Continued expansion of the U.S. economy, strong consumption, current basic scenario = District Fed President
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"The US labor market is strong and household consumption is expected to hold up by the end of the year," said Bullard, who said the growth range of 2.5-3% was "a fast pace compared to potential growth." ..
[Washington, XNUMXth Reuters] – US St. Louis District Fed President Bullard said on the XNUMXth that the US economy will be low in the future ... → Continue reading
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Category Index overview
Nominal and real growth
Economic scale measurements are generallyGDP It is done using (GDP).
GDP is the sum of the values measured by the nominal priceNominal GDPAnd the value measured based on the price of the base yearReal GDPThere is.
Similarly, fluctuations in nominal GDPNominal economic growth rateThe fluctuation of real GDP is calledReal economic growth rateCalled. The rate of increase in quarterly (three months) or yearly is expressed as a percentage.
Nominal economic growth rate
- Nominal economic growth rate (%) = (Nominal GDP of the year-Last year's nominal GDP) ÷ Last year's nominal GDP x 100
Demanded by. Also, the real economic growth rate is
- Real economic growth rate (%) = (Real GDP of this year-Real GDP of last year) ÷ Real GDP of last year x 100
- GDP deflator = This year's nominal GDP ÷ This year's real GDP x 100
A kind of price index can be calculated as follows. By definition, the GDP deflator is 100 as of the base year.
The inflation rate can also be calculated from the GDP deflator.
- Price increase rate (%) = (This year's GDP deflator ÷ Last year's GDP deflator -1) × 100
If prices fall, the rate of price increase will be negative.
From the above formula
- (1 + nominal economic growth rate ÷ 100) ÷ (1 + real economic growth rate ÷ 100) = 1 + inflation rate ÷ 100
For example, in one yearバ タ ー10 pieces for 10 yen,gunSuppose you have an economy that makes 20 pieces for 5 yen. The nominal GDP for this year is 100 yen, which is the sum of 10 yen for butter (10 yen x 100 pieces) and 20 yen for guns (5 yen x 200 pieces). Based on this year, real GDP is also 200 yen.
The following year, the price of butter rises to 12 yen. It is assumed that the production has also increased to 11 pieces. If the production and price of guns do not change, the nominal GDP will be 232 yen (12 yen for butter x 11 pieces = 132 yen and 100 yen for guns). On the other hand, the real GDP measured at the base year price is 210 yen (total of butter 10 yen x 11 = 110 yen and gun 100 yen).
- Real GDP x GDP deflator = Nominal GDP
In this case, 232, which is 210 yen divided by 1.1047 yen, is called the GDP deflator, and if it is 1 or more, the price will rise (inflation) Means.
- Real Economic Growth Rate + Price Increase Rate = 5 + 10.47 = 15.47 ≒ 16 = Nominal Economic Growth Rate
Therefore, the real economic growth rate + the inflation rate ≒ the nominal economic growth rate. However, this formula holds only when each percentage is sufficiently small (up to about 20%).
The purpose of separating nominal and real is to divide the increase in value measured by the amount of money into the increase in price and the increase in production.
Interest in real growth is higher as a standard for improving people's lives and increasing national power.
For example, suppose that a person who received a monthly wage of 15 yen was reduced to 10 yen a month. In this case, the nominal growth rate is
- Nominal growth rate = (10 -15) ÷ 15 x 100 = -33 (%)
It will be negative, but if the price of product A is reduced from 10 yen to 6 yen due to deflation,
- Real growth rate = (10 ÷ 15 ÷ 0.6 -1) × 100 = 11 (%)
Will be. This means that the number of people who can buy product A has increased by 11% because the price of goods is lower than the wages. Considering the actual number, 1 pieces could be purchased in a month before the wage decline, but 1.5 pieces can be purchased in a month after the decline. In such a case, it cannot always be said that "it became poorer than last year".
Potential growth rate and output gap
Growth in labor input, growth in capital input, which are the sources of economic growth,TFPThe three production functions of can be applied to the level of potentially available labor force and capital.Potential GDPAnd its growth ratePotential growth rateと 呼 ば れ る.
Unemployment rateIs always "Inflation Unaccelerated unemployment rateThe GDP growth rate achieved when in NAIRU is the "potential growth rate"... RealUnemployment rate Natural unemployment rateGDP that would have been achieved if it was at the level of,Full employmentGDP when is achieved is called potential GDP.
The difference between this potential growth rate and the actual real growth rate isGDP gapIs called. The factors that make up the potential growth rate arecapitalInput /The laborInput amount of production factors such as input, as a residual that does not depend on theseTotal factor productivityCan be given.
It is the basis for calculating the economic growth rateGDPIn principleMonetary economyOnly the added value traded in is recorded. There is a statistical problem with GDP. For example, there are the following differences.
