Steve Roth — Why Economists Don’t Know How to Think about Wealth (or Profits)

MMT, SFC, NIPA, FFA, etc. Must-read.

Longish and detailed. Weekend reading.

Angry Bear
Why Economists Don’t Know How to Think about Wealth (or Profits)

Steve Roth

originally published at Evonomics 2016

Austin Clemens — The once and future measurement of economic inequality in the United States

A slew of research into economic inequality replete with serious looking graphs may give the impression that measuring inequality in the United States is a solved problem. This is misleading. Inequality is still measured incompletely because existing U.S. government statistics do not attempt to match their estimates to the National Income and Product Accounts. NIPA is the source of the most reported and well-understood economic statistics such as the nation’s Gross Domestic Product and quarterly GDP growth figures.

Because existing estimates of economic inequality are not pegged to NIPA, they don’t account for all sources of income. They may exclude, for example, fringe benefits provided by employers such as employer-provided health insurance and retirement benefits, government transfers such as supplemental nutrition assistance or the child tax credit, government services such as public education, and tax expenditures such as the home mortgage tax deduction and tax breaks for employer-provided insurance. These exclusions, big and small, make many existing estimates of inequality fundamentally incomparable to our most well-established measures of economic growth....

Important analysis from the POV of stock-flow consistency follows. Efforts are underway to improve measurement to bring estimates of income in line with national income accounting in order to remove the inconsistencies arrive at a better understanding of income and wealth distribution in the US.

The ability to look at the geographic distribution of inequality and at slices of income within different income groups teases the possibilities of a more robust project to disaggregate the National Income and Product Accounts statistics that are currently the most referenced statistics of economic progress in the nation. Devoting federal resources to the project could allow us to track inequality not only by income bands, but also by age, geographic location, gender, ethnicity, and type of income.

WCEG — The Equitablog
The once and future measurement of economic inequality in the United States
Austin Clemens

Matias Vernengo — A brief and dispassionate note on 'GDP'

Short summary of GDP (and NIPA) as the basis of macro.

Naked Keynesianism
A brief and dispassionate note on 'GDP'
Matias Vernengo | Associate Professor of Economics, Bucknell University

Bill Mitchell — Analytical appendix for NIPA Chapter 3 – Part 3

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime in 2013. Our (very incomplete) textbook home page – Modern Monetary Theory and Practice – has draft chapters and contents etc in varying states of completion. Comments are always welcome. Note also that the text I post here is not intended to be a blog-style narrative but constitutes the drafting work I am doing – that is, the material posted will not represent the complete text. Further it will change as the drafting process evolves.

The Table of Contents for the first draft, which is nearly completed, currently lists Chapter 3 as National Income Accounting, with a section 3.7 Using the NIPA Framework to Model the Macro Economy. The status of this section might change but the content aims to present some analytical terminology that is used in the specification of macroeconomic models which the student encounters throughout the textbook.

The section (or subsection) will cover basic algebra, manipulation of equations, solving simple linear models, consideration of graphs, and some essential tools that help an applied macroeconomist assess data trends etc.

Today, I am adding to the material already developed which is currently available as Chapter 3 Draft, Section 3.8.

The snippets I develop here will be integrated into the draft for further assessment. The ambiguity of the numbering reflects the transient status of these sections.

The other parts of this section of the text:
Analytical appendix for NIPA Chapter 3
Analytical appendix for NIPA Chapter 3 – Part 2

[CONTINUING FROM HERE]

Index numbers

Bill Mitchell – billy blog
Analytical appendix for NIPA Chapter 3 – Part 3
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Bill Mitchell — Analytical appendix for NIPA Chapter 3 – Part 2

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime in 2013. Our (very incomplete) textbook home page – Modern Monetary Theory and Practice – has draft chapters and contents etc in varying states of completion. Comments are always welcome. Note also that the text I post here is not intended to be a blog-style narrative but constitutes the drafting work I am doing – that is, the material posted will not represent the complete text. Further it will change as the drafting process evolves.

The Table of Contents for the first draft, which is nearly completed, currently lists Chapter 3 as National Income Accounting, with a section 3.7 Using the NIPA Framework to Model the Macro Economy. The status of this section might change but the content aims to present some analytical terminology that is used in the specification of macroeconomic models which the student encounters throughout the textbook.

