25-09-2003 16:58									#91
	Support Apolyton buy from Amazon

quote: Originally posted by Saras So what's the deal with mundane Sparkassen dominating retail deposits?

Could you rephrase that question?

	25-09-2003 17:54									#92
	Help yourself to an AD-FREE life

Sparkasse = biggest credit institute in East Germany

	25-09-2003 20:22									#93
	Support Apolyton

quote: yeah but they will catch up? danger!!

It's awfully tough to say. They could catch up faster than ef says, but they could also go into a long period of economic chaos, like has happened in Indonesia. Also, the US could experience a period of low or high economic growth as well, but admittedly those numbers are more easily range-bound--we have a pretty good idea what the trends are for the US.

	25-09-2003 20:56									#94
	Enter the AD-FREE zone

quote: Originally posted by el freako There are many difficulties in comparing growth rates across economies - as I have said before here I have done several studies comparing constant-price GDP growth rates to current-price GDP converted using Purchasing Power Parities, here are some results: 'Correction factor' (i.e. what to add or subtract from the reported growth rate) for selected economies, with US growth rates as a base: United States: 0.0% (obviously ) Japan: +0.4% Germany: +0.6% France: +0.1% Britian: +0.4% Italy: +0.5% Canada: +0.4% China: -2.3% India: +0.5% EU15: +0.5% I find it interesting to compare the more-often reported statistics with the 'adjusted' values and also correcting for population growth: 'corrected' growth in GDP per head 1993-2003: United States: 2.1% Japan: 1.4% Germany: 1.9% France: 1.8% Britian: 3.0% Italy: 2.1% China: 5.5% India: 4.7% EU15: 2.5%

Why bother with "PPP". Use currency exchange rates.

	25-09-2003 21:09									#95
	Support Apolyton, buy Civilization III: Complete

what's the difference, GP? please explain what both mean.

	25-09-2003 21:10									#96
	Browse Apolyton AD-FREE

el freako: I was actually thinking along the line of simple lies for political reasons...

quote: Actually my long term (50 year) forecasts show China's GDP only equalling the US's level in 2050. It will continue it's rapid rise from the current 55% of the US level to around 80% in 2030, then the rise will slow significantly (as the effects of their one-child policy cause the workforce to shrink)

How do you -if you actually do so- model the fact that the chinese growth will start decline as it's a lot easier to catch up than to take the lead in economic development?

	25-09-2003 21:11									#97
	Support Apolyton, buy Galactic Civilizations

... and PPP is better!

	25-09-2003 21:12									#98
	Inflate your Upload Space

quote: Originally posted by TCO Why bother with "PPP". Use currency exchange rates.

Well in that case I think you should applaud the Euro area's amazing growth rate of over 15% over the last year - so what if 14.5% of that was due to the appreciation of the euro, after all we should all use currency exchange rates.

With European growth six times faster than the US level when will americans ditch their sluggish economic practices and adopt our 'continental' model with high social protection, government spending and taxation.



The above is to show how absurd your stance is TCO.

	25-09-2003 21:13									#99
	Increase Your PM Length

what does Purchase Power Parity mean? what is the currency exchange rates stuff about?

enlighten me!!

	25-09-2003 21:17									#100
	Suffering from ads?

quote: Originally posted by Kropotkin How do you -if you actually do so- model the fact that the chinese growth will start decline as it's a lot easier to catch up than to take the lead in economic development?

Well the 'catch up' is in the form of productivity - I assume a faster rate of growth in productivity in China (although the gap slowly narrows - I use an algorithm based on what happened to a group of countries, mainly in europe and latin america, during 1950-2000).
However China's working-age population (15-64) will start to shrink from the mid 2020's onward, the US's also slows sharply after 2010 but recovers slightly in the 2030's and 40's.
This difference in the relative growth in the working-age population is what accounts for the slowdown in China's 'catchup' with the US after 2030.


Purchasing Power Parities are an attempt to compare price levels across economies - basically you take a 'basket' of goods and services in one country, see how much it costs and then see how much the same 'basket' costs in another - you then use the resulting rate for converting the size of the economies.

This is better than exchange rates because it covers many prices that are not affected by exchange rates because they are not traded internationally - things like haircuts or take-away foods for example.
Exchange rates are also inaccurate because the vast majority of the trades that result in them have noting to do with GDP (or value-added) but relate to capital flows.

	25-09-2003 23:05									#101
	Avatar Enlargement: We've got the solution

quote: The above is to show how absurd your stance is TCO.

I still think comparing the currency converted GDP figures is useful as well. For instance, the argument that the US demand growth is driving global economic growth disproportionately (which it is) makes no sense unless you consider the currency converted GDP growth.

quote: I don't consider it an expansion period yet.

