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Hypothesis - Still Need Answers

askbob
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1/25/2011 6:49:10 PM
Posted: 5 years ago
Ok so after having the last thread fail miserably I pose the question again:

MACROECONOMICALLY

Will a GDP show a higher growth rate if consumption comprises less of the GDP and in place of that decreased consumption you have equally increased investment.

What I'm trying to Prove:

Teaching financial literary courses to highschool aged students will provide a higher personal savings rate over the course of their life.

A higher personal savings rate increases the "I" part of the GDP equation and decreases the C. Consumers either directly invest or put their money in institutions that invest (investment banks) that money.

These investment spur innovations and greater efficiency in businesses as the cost of buying improvements on debt has been cheapened due to the increased availability for loans.

These improvements lead to a higher GDP.
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Sieben
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1/25/2011 6:57:20 PM
Posted: 5 years ago
At 1/25/2011 6:49:10 PM, askbob wrote:
Ok so after having the last thread fail miserably I pose the question again:

MACROECONOMICALLY

Will a GDP show a higher growth rate if consumption comprises less of the GDP and in place of that decreased consumption you have equally increased investment.

I assume you mean real GDP, which just measures volume.

It depends if the investment increases volume. That's just physical. It could go one way or the other.

What I'm trying to Prove:

Teaching financial literary courses to highschool aged students will provide a higher personal savings rate over the course of their life.

A higher personal savings rate increases the "I" part of the GDP equation and decreases the C. Consumers either directly invest or put their money in institutions that invest (investment banks) that money.

These investment spur innovations and greater efficiency in businesses as the cost of buying improvements on debt has been cheapened due to the increased availability for loans.

These improvements lead to a higher GDP.
Who cares about maximizing GDP? RGDP is just volume... but there are lots of reasons why we'd want volume to contract (durability, multifunctionality, etc). So investment might cause GDP to contract.

You have to realize that GDP is a BS variable. The purpose of economies is to be an efficient means for their participants, not to maximize the number of power crystals.
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Zetsubou
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1/25/2011 7:03:15 PM
Posted: 5 years ago
At 1/25/2011 6:49:10 PM, askbob wrote:
Ok so after having the last thread fail miserably I pose the question again:

MACROECONOMICALLY

Will a GDP show a higher growth rate if consumption comprises less of the GDP and in place of that decreased consumption you have equally increased investment.

Sorry if I'm being ignorant but how does investment replace the value of capital? I'm sort of confused.
'sup DDO -- july 2013
askbob
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1/25/2011 7:33:30 PM
Posted: 5 years ago
At 1/25/2011 7:03:15 PM, Zetsubou wrote:
At 1/25/2011 6:49:10 PM, askbob wrote:
Ok so after having the last thread fail miserably I pose the question again:

MACROECONOMICALLY

Will a GDP show a higher growth rate if consumption comprises less of the GDP and in place of that decreased consumption you have equally increased investment.

Sorry if I'm being ignorant but how does investment replace the value of capital? I'm sort of confused.

consumption not capital
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Reasoning
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1/25/2011 7:38:29 PM
Posted: 5 years ago
At 1/25/2011 6:49:10 PM, askbob wrote:
Will a GDP show a higher growth rate if consumption comprises less of the GDP and in place of that decreased consumption you have equally increased investment.

Ceteris paribus, yes.
"What we really ought to ask the liberal, before we even begin addressing his agenda, is this: In what kind of society would he be a conservative?" - Joseph Sobran
LaissezFaire
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1/25/2011 7:50:05 PM
Posted: 5 years ago
Let's say the savings rate was 5%, but suddenly changed to 10% for some reason. Right away, GDP would stay the same, wouldn't it? The difference would be where the money is going, where the resources are going to be allocated--not how much total resources/production there is available. So, instead of being allocated to consumer goods, more resources would be allocated to investment/capital goods. So, a year later, because more money was invested in capital goods, the US is that much more productive, so total production (GDP) is higher.