The section (or subsection) will cover basic algebra, manipulation of equations, solving simple linear models, consideration of graphs, and some essential tools that help an applied macroeconomist assess data trends etc.

Today, I am adding to the material already developed which is currently available as Chapter 3 Draft, Section 3.8.

The snippets I develop here will be integrated into the draft for further assessment. The ambiguity of the numbering reflects the transient status of these sections.

The first part of this section of the text:
Analytical appendix for NIPA Chapter 3

[CONTINUING FROM HERE]

Graphical depiction of macroeconomic models

Bill Mitchell – billy blog
Analytical appendix for NIPA Chapter 3 – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Bill Mitchell — Analytical appendix for NIPA Chapter 3

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to publish the text sometime in 2013. Our (very incomplete) textbook home page – Modern Monetary Theory and Practice – has draft chapters and contents etc in varying states of completion. Comments are always welcome. Note also that the text I post here is not intended to be a blog-style narrative but constitutes the drafting work I am doing – that is, the material posted will not represent the complete text. Further it will change as the drafting process evolves.

The Table of Contents for the first draft, which is nearly completed, currently lists Chapter 3 as National Income Accounting, with a section 3.7 Using the NIPA Framework to Model the Macro Economy. The status of this section might change but the content aims to present some analytical terminology that is used in the specification of macroeconomic models which the student encounters throughout the textbook.

The section (or subsection) will cover basic algebra, manipulation of equations, solving simple linear models, consideration of graphs, and some essential tools that help an applied macroeconomist assess data trends etc.

Today, I am adding to the material already developed which is currently available as Chapter 3 Draft, Section 3.8.

The snippets I develop here will be integrated into the draft for further assessment. The ambiguity of the numbering reflects the transient status of these sections.

In this section we present some analytical terminology that is used in the specification of macroeconomic models and which you will find throughout this book.

The level of mathematics that will be used throughout this book is no more sophisticated than the typical material that a student would encounter in the second-half of their secondary school studies. The most advanced analysis we employ is simultaneous equation techniques and some simple calculus. For the most part, the mathematics is confined to algebraic representations of the behavioural theories and/or accounting statements that we advance and some simple solution exercises to determine the unknown aggregates we are interested in.

The practical material accompanying the analytical text will also provide a step-by-step sequence to mastering the techniques required.
We recognise that mathematical techniques are commonly used within the social sciences and that students will gain confidence in dealing with the standard conceptual and empirical literature in economics and more broadly if they develop some formal modelling skills in addition to the deep understanding that we hope to engender.

Bill Mitchell – billy blog

Analytical appendix for NIPA Chapter 3

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

Bill Mitchell — US National Accounts – economy plodding along due to fiscal drag

Bill parses NIPA data; finds US mired in stupidity.

Bill Mitchell – billy blog

US National Accounts – economy plodding along due to fiscal drag

Bill Mitchell

circuit — Nod to the St. Louis Fed: NIPA tables now on FRED

This is news worth sharing for all those policy wonks out there. The St. Louis Fed has added over 10,000 new data series from the Bureau of Economic Analysis (BEA) National Income and Product Account tables to its excellent FRED database and research tool. FRED now counts over 70,000 series of data.

Fictional Reserve Banking
Nod to the St. Louis Fed: NIPA tables now on FRED
circuit

Steve Roth — Identity Games: Saving ≠ Saving? Whodathunkit?

Before I go, one more thought: After coming up with this “accumulation” notion/usage, Very Little Googling revealed that (no surprise) it’s hardly original. It’s right there in Volume I of Das Kapital. (I just discovered this? Hey, I’m self-taught, with the resulting predictably spotty/spotlight reading background. I’m working on it!)

And let’s not forget: It was the 1930s. Kuznets and co. were developing the national accounts, and they were devoted capitalists. They’re gonna use Marxist language, much less concepts and theory? In the National Accounts? Of The United States of America? Not gonna happen.

Asymptosis
Identity Games: Saving ≠ Saving? Whodathunkit?
Steve Roth

Steve Roth — Scott Sumner Does Not Understand that S ≠ I

This is basic sectoral accounting, a subject in which neoclassical (and “market monetarist”) economists seem to have received no training.

Asymptosis
Scott Sumner Does Not Understand that S ≠ I
Steve Roth

We knew this already but Steve reminds us of it.

Ramanan posts a clarification of different uses of S = I that can lead to ambiguity and confusion.


The Saving = Investment Identity