Well, I do. And the numbers back me up.

	25-09-2003 23:50									#102
	Support Apolyton, buy Civilization 2

quote: Originally posted by DanS I still think comparing the currency converted GDP figures is useful as well. For instance, the argument that the US demand growth is driving global economic growth disproportionately (which it is) makes no sense unless you consider the currency converted GDP growth.

Surely you see the circular logic in that statement?

It makes just as much sense if you convert using exchange rates or PPPs, it's just that the US's 'contribution' is significantly smaller.

If the (rather sluggish by past standards) recovery in the US is 'driving world growth' then why have commodity prices been so bullish, maybe because demand in China is booming?

Measuring the share of global imports using exchange rates is more useful, but that still runs into the problem that the prime determinant of exchange rates is relative investment flows, not relative imports.
Using the price determined in one market to calculate the value of production in another is problematic, at best.

	26-09-2003 00:18									#103
	Support Apolyton, pre-order Civilization IV

quote: Surely you see the circular logic in that statement?

Yep. But so many say it, so it must be true. We've got to know why they say it.

quote: If the (rather sluggish by past standards) recovery in the US is 'driving world growth' then why have commodity prices been so bullish, maybe because demand in China is booming?

Demand in China is booming. No doubt about it. But how is this impacting world growth? Are the Chinese consumers buying imported goods and services?

	26-09-2003 00:40									#104
	Support Apolyton buy from Amazon

Not finished goods to any significant extent.

However Chinese industry is sucking in large amounts of raw materials, which is leading to the price rise (which is unusual when the developed world is still in a period of very sluggish growth)

	26-09-2003 01:11									#105
	Support Apolyton buy from Amazon

Do you have any numbers on these raw materials inflows and how they compare to US raw materials inflows?

	26-09-2003 01:15									#106
	Avatar Enlargement: We've got the solution

quote: Originally posted by el freako Well in that case I think you should applaud the Euro area's amazing growth rate of over 15% over the last year - so what if 14.5% of that was due to the appreciation of the euro, after all we should all use currency exchange rates. With European growth six times faster than the US level when will americans ditch their sluggish economic practices and adopt our 'continental' model with high social protection, government spending and taxation. The above is to show how absurd your stance is TCO.

Why use a mathematical expression when you can use a market reality. The Euro production was worth more at that time.

	26-09-2003 01:16									#107
	Support Apolyton, buy Alpha Centauri

And freko, you really are way too obsessed with the **** size issues here. Try thinking about the economics instead. It's not about "feeling great" or that kind of crap.

	26-09-2003 01:19									#108
	Browse Apolyton AD-FREE

quote: Originally posted by el freako Purchasing Power Parities are an attempt to compare price levels across economies - basically you take a 'basket' of goods and services in one country, see how much it costs and then see how much the same 'basket' costs in another - you then use the resulting rate for converting the size of the economies. This is better than exchange rates because it covers many prices that are not affected by exchange rates because they are not traded internationally - things like haircuts or take-away foods for example. Exchange rates are also inaccurate because the vast majority of the trades that result in them have noting to do with GDP (or value-added) but relate to capital flows.

Ice is worth less in the arctic. Use market prices. You are right that there is a lot of volatility, though...

	26-09-2003 01:22									#109
	Avatar Enlargement: We've got the solution

I mean less. Frigging server won't let me edit.

	26-09-2003 01:27									#110
	Support Apolyton, buy Civilization III: Complete

el freako, it is also silly to look at a single year datum to make a decision. Like looking at a company heading down the tubes and getting excited about the month where there stock has an uptick. Surely you can think of more astute ways to look at social policy costs?

	26-09-2003 01:31									#111
	Support Apolyton, buy Civilization 2

You havn't addressed the fact that you are measuring one thing (value added or GDP) using prices obtained in trading something that does not relate to it (investment flows are not part of value added).

It's a bit like claiming that you can compare the value of production of maize and beef by multiplying the metric tonnes produced by the price of natural gas futures.

	26-09-2003 01:38									#112
	Increase the size of your Attachments

If you want to compare year to year production within a country, you need to adjust for inflation, granted.

If you want to compare production levels from country to country in a given year you can use the market value. Products have a market value. Currency has a market value. No? By analogy, you can also compare growth rates from country to country without adjusting for inflation (since the currencies are traded.) You can't say what the absolute growth rate is but you can make a comparison. Yeah, you will have some "interesting" numbers. But heck ice is worth less in the arctic. And ice can have volatile worth. It's worth a lot in VA right now with the power loss...

	26-09-2003 01:39									#113
	Put an end to popups!

Think about it in terms of arbitrage.

