Ch2: The Data of
Macroeconomics
Mankiw: Macro Ch2
Mankiw: Principle of Econ Ch23,24,28
Williamson: Macro Ch2
Froyen: Macro Ch2
Macro Variables
Y: national income or GDP
P: price level (cost of living)
π: inflation rate
u: unemployment rate
r: interest rate
主計處網站：
http://www.stat.gov.tw/ct.asp?xItem=15139&ctNo
de=3565
The Definition of GDP





國內生產毛額
Gross domestic product (GDP) is a measure of
the income and expenditures of an economy.
It is the total market value of all final goods and
services produced within a country in a given
period of time.
台灣2007年GDP：約12.6兆新台幣
(台灣資料請參考Ch23.xls)
GNP ( Gross National Product):國民生產毛額
The Definition of GDP

“GDP is the Market Value . . .”
Output is valued at market prices.
(1) traded in the market
(2) weighted with market prices

“. . . Of All Final . . .”
(1) records only the value of final goods,
not intermediate goods:
No double counting (不重複計算)
(2) Or Σ(value added)：附加價值的加總
eg, 小麥（$1）麵粉（$3）麵包（$6）
The Definition of GDP

“. . . Goods and Services . . . “


“. . . Produced . . .”


currently produced, not transactions involving goods
produced in the past. (No second-hand trade)
“ . . . Within a Country . . .”


both tangible goods (food, clothing, cars) and intangible
services (haircuts, housecleaning, doctor visits).
within the geographic confines of a country. “
“. . . In a Given Period of Time.”

within a specific interval of time, usually a year or a
quarter (three months).
What Is Not Counted in GDP?
GDP includes all items produced in the
economy and sold legally in markets.
GDP excludes
(1)most items produced and consumed at home.
(2)items produced and sold illicitly (illegal drugs).

Imputed values:
住宅服務的價值－即「租金」：租用及自用均設算。
家庭主婦所提供之服務不計入家事服務或GDP當中，若
家庭主婦亦計入GDP，則各國將無所謂之失業者。
The measurement of GDP:
Identity: GDP = total output
= total income
= total expenditure
illustrated with the circular-flow diagram.
3 approach:
1. Production approach (產出面)
Y= output=Σ value-added
2. Expenditure approach (支出面 )
3. Income approach (所得面 )
The Circular Flow
Output
Expenditure
($)
Firms
Households
Income ($)
Factors (Labor,
capital, Land)
Output=Income=Expenditure
For an economy as a whole,
 income must equal expenditure because:
Every dollar of spending by some buyer is a
dollar of income for some seller.

output must equal expenditure because:
Unsold output goes into inventory,
assuming that
firms purchase their unsold output.
Expenditure Approach:
The expenditure components of GDP
Y =
value of
total output




C + I + G + NX
aggregate
expenditure
C: consumption
I: investment
G: government spending
NX: net exports
Consumption (C)
definition: The value of all goods and services
bought by households. Includes:



durable goods
last a long time
ex: cars, home appliances
nondurable goods
last a short time
ex: food, clothing
services
work done for consumers
ex: dry cleaning, air travel.
Investment (I)
Definition 1: Spending on [the factor of production]
capital.
Definition 2: Spending on goods bought for future use
Includes:



business fixed investment
Spending on plant and equipment that firms will use to
produce other goods & services.
residential fixed investment
Spending on housing units by consumers and landlords.
inventory investment
The change in the value of all firms’ inventories.
Investment vs. Capital
Investment is spending on new capital.
Example (assumes with depreciation):
Kt 1  (1   ) Kt  It
t 期期初 Kt=20, 折舊率δ=0.2, 毛投資 It=5，
Kt+1=?
淨投資＝？
Stocks vs. Flows
Flow
Stock
A stock is a
quantity measured
at a point in time.
A flow is a quantity measured per unit of time.
Stocks vs. Flows - examples
stock
flow
Capital
(human capital)
Investment
(education)
Wealth
Annual saving
Govt debt
Govt budget deficit
Government spending (G)


