Exam (elaborations)
318 Quantitative Economics
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ECOS 318Any economic analyses addresses the following five criteria:
1. Economic growth
2. Full employment
• Narrow SA definition: 20%
• Broad definition: 38-40%
• Doesn’t mean 100% of people are employed
3. Price stability
• No inflation
4. Balance of payments stability
5. Equitable distribution of income
What is the role of the government?
- The general problem is that the government takes too little action too late
• Or the correct action happens at the wrong time
- Due to the lag structure, this becomes incredibly problematic
- Lags:
• Recognition
• Decision
• Action (implementation)
• Outside or impact
- Role of economic indicators
Statistics or indicators
The government is very keen on amassing statistics, but one must not forget that these figures are
put down by the ‘village watchman’ who puts down what he wants. You can never fully trust stats
SA.
Cyclical analysis
- Economic growth
- Employment
- Price stability
- Balance of payments
- Monetary sector
- Current policy
Structural analysis
- Long term GDP per capita growth
- GDP sectoral
• What contributes what to the economy?
- Income distribution
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,- Analyse each sector
- Population trends
- Labour trends
South Africa’s role in Africa
- Trade
- Investment
- Adding values to raw materials
- Sharing expertise, skills, and technology
- Assisting in creating stability
- Sharing knowledge in the treatment of killer diseases
South Africa’s factors of production
- Land and natural resources
- Labour and entrepreneurship
- Capital
• Importance for economic
• Savings and investment
- Economic growth in perspective
GENERAL DATA ANALYSIS
DATA SOURCES
- Part of an economist’s toolkit
- Interpreting economic data
Definitions
- Time period
- Seasonally adjusted
• Occurs when you look at data in a short period, like a year
- Geographical
• Eg GDP in Western Cape is higher than the Eastern Cape
- Inflation adjusted
- Units of measurement
- Levels, percentages
- International comparisons
- Data sources and how it is obtained
- Data revisions
- Correlation and causality
- Start and endpoints
- Data mining
- Stock vs flow
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, BASIC TECHNIQUES AND CONCEPTS
Averages
Simple average
Weighted average
Eg assume food prices increase by 15% and all other items by 6%, what is the effect on the CPI?
Moving average
- The average of a number of observations over the number of observations
- (100 + 123 + 141) / 3 = 121.3
- The point of this is to smooth the data
Growth rates
- The increase in growth from one year (period) to the next
or
- Quarterly: n=4
- Monthly: n=12
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