNon-reciprocal obligation but monetaryi.e. gifts, pensions, charity

NB. Balance indicates whether living in debt or able to pay for consumables

Capital TransfersNo reciprocal obligation but Capital nature.

i.e. fixed assets, infra-grants, emmi/immi funds, gov. debt relief

Financial AccountFinancial assets, obligation to repay

Inflow = credit = LOVC or AOVC

Outflow = debit = LOVC or AOVC

Direct (Control, >10%, long term)Portfolio (Speculation, volatile)Other

(A) Assets: RSA in OVC(L) Liability: OVC in RSA

Change in Official ReservesBalances BoP via sum of all other

accounts.

Surplus NB for financing transactions, defending forex & repmnt of foreign

debt.

Surplus can also indicate negative trade relations due to sanctions.

Thus NB to know cause of increase.

Unrecorded transactions

Statistical estimateResidual amount

BoP

Current AccountTrade Balance (Gds +X,-M)+ net gold (commodity gold)+ net income (receipts – pmnts)+ net service (receipts – pmnts)+ Current transfersNon-reciprocal obligation but monetaryi.e. gifts, pensions, charity

NB. Balance indicates whether living in debt or able to pay for consumables

Capital TransfersNo reciprocal obligation but Capital nature.

i.e. fixed assets, infra-grants, emmi/immi funds, gov. debt relief

Financial AccountFinancial assets, obligation to repay

Inflow = credit = LOVC or AOVC

Outflow = debit = LOVC or AOVC

Direct (Control, >10%, long term)Portfolio (Speculation, volatile)Other

(A) Assets: RSA in OVC(L) Liability: OVC in RSA

Change in Official ReservesBalances BoP via sum of all other

accounts.

Surplus NB for financing transactions, defending forex & repmnt of foreign

debt.

Surplus can also indicate negative trade relations due to sanctions.

Thus NB to know cause of increase.

Unrecorded transactions

Statistical estimateResidual amount

External Stability Eksterne Stabiliteit

Balance of Payments (BoP)◦ Definition◦ How do we Measure it?

Surplus Deficit

Current Account◦ Flow of G&S

Financial Account◦ Flow of MONEY

Betalingsbalans (BoP)◦ Definisie◦ Hoe Meet ons dit?

Surplus Te kort

Lopende Rekening◦ Vloei van G&D

Finansiele rekening◦ Vloei van GELD

Equity Gelykheid

What is it? How do we measure

it?◦ Lorenz Curve◦ Gini coefficient◦ Quantile relation

Wat is dit? Hoe meet ons dit?

◦ Lorenz Kromme◦ Gini koëffisiënt◦ Kwantiel

verhouding

Equity Gelykheid

Lorenz Kurwe / Curve

Asse / Axis Max

Kum

.% Inko

me

Kum.% Bevolking

GINI Formule /

Formula Waarde / Value Indeks / Index

Poverty levels: people living in poverty by province and race, 2010 (proportions)

Province African Coloured Indian White Total

Eastern Cape 53.9% 34.5% 12.3% 0.6% 49.4%

Free State 44.3% 46.3% 23.0% 1.0% 39.8%

Gauteng 31.5% 25.1% 14.0% 0.5% 24.7%

KwaZulu-Natal 56.9% 26.1% 9.4% 0.6% 49.5%

Limpopo 48.5% 20.9% 22.4% 2.8% 47.3%

Mpumalanga 49.4% 35.0% 12.4% 0.9% 45.9%

North West 49.8% 50.3% 17.6% 1.7% 45.7%

Northern Cape 50.7% 46.0% 17.4% 0.8% 43.3%

Western Cape 37.0% 23.2% 13.7% 0.5% 22.1%

South Africa 47.4% 28.4% 11.1% 0.7% 39.9%

Source: IHS Global Insight Southern Africa, Regional eXplorer ver 566, 2011

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