What is this for, anyway?
Should we subsidize education?
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: At 6/22/2011 6:57:23 PM, el-badgero wrote:
: i didn't like [Obama]. he was the only black dude in moneygall yet he claimed to be home. obvious liar is obvious liar. i bet him and bin laden are bumfvcking right now.
askbob
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1/25/2011 8:58:00 PM
Posted: 5 years ago
At 1/25/2011 7:50:05 PM, LaissezFaire wrote:
Let's say the savings rate was 5%, but suddenly changed to 10% for some reason. Right away, GDP would stay the same, wouldn't it? The difference would be where the money is going, where the resources are going to be allocated--not how much total resources/production there is available. So, instead of being allocated to consumer goods, more resources would be allocated to investment/capital goods. So, a year later, because more money was invested in capital goods, the US is that much more productive, so total production (GDP) is higher.

What is this for, anyway?

a 40 to 50 page thesis

The logic coherently follows, I need sources that confirm this.
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kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
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LaissezFaire
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1/25/2011 9:39:11 PM
Posted: 5 years ago
At 1/25/2011 8:58:00 PM, askbob wrote:
At 1/25/2011 7:50:05 PM, LaissezFaire wrote:
Let's say the savings rate was 5%, but suddenly changed to 10% for some reason. Right away, GDP would stay the same, wouldn't it? The difference would be where the money is going, where the resources are going to be allocated--not how much total resources/production there is available. So, instead of being allocated to consumer goods, more resources would be allocated to investment/capital goods. So, a year later, because more money was invested in capital goods, the US is that much more productive, so total production (GDP) is higher.

What is this for, anyway?

a 40 to 50 page thesis

The logic coherently follows, I need sources that confirm this.

Sieben might have some. He did a cool econometric thing comparing the size of government to economic growth here http://www.debate.org... , maybe he knows where sources that could help you would be. Also, I don't see how you could possibly write 40-50 pages on this, unless you're really, really good at BSing to make papers longer.
Should we subsidize education?
http://www.debate.org...

http://mises.org...

http://lewrockwell.com...

http://antiwar.com...

: At 6/22/2011 6:57:23 PM, el-badgero wrote:
: i didn't like [Obama]. he was the only black dude in moneygall yet he claimed to be home. obvious liar is obvious liar. i bet him and bin laden are bumfvcking right now.
bluesteel
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1/25/2011 9:40:43 PM
Posted: 5 years ago
http://www.cid.harvard.edu...
"We find a strong relationship between lagged per capita GDP growth and national savings. Each one percent increase in the lagged growth rate is associated with about a one-third percentage point increase in national savings."

I posted this in the first thread - I thought it was helpful.

Studying the effect of savings rates in Asia (the Asian Tiger economies are perfect for studying this topic) compared to lagged GDP growth (GDP growth a few years following the high savings rate) - using regression analysis, they find that a 0.33333% increase in national savings leads to a 1% increase in GDP growth.

Doesn't that help your thesis?
You can't reason someone out of a position they didn't reason themselves into - Jonathan Swift (paraphrase)
askbob
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1/25/2011 9:44:50 PM
Posted: 5 years ago
At 1/25/2011 9:39:11 PM, LaissezFaire wrote:
At 1/25/2011 8:58:00 PM, askbob wrote:
At 1/25/2011 7:50:05 PM, LaissezFaire wrote:
Let's say the savings rate was 5%, but suddenly changed to 10% for some reason. Right away, GDP would stay the same, wouldn't it? The difference would be where the money is going, where the resources are going to be allocated--not how much total resources/production there is available. So, instead of being allocated to consumer goods, more resources would be allocated to investment/capital goods. So, a year later, because more money was invested in capital goods, the US is that much more productive, so total production (GDP) is higher.

What is this for, anyway?

a 40 to 50 page thesis

The logic coherently follows, I need sources that confirm this.

Sieben might have some. He did a cool econometric thing comparing the size of government to economic growth here http://www.debate.org... , maybe he knows where sources that could help you would be. Also, I don't see how you could possibly write 40-50 pages on this, unless you're really, really good at BSing to make papers longer.

I will eventually be doing my own research, I'd rather just know if it has an answer and what it is before fruitlessly researching
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Me - i was being completely sarcastic
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bluesteel
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1/25/2011 9:55:57 PM
Posted: 5 years ago
C + I + G + NX

In theory, transferring spending from C to savings (which becomes investment spending), should have absolutely no effect on GDP. But that's only in theory.
You can't reason someone out of a position they didn't reason themselves into - Jonathan Swift (paraphrase)
askbob
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1/25/2011 10:18:44 PM
Posted: 5 years ago
At 1/25/2011 9:55:57 PM, bluesteel wrote:
C + I + G + NX

In theory, transferring spending from C to savings (which becomes investment spending), should have absolutely no effect on GDP. But that's only in theory.