G includes all government spending on
goods and services..
G excludes transfer payments
(e.g., unemployment insurance
payments), because they do not
represent productive activities.
Net exports: NX = EX – IM
def: The value of total exports (EX)
minus the value of total imports
(IM).
2%
0
0%
-200
-2%
-400
-4%
-600
-6%
-800
1950
-8%
1960
1970
NX ($ billions)
1980
1990
2000
NX (% of GDP)
percent of GDP
billions of dollars
200
U.S. Net Exports, 1950-2006
年度
20
05
20
02
19
99
19
96
19
93
19
90
19
87
19
84
19
81
19
78
19
75
19
72
19
69
19
66
19
63
19
60
19
57
19
54
19
51
%
Taiwan data: export and import (%)
出口與進口佔GDP比例
80
70
60
50
40
出口
進口
30
20
10
0
Taiwan’ GDP (Y) 組成
C
I
G
EX
IM
S
歷年平均
59.18
22.62
16.55
38.16
36.51
24.26
1951-1960
71.17
15.99
19.07
9.42
15.65
9.76
1961-1970
61.98
21.71
18.41
20.81
22.91
19.61
1971-1980
52.45
30.09
15.84
45.60
43.98
31.71
1981-1990
51.29
22.60
16.20
52.17
42.26
32.51
1991-2000
57.90
24.38
15.51
46.50
44.30
26.58
2001-2007
60.80
20.20
13.31
61.43
55.74
25.89
GNP vs. GDP

Gross National Product (GNP):
Total income earned by the nation’s
factors of production.

Gross Domestic Product (GDP):
Total income earned by domesticallylocated factors of production.
GNP=GDP+(factor payments from abroad)
– (factor payments to abroad)
=GDP+NFP
(NFP: net factor payments from abroad)
Income Approach:

National income (NI) 國民所得
≡ factors income
≡ wages + net interest income
+ rental income + profits

NNP (net national product)
≡ GNP- depreciation
NI ≡ NNP-indirect business taxes

Income approach 相關所得定義
Personal income (PI) 個人所得
=NI
+ net Govt transfer to individuals
- corporate retained earnings
+ interest income on govt bonds
=NI
+ (government transfers to individuals - Social
insurance contributions)
-(corporate profits- Dividends)
+(personal interest income - net interest) 課本公式
 Disposable Personal income 個人可支配所得
= PI- personal income tax

Numerical example by Williamson
Calculate GDP from each approach
Real vs Nominal GDP

Nominal GDP
values of goods and
services at current
prices. (Y=PtQt)
Y  P Q   Pi Q
t
Real GDP
values of goods and
services at constant
prices in the base year.
(y=P0Qt):
the measure of real
output

t
t
i
t
i
y  P 0Qt   Pi 0Qit
i
Eg, Real and Nominal GDP
The GDP Deflator (GDP平減指數=P)

The GDP deflator is calculated as follows:
Nominal GDP
GDP deflator=
 100
Real GDP
Pt Qt
= 0 t  100
PQ
  the measure of price change
亦即 P  Y / y
Y=P*y， P=Y/y ，y=Y/P

Converting Nominal GDP to Real GDP:
Real GDP20XX
Nominal GDP20XX

100
GDP deflator20XX
亦即 y=Y/P
2007年：名目每人平均GDP為NT$55萬＝16,768美金
實質每人GDP=(550,343/96.14)=572,439 (2001價格)
Inflation Rate
The Inflation Rate（π）：
通貨膨脹率＝物價上漲率
 When π<0：deflation (通貨緊縮)

P in Year 2 - P in Year 1
Inflation Rate in Year 2=
100
P in Year 1
P Pt  Pt 1
亦即  t 

P
Pt 1
percentage changes
Z  XY
Z  Y X  X Y (ignore X Y )
growth rate
Z X Y


Z
X
Y
Y Z/X
Y Z X


Y
Z
X
或者取 ln，全微分可得。
＊percentage change in Z (growth rate of Z)
 percentage change in X + percentage change in Y
percentage changes
Y  Py
Y y P


Y
y
P
Eg:
Nominal GDP rises 9%
and Real GDP rises 4%,
then the inflation rate is approximately 5%.
Growth rates of
Nominal GDP and Real GDP
FIGURE Growth rate of Nominal GDP and Real GDP
45
40
35
30
%
25
20
15
10
5
0
1952
1956
1960
1964
1968
1972
1976
1980
1984
-5
Year
Nominal GDP
Real GDP
1988
1992
1996
2000
2004
Measuring the Cost of Living
Consumer Price Index (CPI）：
消費者物價指數
 shows the cost of a basket of goods and
services bought by a typical family relative
to the cost of the same basket in the base
year.
‧used to monitor changes in the cost of
living over time. When the CPI rises, the
typical family has to spend more dollars to
maintain the same standard of living.

