epogrebnyak/0_overview.md

## 0_overview.md

      
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              0_overview.md
            
          
    Overview plan


Statistics frameworks
Data sources
Good examples of macro analysis
Modelling
Special case - India

Cases to analyse

I thought of looking at some economic crises (eg Argentina, Russia 1998 and world in 2008),
where things were dramatic, but more suggestions welcome.
Traditional topics


Economic growth
Monetary policy, inflation, interest rates
Exchange rates
Households, consumption, labour, inequality
Corporate sector, stock market valuation
Fixed asset investment
Budget/fiscal issues
Trade, current account


## 1_statistics.md

      
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              1_statistics.md
            
          
    1. Statistics frameworks

This section goes a bit into methodologies of economic statistics and it may appear quite boring.
Hopefully, there will be more life and interplay of terminology later in the review plan.
Focus:

System of national accounts (SNA)
Input-output tables (IO)
Flow of funds (FoF)

Motivations:

SNA systematically connect incomes generation, redistrubution (taxation and budget spending) and use of savings in a series of accounts, each account is a balance identity.
IO table are useful for analysis by industry: cost structure, demand drivers, profitability, technology/structural shift
FoF help understand 'who finances who' in the economy
IO and FoF are extensions of SNA

Importance
Answers question:  How should we look at economic data in a systematic way
Good for: economy structure, cross-country analysis, long trends
Drawbacks:

(1) Mostly quantaties, not prices or asset valuations
(2) Takes long to compile, time lags
(3) Innovations (eg new industries, financial products) do not show up
(4) SNA is a bit dull and tedious to follow.

Jargon:

GDP sometimes called 'output', but it is value added, not total production revenue (common mistake)
IO tables surface as 'supply and use tables'

Checkpoints:

Open and close stocks are related as opening stock + increases - decreases + valuation changes = ending stock.
Production + Import = Consumption + Export + Change in invetories
GDP can be equally calculated as sum of expenditures (C+I+G+EX-IM), sum of incomes (wages and gross profit), or output less intermediate consumption.
IO tables algebraically capited by AX + Y = X, where X is output, Y is final demand and AX is intermediate demand.
Flow of funds connects "net lending/borrowing" by sector with "net worth".
Arringing at S-I = NX, see some simple explaination here

Underlying concepts from economic statistics:

stocks vs flows
volume vs price changes
current vs basic prices
sectors of economy
industry classification

Studying
SNA
The hard way, a bit of a self-torture: SNA2008,
together with a national accounts report of a domestic statistics office. Equally challenging as SNA2008: ESA2010
Stat offices on national accounts:

Hungary
Russia,
UK,
OECD countries.

Note:
SNA is a catch-all framework, even small transactions (eg capital transafers from abroad)
have their spot, making it harder to grasp core identities and relashionships. Also
there is a jump in scope when presented with sector accounts after economy as a whole accounts.
Different types of taxes also pollute the big picture.
Studying SNA methodology is worth when you have experience with some parts of economic statistics
and got an interest to assemble pieces into a bigger, coherent and internationally comparable picture.
As an SNA use you are  often exposed with just several segments of accounts, notably
final demand drivers, industries contribution to GDP, fixed capital formation. It also 'clicks'
when you connect notions and variables from a macro course (C, I, G) with actual
stitistical defintions and maybe even SNA codes.
FoF
For flow of funds is easier to understand - it is closer to accounting balances.
For example see summary tables in flows and stocks fo the US flow of funds or spot some international comparisons here.
IO Tables
Detailed supply and use tables for US economy are here. The one with 405 industries is very rich data. You can assess the cost structure of McDonalds, see which industries have highest value added (tobacco), and a lot of other cool stuff.
Some additional material and links are down in comments.
Proposed excercise: Hungary national accounts

Let's look at integrated table for national accounts. This format is a bit artificial

same values appear many times, hard to establish the balancing identities and motivation why it
is piled up this way. Nonetheless, let's treat the table lightly and at least try extract some
information from it.

Steps:

Download integrated accounts for Hungary - http://www.ksh.hu/docs/hun/xftp/idoszaki/monsz/monsz9514/t1001_integralt_1995_2014.xls
Let's look at year 2014.
Go over terms in columns L:N, try establish reltionships between terms.
Find a GDP figure (hint - cross section of Value added, gross / GDP and Total economy).
How is GDP composed? What happens next to it?
Which sectors are net lenders and which are net borrowers?
How much money did Hugarian government borrow in 2014?