Thursday
Feb122015

UK NGDP Q4 2014 prediction market

February 26th will see the publication of the Second Estimate of the UK National Accounts, which will include our first look at the NGDP figures for Q4 2014. 

 For a link to the question at Inkling Markets, see here.

Saturday
Jan312015

How quickly will Mark Carney run the London marathon?

Here is our new prediction market:

Sunday
Jan112015

Effective exchange rates

I've just stumbled across the BIS' Effective Exchange Rate Index:

I've always found it difficult to get hold of a regularly updated effectice exchange rate index, and ideally would have a real one (the BIS one is nominal). Any suggestions?

Sunday
Jan112015

MA growth falls to 6.96%

In November 2014 the growth rate of MA(ex) fell to 6.96%, down from 7.76% in October. This still represents a strong growth rate since a strong burst from -0.37% in May 2012 to +10.12% in February 2013.

Also, the Bank of England's A1.1.1 "Notes and coin and reserve balances" doesn't contain the growth rate of the total monetary base (i.e. Notes and Coin + Reserves), but here it is:

Monday
Nov032014

Total Output grew by 2.17% in 2012

October 31st saw the belated release of the 2014 Input-Output Supply and Use Data. This is important because it incorporates a larger amount of economic activity than GDP data, but comes at the cost of only appearing as an annual series, and with an 18 month (or longer) lag. The diagram below shows the breakdown of the measure for 1997:

I've previously mentioned that Gross Output data is now an official BEA statistic, and I am interested in seeing equivelent figures for the UK. Here they are.

Firstly, in terms of absolute numbers, we can see that Total Output dwarfs Nominal GDP. 

In fact Total Output is around twice as large as Nominal GDP:

The reduction in the ratio that occured in 2002-2005 is a result of Nominal GDP growth running ahead of Total Output growth. But notice the dramatic increase in the ratio in 2006. This was because Nominal GDP was growing at 5.81%, whilst Total Output grew at 8.73%. This reveals that economic activity was running at a significantly higher pace than a focus on GDP data was telling us:

One of the main reasons why the September revisions to GDP had such an impact was because of a reclassification of R&D spending. This rests on a conceptual problem with distinguishing between investment and intermediate consumption. As more and more economic activity becomes service based we might expect this problem to grow over time. One of the chief benefits of using a broader measure of national income is that it captures all intermediate consumption, and therefore the boundary between intermediate and final consumption/investment becomes less relevent. 

These figures reveal that in 2010 and 2011 the wider economy was growing at a higher rate than that being measured by GDP, and in 2012 they were effectively the same. It is very difficult to read much into these annual growth rates, given that there is likely to be a lot of quarterly volatility. But in the same way that the US have started releasing this as a quarterly series, there would be much to gain from the ONS doing likewise.