In short term that is correct. In long term it's another question
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bluesteel
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1/25/2011 10:34:58 PM
Posted: 5 years ago
At 1/25/2011 10:18:44 PM, askbob wrote:
At 1/25/2011 9:55:57 PM, bluesteel wrote:
C + I + G + NX

In theory, transferring spending from C to savings (which becomes investment spending), should have absolutely no effect on GDP. But that's only in theory.

In short term that is correct. In long term it's another question

Well true, since your question is about growth rates not GDP itself.

As far as I can tell, there are two ways to increase growth rates.

1) People gradually take on more and more debt, growing GDP through consumption rates (this has been happening recently in the U.S.)

2) Productivity growth.

In-so-far as investment spending achieves the latter, it will lead to higher and more sustainable growth rates.

But if investment spending goes towards preparing for future demand growth, it may prove useless if that demand never materializes, which happened during the Great Depression. It is also useless if venture capital firms invest the money in a bunch of useless dot coms http://www.newsweek.com...

It's the same with the question of whether higher government spending stimulates economies - the answer has to do more with WHAT the government spends the money on, not whether it spends.
You can't reason someone out of a position they didn't reason themselves into - Jonathan Swift (paraphrase)
Sieben
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1/26/2011 7:55:58 AM
Posted: 5 years ago
Why was my answer bad? RGDP is just volume. You can't tell whether an investment will increase volume. You can't even tell whether just rearranging consumption will increase volume.

Ah the mysticism of keynesianism.
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askbob
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1/26/2011 8:17:46 AM
Posted: 5 years ago
At 1/26/2011 7:55:58 AM, Sieben wrote:
Why was my answer bad? RGDP is just volume. You can't tell whether an investment will increase volume. You can't even tell whether just rearranging consumption will increase volume.

Ah the mysticism of keynesianism.

RGDP measures value not volume.
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Sieben
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1/26/2011 8:24:34 AM
Posted: 5 years ago
At 1/26/2011 8:17:46 AM, askbob wrote:
At 1/26/2011 7:55:58 AM, Sieben wrote:
Why was my answer bad? RGDP is just volume. You can't tell whether an investment will increase volume. You can't even tell whether just rearranging consumption will increase volume.

Ah the mysticism of keynesianism.

RGDP measures value
Value is subjective. You can't measure it, especially not in aggregate.

not volume.

Wikipedia says: http://en.wikipedia.org...

If a set of real GDPs from various years are calculated, each using the quantities from its own year, but all using the prices from the same base year, the differences in those real GDPs will reflect only differences in volume.

So if you're talking about real GDP growth, you're talking about volume.
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askbob
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1/26/2011 8:49:21 AM
Posted: 5 years ago
At 1/26/2011 8:24:34 AM, Sieben wrote:
Value is subjective. You can't measure it, especially not in aggregate.

Lol if you can't measure value then how do you explain a society with an ability to trade?

You can easily get manufacturing numbers from corporations.

not volume.

Wikipedia says: http://en.wikipedia.org...

If a set of real GDPs from various years are calculated, each using the quantities from its own year, but all using the prices from the same base year, the differences in those real GDPs will reflect only differences in volume.

So if you're talking about real GDP growth, you're talking about volume.

first sentence on that page:

Real Gross Domestic Product (GDP) is a macroeconomic measure of the value of output economy adjusted for price changes
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kohai -If you're the owner, then do something useful like ip block him and get us away from juggle and on a dofferent host!
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Sieben
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1/26/2011 8:58:11 AM
Posted: 5 years ago
At 1/26/2011 8:49:21 AM, askbob wrote:
At 1/26/2011 8:24:34 AM, Sieben wrote:
Value is subjective. You can't measure it, especially not in aggregate.