The composition of the CPI’s “basket”
台灣CPI類別權數（基期＝1995）
7、雜項類
6%
6、教養娛樂類
17%
1、食物類
26%
1、食物類
2、衣著類
3、居住類
4、交通類
5、醫藥保健類
5%
5、醫藥保健類
2、衣著類
4%
6、教養娛樂類
7、雜項類
4、交通類
14%
3、居住類
28%
How to calculate CPI
t
0
PQ
CPI= 0 0 100
PQ
  another measure of price change
Take GDP accounting for example,
suppose the base year is 2005,
Please calculate CPI.
Problems in Measuring the Cost of Living
CPI：not a perfect measure of cost of
living：
(1) Substitution bias
(2) Introduction of new goods
(3) Unmeasured quality changes
 cause the CPI to overstate the true cost of
living.

CPI vs. GDP Deflator
prices of capital goods


included in GDP deflator (if produced domestically)
excluded from CPI
prices of imported consumer goods

included in CPI

excluded from GDP deflator
the basket of goods


CPI: fixed
GDP deflator: currently produced, changes every
year
Taiwan data:
Two measures of inflation
FI GUR E
T w o M e a su r e s o f I n f l a t i o n R a t e s
50
40
Annual Inflation Rate (%)
30
20
10
0
1960
1964
1968
1972
1976
1980
1984
1988
-10
GDP deflator
Year CPI
1992
1996
2000
2004
勞動力之分類
臺灣地區總人口
未滿十五歲人口
武裝勞動力
十五歲以上人口
監管人口
民間人口
（現役軍人）
（民間）勞動力
就業者
非勞動力
失業者
Measurement of Unemployment
人力資源調查：名詞與定義
 民間人口：在資料標準週內年滿十五歲。
 勞動力（Labor Force，LF）：
可以工作之民間人口，包括就業者及失業者。

就業者（the Employed，E）：
從事有酬工作者，或從事十五小時以上無酬家屬工作者。

失業者（the Unemployed，U，「狹義失業人口」）：
同時具有： （１）無工作；（２）隨時可以工作；（３）正在尋找
工作或已找工作在等待結果。尚包括等待恢復工作者及找到職業而未
開始工作亦無報酬者。
勞參率與失業率
非勞動力（not in the LF）：
不屬於勞動力之民間人口，包括因就學、料理家務、高齡、
身心障礙、想工作而未找工作及其他原因等而未工作亦未
找工作者。


勞動參與率(labor-force participation rate)：
= 勞動力/十五歲以上民間人口

失業率(unemployment rate)：
= 失業者/勞動力
廣義失業率
廣義失業人口：「狹義失業人口」
加上「非勞動力中想工作而未找工作者」。
後者：非勞動力人口中有工作意願
但無尋職行動之人口：
Discouraged Worker（喪志勞工）

廣義失業率
= 廣義失業人口/(勞動力+喪志勞工)

Taiwan data:
The Breakdown of the Population in 2007
Employed
1029.4萬
Labor Force
(1071.3萬)
Adult
Population
(1839.2萬)
Unemployed (41.9萬)
Not in labor force
（767.9萬）
Copyright©2003 Southwestern/Thomson Learning
Chapter Summary
 GDP GNP NNP NI PI DPI
 3 approach to measure output
 GDP=C+I+G+(EX-IM)
 Nominal GDP, real GDP
Price index, inflation rate
CHAPTER 2
The Data of Macroeconomics
slide 44
Chapter Summary
 Overall level of prices measured by


the Consumer Price Index (CPI),
the GDP deflator
 Labor participation rate
Unemployment rate
CHAPTER 2
The Data of Macroeconomics
slide 45