- Items not included in GDP
- Long-term care by relatives inside the family
- What is recorded in GDP
- Long-term care by a paid service outsourced
- What is recorded in GDP by attribution calculation
- Consumption of self-produced products by farmers
Increase in value-added production and its significance
Economic growth is the increase in value-added production. For this reason, it may differ from the actual increase in production. In the following, it is assumed that raw material production and automobile production are carried out in different countries.
If a car of 1 million yen is manufactured from raw materials of 30 yen in the first year, the added value created by the car production is 100 yen. If 70 units were produced, the total value-added production by automobile production would be 100 million yen. On the other hand, even in raw material production, 7000 units will add value of 100 million yen. The following year, the production of automobiles will reach 3000 units, while the price of raw materials will increase to 110 yen per vehicle due to soaring raw materials. In this case, if the price of the car does not change, the value-added production by car production will be 1 million yen. The raw material is 40 million yen.
In this case, as of the second year, the raw materialCountry of originThen, value-added production will increase by 1400 million yen, while value-added production will decrease by 400 million yen in automobile-producing countries. Despite the increase in automobile production in automobile-producing countries, the economic growth rate will be negative. this isMarket economyIt means that the work of raw materials has put more value on raw material production. As a result, raw material producing countries will increase production, the value of automobile production will naturally increase, and automobile production will increase. A market economy that has a price mechanism like this has a built-in economic growth mechanism.[Annotation 1].. As mentioned above, the increase in production volume is determined by the value added from the market. Also, the added value was required for productionLabor forceとcapitalWill be distributed to. Distribution to the labor force means wages, etc., and distribution to capitaldividend-interest rateMeans
In countries that meet the three premises of 1) many efficiency policies, 2) freedom to choose a profession and place of residence, and 3) a well-developed safety net. It is desirable to adopt the principle of efficiency policy (expansion of pie).
Factors of economic growth
There are three factors for economic growth: 1) labor force (population increase), 2) capital stock of machinery and factories (accumulation), and 3) technological progress... "Growth potential will increase due to factors other than labor and capital.Total factor productivity(TFP) will rise ".. GDP growth can be broken down into technological progress (total factor productivity growth), capital growth and labor growth..
As conditions for economic growth, 1)Private ownershipProtection, 2)Innovation, 3) Acceptance to enable scientific rationalism, 4) Institutionalization of debts and credits, 5) Freedom of participation, 6) Openness..
A 2006 World Bank Growth and Development Commission report concludes that there are no general principles for economic growth.To this committeeNobel Prize in EconomicsAward winnerMichael spence,Robert ThoreauA two-year study was conducted by 21 working groups and 300 workshops, with the participation of 11 experts and 12 researchers..
- Supply and demand
The idea that even if aggregate demand is insufficient and unsold products occur, they are all sold out due to falling prices, that is, economic activity is determined by aggregate supply.Say's Law".Mitsubishi Research Institute"Long-term economic growth is the ability of the country as a whole to create goods and services.SupplyIt depends on the aspect. ".
The modern (2011) economy has an economic structure in which supply adapts to demand rather than supply. A supply-focused approach increases economic distortions and increases social burden. As a result, it hinders the sustainable development of the economy.
The economy is said to be determined by the smaller of supply and demand (MacroeconomicsShort side principle). In other wordsDeflation gapIf there is, the economy can grow without changing the supply side.
In developing countries, a great deal of effort has been devoted to increasing productivity, and countries that have been able to increase productivity have achieved economic growth. However, as the economy matured, the demand side gradually became more important. This is because it has been thought that a price mechanism that matches supply and demand works, but in reality, prices are rigid and demand is often insufficient for supply. .. In other words, there were frequent cases of non-operating equipment and unemployment due to excess capital equipment and labor required for production..
Economic development requires people who are educated to respond quickly to development.. In the case of Japan, it is thought that the economy has developed because the literacy rate was high at the common people level and the education level was high since the Edo period.. AlsoMeiji EraIt is said that the spread of the school system in Japan has enhanced national education that enables reading and writing calculations through compulsory education, and that the increase in the number of students enrolled in higher education after the war has produced human resources in Japan who can respond to economic development... During Japan's high economic growth period in the 1960s, the Japanese economy grew at an annual rate of about 10%, of which about 6% was due to technological progress..
Even in bad natural conditionsComparative advantageCan be used to lay the foundation for economic development.. In empirical researchMoving between industriesThere is also a statistic that the more intense the economy grows.. Trade is a major factor in economic development.