Lol if you can't measure value then how do you explain a society with an ability to trade?
Trade is between individuals? If I trade my pizza for your wristwatch, it means we both value the other more. How much? Dunno. How much in aggregate? dunno.

first sentence on that page:

Real Gross Domestic Product (GDP) is a macroeconomic measure of the value of output economy adjusted for price changes

But not rgdp GROWTH. GROWTH is a change in VOLUME.
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bluesteel
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1/26/2011 11:53:12 AM
Posted: 5 years ago
At 1/26/2011 8:58:11 AM, Sieben wrote:
At 1/26/2011 8:49:21 AM, askbob wrote:
At 1/26/2011 8:24:34 AM, Sieben wrote:
Value is subjective. You can't measure it, especially not in aggregate.

Lol if you can't measure value then how do you explain a society with an ability to trade?
Trade is between individuals? If I trade my pizza for your wristwatch, it means we both value the other more. How much? Dunno. How much in aggregate? dunno.

That's silly, of course you can measure individual valuations. Using an (arbitrary?) money scale, you can ask someone "what is the most amount of money you would pay to possess this object?"

If you object to using money, put hundreds of items in front of the person, tell them to rank the items in comparison to each other from most to least valuable, then ask them which items they would exchange for the objection they are valuing.

A demand is curve is supposed to be an aggregate of personal valuations of an items value. So the free market naturally determines value.


first sentence on that page:

Real Gross Domestic Product (GDP) is a macroeconomic measure of the value of output economy adjusted for price changes

But not rgdp GROWTH. GROWTH is a change in VOLUME.

What do you mean by volume, Sieben. The number of goods sold and the amount of capital stock - something like that?
You can't reason someone out of a position they didn't reason themselves into - Jonathan Swift (paraphrase)
djsherin
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1/26/2011 12:31:37 PM
Posted: 5 years ago
At 1/26/2011 8:49:21 AM, askbob wrote:
At 1/26/2011 8:24:34 AM, Sieben wrote:
Value is subjective. You can't measure it, especially not in aggregate.

Lol if you can't measure value then how do you explain a society with an ability to trade?

You don't need to objectively measured value in order to trade. Value is subjective and ordinal, nor objective and cardinal.

You can easily get manufacturing numbers from corporations.

not volume.

Wikipedia says: http://en.wikipedia.org...

If a set of real GDPs from various years are calculated, each using the quantities from its own year, but all using the prices from the same base year, the differences in those real GDPs will reflect only differences in volume.

So if you're talking about real GDP growth, you're talking about volume.

first sentence on that page:

Real Gross Domestic Product (GDP) is a macroeconomic measure of the value of output economy adjusted for price changes

Real GDP is an attempt to measure amount of goods produced and services provided over a given geographical area for some period of time. The point of real GDP is to remove price changes and just see changes in output. The term "value" is being used loosely in that definition. GDP is calculated using prices and output, neither of which are value.
Sieben
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1/26/2011 3:31:41 PM
Posted: 5 years ago
At 1/26/2011 11:53:12 AM, bluesteel wrote:
At 1/26/2011 8:58:11 AM, Sieben wrote:
At 1/26/2011 8:49:21 AM, askbob wrote:
At 1/26/2011 8:24:34 AM, Sieben wrote:
Value is subjective. You can't measure it, especially not in aggregate.

Lol if you can't measure value then how do you explain a society with an ability to trade?
Trade is between individuals? If I trade my pizza for your wristwatch, it means we both value the other more. How much? Dunno. How much in aggregate? dunno.

That's silly, of course you can measure individual valuations. Using an (arbitrary?) money scale, you can ask someone "what is the most amount of money you would pay to possess this object?"

If you object to using money, put hundreds of items in front of the person, tell them to rank the items in comparison to each other from most to least valuable, then ask them which items they would exchange for the objection they are valuing.

The issue is that value is ordinal, which I think you agree with. From this you can't measure "value", you can only rank it. And even then it is only within one person. We may still disagree, but the general point is that there is no aggregate-economy metric that can be said to represent aggregate happiness.

A demand is curve is supposed to be an aggregate of personal valuations of an items value. So the free market naturally determines value.
Of personal valuations in dollar amounts.

What do you mean by volume, Sieben. The number of goods sold and the amount of capital stock - something like that?
Yeah. Actually when you look at volume more closely, you realize its even more arbitrary than that. Does a 6-pack count as one item or 6 individual items? Whoever decides that at the USBEA must be the most infuriating person...
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