	26-09-2003 01:51									#114
	Inflate your Upload Space

You're still not getting it are you?

GDP, which you want to compare between economies, relates to the value added in that economy.

Exchange rates are mainly determined by capital flows (they usually make up 90% or more of currency trades), only the remaining tenth is related to international trade (and therefore international prices).
However international trade only accounts for 10% to 15% of the GDP of the major currencies economies.

So you are saying the 'market price' (actually there is no market price as no-one trades GDP) for comparing value added across economies should be one that only really applies to 15% of the thing you are comparing, and the price is determined in a market where 90% of the transactions are to do with something else entirely.

Surely you can see how absurd this is?

	26-09-2003 02:19									#115
	Inflate your Upload Space

quote: Originally posted by el freako You're still not getting it are you? GDP, which you want to compare between economies, relates to the value added in that economy. Exchange rates are mainly determined by capital flows (they usually make up 90% or more of currency trades), only the remaining tenth is related to international trade (and therefore international prices). However international trade only accounts for 10% to 15% of the GDP of the major currencies economies. So you are saying the 'market price' (actually there is no market price as no-one trades GDP) for comparing value added across economies should be one that only really applies to 15% of the thing you are comparing, and the price is determined in a market where 90% of the transactions are to do with something else entirely. Surely you can see how absurd this is?

You are not seeing the arbitrage point. Currencies are freely traded. So are products. Ice is worth less in the arctic.Check out a fungible product (e.g. gold). It is worth the same everywhere. There are no arbitrage opportunities in gold. If land or cars or services cost more in one country, then they are worth more. The currencies are freely traded.

	26-09-2003 02:42									#116
	Lose 30 kilos (of popups)

quote: Originally posted by el freako You're still not getting it are you? GDP, which you want to compare between economies, relates to the value added in that economy. So you are saying the 'market price' (actually there is no market price as no-one trades GDP) for comparing value added across economies should be one that only really applies to 15% of the thing you are comparing, and the price is determined in a market where 90% of the transactions are to do with something else entirely. Surely you can see how absurd this is?

99.9% of currency transactions have nothing to do with gold. Yet there are not arbitrage opportunities. Why? Obviously percent of transactions is not the key--elimination of arbitrage is the key. If ice costs less in the arctic, it is worth less in the arctic. By implication, the same is true for widgets in France.

	26-09-2003 02:46									#117
	Lose 30 kilos (of popups)

Some products are freely traded across economies. but most services are not.

And as services make up 60% to 70% of GDP then your argument (which seems to equate to 'markets are perfect everywhere') doesn't hold much water.

How can you account for the persistant (5 to 10 years or more) under or over valuation of some countries currencies then?
If the market is moved by differing prices in goods or services then these should equalize in the long run - or at least move around an equilibrium price, but they don't because the market is not moved (or at least not very much) by trade in goods and services but by investment flows.

You are still using the prices of apples to compare oranges.


Gold is easily tradable across frontiers.
Rent, medical costs, education, haircuts etc are not.
That's where your argument falls down - if they where traded then exchange rates would be an ok way to compare economies.

	26-09-2003 02:50									#118
	Enter the AD-FREE zone

If the service is freely traded, the price is still indicative of value. That is because people can buy less of the service and buy gold or oil or what-have you instead. I don't have to connect the individuals. That is how a price mechanism works.

If there are less prostitutes in the US, than in your country and a **** costs more here, than it is worth more.

	26-09-2003 03:07									#119
	Support Apolyton buy from Amazon

Now you're using a circular argument.

How can identical products or services be priced differently in different countries (when converted into a common currency using exchange rates)?

You seem to be saying that because a currency is overvalued, relative to others, then the people there are happly to put up with higher prices than others abroad.

Conversely countries with undervalued exchange rates must be full of bargain-hunters.

It would be nice to live in such a perfect world where prices equalized globally - but this has not been observed to happen in the real world.

The goods/services which show the least deviation from a common value are those most easily traded across frontiers, whereas those that don't are those that are difficult to trade - surely this implies that a perfect market does not exist, that's because no market is perfect.

Even your example of gold trading is not a perfect market, arbitrage opportunities exist - otherwise there would be few speculative traders in the market, which is not the case.

	26-09-2003 04:05									#120
	Support Apolyton buy from Amazon

Well at least you've ditched the "what percent of transactions" argument. I was going to drive a further stake in it with examples of three commodities with A and C having no common purchasers/sellers but the groups connected in purchasing/selling B.

Do you really think that ice in the Arctic is the same as ice in the Sahara? That the location of the ice is irrelevant to valuing it? Well you can assign your arbitrary equal value, but I'll go with the market that sees a difference in the two. The market somehow seems a lot closer to reality than "what el freako thinks".