Trade in countries with economic growth so far has undergone rapid industrialization except for resource-rich countries, and workers were mainly employed by the manufacturing industry. As stages of trade and economic growth, (1) export of traditional products, (2) primary import substitution (light industrial products), (1) primary export substitution (mainstream shifts from traditional products to light industrial products) ), (3) Secondary import substitution (heavy industrial products), (1) Secondary export substitution (mainstream shifts from light industrial products to heavy industrial products), etc... Since the 1960s, the ratio of standard income to output in developing countries has declined, and the relative price of the manufacturing industry has declined compared to the service industry. It is said that the productivity of the service industry is necessary for economic growth because the employment of the manufacturing industry is decreasing and the same economic growth as in the past may be difficult..
Types of economic growth
Economic growth can be constrained by a variety of constraints. Of these, the two main requirements in developed economies are
- Increased labor productivity
- Demand creation
Is.. The mode of modern economic growth can be summarized into the following three types depending on which of these two conditions is the growth factor (in other words, the limiting factor)..
- Proportional growth economy
- Productivity-led economy
- Demand saturated economy
- Proportional growth economy
- In an economy consisting of two sectors, the modern sector and the traditional sector, the modern sector (capitalist sector) does not have technological progress and productivity increase, and all inputs and outputs increase proportionally. The labor force needed for growth is supplied indefinitely from the traditional sector.Arthur Lewis(Arthur Lewis) called this situation an "unlimited labor supply economy."Dual economic modelAlso called (dual economy model).
- It is believed that Japan before the Pacific War was basically in a proportional growth economy. When the unlimited labor supply ends,Lewis Turning PointThat is. There are 1930s and 1950s theories about when unlimited labor supply ended in Japan... As of 2007, it is being debated whether China has crossed the Lewisian turning point..
- Productivity-led economy
- Productivity rises at a high rate, and per capita wages (income) also rise, but the people's willingness to consume is strong, new demand is created one after another, and the economy grows rapidly. JapaneseHigh economic growthIs that. High growth in 1973First oil shockHowever, until the end of the 1980s, it showed high growth of more than 4% in real terms, helped by excess exports. This growth rate was one of the highest among the developed countries at that time. But this growth was in 1992Bubble burstIt is believed that it ended with.
- Demand saturated economy
Economic growth and business cycle
Economic growth is an increase in production and consumption. For this reason, economic growth has a supply side and a demand side. Added value工場,farm,officeProduced in. Therefore, in factories, etc.Capital investmentWill bring about an increase in supply capacity and become a source of economic growth. On the other hand, demand will increase due to increased purchases by consumers and increased capital investment by companies and governments, which will be a source of economic growth. Capital investment is a typical example of having an important impact on these two aspects in common.investmentIs. Investment has led to increased supply and demand and is a driving force for economic growth.
However, as supply meets demand and equipment utilization declines, investment will decline. Economic growth will be sluggish accordingly. Such a state is a recession phase in the business cycle. Regarding the significance of the recession on economic growthJoseph SchumpeterbyCreative destructionTheory exists. This is because the selection of inefficient sectors such as bankruptcy and unemployment due to the recession will improve the productivity of the economy as a whole.Survival of the fittestIs the way of thinking. In contrast, a empirical study of Caballero and Hummer in the US manufacturing industry found that the recession had an advantage over the survival of old companies. This is due to the fact that only companies with large net assets can enter the market during a recession.
It is inventory in the short term, capital investment / housing investment in the medium term, and long-term investment that will increase this investment again.InnovationFluctuations such as (innovation)Business cycle) Is believed to be. In particular, technological innovation creates new product needs through a completely new combination of production factors, and investment is made to meet those demands, resulting in economic growth.
Economic growth and its problems
For economic growthresourceThere are restrictions. In the old days森林The amount of was constraining economic development. Even today, labor, land,Natural resourcesThere are restrictions on economic growth due to such factors. Low growth after the oil crisis, 1980sCrude oil priceThe booming economy supported by the decline is a historical example.
Industrial revolutionAfter that, economic growth is large汚染Came to generate.Environment issuesMany of them are the result of some kind of production activity, and their regulation (environmental policy) also leads to restraint of economic activity. The economy and environment are, so to speakTrade offHave a relationship.
About climate change preventionEconomicsResearch shows that global warming can be prevented without slowing economic growth... In the Japanese economy, GDP grew by an average of 1973% annually from 1986 to 3.4,CO2Emissions are declining by an average of 0.3% annually. On the other hand, from 1987 to 1995, GDP grew by an average of 3.1% per year, but CO2 emissions increased by an average of 2.9% per year. In other words, even if the economy grows, CO2 does not necessarily increase... There is no evidence that pollution regulation has hindered economic growth, and the regulation has rapidly improved industrial and urban pollution... Environmental protection is a driving force for economic growth, at least for developed countries, rather than negative for economic growth.
Not GDPLiteracy rate,Infant mortalityThere is also a view that such things are desirable as an indicator of economic affluence... However, as GDP increases, the literacy rate and child mortality rate will actually improve almost proportionally... In addition, economic growth measured the impact of the environment and natural resources.Green GDPThe concept is also advocated.
Economic growthMonetary economyIt happens not only in. The reality is生産Because it is increasing.ModernGross domestic product before the development of typical GNP statisticsfinanceIt will be investigated based on the records of.Tax systemIf the country is well protectedtax rateThis is because the tax base can be calculated from the tax revenue and the approximate total production can be calculated. thesestatisticsAs a result of the approachIndustrial revolutionIt can be seen that the previous economic growth rate was about 0-1% on average annually. Before the Industrial Revolution, the world's economic growth rate was almost zero and continued for more than 1500 years.Ancient romeWith people16st century OfItalian,Englishman OfStandard of livingHad hardly changed.. In addition,17st centuryUp to the largest in the worldeconomic superpower TheChugokuMet. By the way,JapanIs estimated to have been the 7th largest economy at that time.
18st centuryWhen the Industrial Revolution occurred in Britain, graduallyWorld economyGrowth speedaccelerateIt began to. But it happens frequentlypanicSlowinvestmentBecause of this, economic growth was still limited.19st centuryからSecond World WarThe world economy will continue to expand untilAfter the warAchieve record high growth. At this timeNational economyへGovernment interventionToMixed economyEach country adopts the system,Bretton Woods regimeUnderWestern countriesIs largeFree tradeTo startCapital investmentBecause it also increased.Oil shockAfter that, although it slows down a little,East AsiaGrowth trajectory has been maintained by economic development and continues to the present.
The world economythe 1980sGlobal that continued until the beginninginflationBreak away from (Inflation eater) On the other handthe 2000sContinuous when enteringresourceI was suffering from soaring prices.Developed countryHigh cost (high)wage) NaAdded valueProduction is thiscompetitionExposed to someindustryIs on the verge of survival. The reason isChugokuThen.20st centuryIt can be said that a tremendous increase in production volume has occurred from the end.[Annotation 2]
Meanwhile, in this global economic growthAfricaCountries andSocialismSome countries are experiencing economic contractions. In the medium to long termLow birthrate-AgingとEnvironmental destruction, Natural resource shortages are considered to be a limiting factor for global economic growth.
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- ^ If the price is artificially manipulated and fixed cheaply, the industry cannot grow and economic growth is distorted. For example, selling a super-discount set meal in a high-rent downtown area would be very popular, but it would not be possible to expand the store because profits would not increase. As a result, long lines are formed in the store, resulting in a typical supply shortage. In socialist countries, there were some sights of queues due to lack of goods at the end of the period, because they did not have a flexible pricing mechanism.
- ^ this isChinese economy World economyへopenAt the time ofProductsWith added valueLabor forceThis is because there was a significant imbalance in the cost of. As a result, China's production continues to grow until China's labor costs and commodity value are balanced. The increase in productionProductsPriceWith a drop inPlace of originIt causes a rise in price and a decrease in added value.
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- ^ Hideomi Tanaka, "The Japanese Salaryman Will Revive", Japan Broadcast Publishing Association <NHK Books>, 2002, p. 181.
- ^ Division of roles between politicians and bureaucratsRIETI November 2010, 12
- ^ Takashi Oshio, "Introduction to Economics for High School Students," Chikuma Shobo <Chikuma Shinsho>, 2002, 141 pages.
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- ^ Banerjee, Duflo 2020, pp. 4032-4044 / 8512.
- ^ Takashi Oshio, "Introduction to Economics for High School Students," Chikuma Shobo <Chikuma Shinsho>, 2002, 106 pages.
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- ^ Soichi Marui, "Japan can grow without relying on nuclear power," Diamond, 2011, pp. 89-90.
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- ^ Heizo Takenaka, Heizo Takenaka, "Economics of Living Japan", Gyosei, 2nd Edition, 2001, pp. 186-187.
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- ^ Warrior Research2009/10/9
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- ^ Ryuichiro Matsubara (2001) "Solving the Mystery of the" Consumption Depression "" Diamond, Hayashi, F. & EC Prescot 2002 "Japan in the 1990s: A Lost Decade," Review of Economic Dynamics 5: 206 - 235.
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- Will the large negative output gap be prolonged? Explanation of the impact of the output gap on real GDP growth rate and potential growth rate
- Misunderstanding that "structural reform will increase potential growth rate" (PDF file) Explanation of the impact of supply / demand on potential growth from both sides
- Catalog Economic Growth Rate Trends (Japan)