Europe's incomes outpaced the rest of the west in 1990-2002

[el freako]

I put got the 1990 and 2002 figures the wrong way around, sorry for the confusion - that'll teach me not to preview a post eh?
The above post is edited.

[RGBVideo]

Ireland: 45% 71%

It's because he mixed up the years. Seems to me that, bolded is 1990, cursive 2002.

[chequita guevara]

Originally posted by Giancarlo
bald assertion man.

Which, ironically enough, was Fez's nickname for quite sometime.

[pchang]

With the mobility of capital and the ability to outsource due to information technology gains, I would expect income harmonization across the globe.

[Saras]

Yup. Globalisation

[Flubber]

Excuse my ignorance but how does one "correct for the economic cycle"?? . . .. and why should one do that? Is it the assumption that a country currently in a recession will improve more than a country not currently in a recession??

[The Viceroy]

The economic cycles have to be taken into account, because some countries may be in recession whilst others at the peak preformance. If the figures compared to the US, always showed the US in recession and the EU at its peak, it could not be considered a fair reflection.

Im not certain how you go about correcting for it, im assuming some form of averaging takes place???

[DanS]

It should be noted that correcting for business cycles is something of a black art. I wouldn't put a lot of stock in it. Because of this, I'm somewhat skeptical about a time period with 2 recessions, but only 1 expansion for the US.

That said, as pchang states, I wouldn't expect anything different from this analysis and in fact I'm somewhat surprised that Europe didn't gain even more ground than it did. It should have gained more ground.

[Flubber]

Originally posted by The Viceroy
The economic cycles have to be taken into account, because some countries may be in recession whilst others at the peak preformance. If the figures compared to the US, always showed the US in recession and the EU at its peak, it could not be considered a fair reflection.

Im not certain how you go about correcting for it, im assuming some form of averaging takes place???

I could undeerstand WHY you would want to do it-- you want to measure real change and not some blip arising from a recession (temporary). Thats why I wondered exactly how it is accomplished.

I suspect like DanS indicated, that it is somewhat of a black art. After all, if Canada grew really well for 5 years, is that a "boom" that needs to be adjusted ?? Or was it the new reality based on changed world circumstances and was the economy really curtailed compared to how it might perform when other nations that it sells products to begins to boom ?

[Lawrence of Arabia]

wow, these numbers are very interesting freako. thanks a lot. where do you work btw?

[Sava]

@ Fezzing in this thread

[el freako]

Originally posted by Lawrence of Arabia
wow, these numbers are very interesting freako. thanks a lot. where do you work btw?

I'm a freelance programmer, that said I only work around 100 hours a month (but at £35 an hour why should I work more )

Originally posted by Flubber
I suspect like DanS indicated, that it is somewhat of a black art. After all, if Canada grew really well for 5 years, is that a "boom" that needs to be adjusted ?? Or was it the new reality based on changed world circumstances and was the economy really curtailed compared to how it might perform when other nations that it sells products to begins to boom ?

Well measuring GDP itself is something of a black art as well, with lots of fudges and estimates.
You can make rough-and-ready estimates of the economic cycle by comparing the growth in the capital stock and labour force with historical averages - that said the estimates of 'trend' growth tend to be off a bit around the peak of a boom.

Originally posted by DanS
Because of this, I'm somewhat skeptical about a time period with 2 recessions, but only 1 expansion for the US.

Well the basic GDP figures for the EU15 show a rise from 97.4% of the US level in 1990 to 97.8% in 2002 (and a per capita rise from 67% to 74%), so even in ignoring the economic cycle Europe managed to grow faster than America.

Originally posted by DanS
In fact I'm somewhat surprised that Europe didn't gain even more ground than it did. It should have gained more ground.

Well you have to ask yourself why Europe gained more ground than Canada, Australia or Japan don't you?
What is europe doing right that those others are not?

[Ming]

Discuss the topic, and NOT the posters...

And Giancarlo... I highly suggest you check your PM's!

[Lawrence of Arabia]

I have recently done a study on relative incomes for most of the OECD with the primary emphasis being on studying income (as opposed to production which is used in GDP) and making the data as comparable as possible.

I chose the datum years of 1990 and 2002 as these are the earliest and latest set of EKS PPPs that I have for the region (prior to 1990 the OECD used GK PPPs which gave different results).

To correct for the effects of the differing economic cycle I adjusted the GDP using the OECD's estimates for the output gap.

And to convert from production to income I then added net property income from abroad (the main component of this is remitted profits and wages).

1. so first you took EKS PPP, which is a productivity/GDP number
2. where did you get the OECDs estimate for output gap, and what formula did you use to adjust it?
3. where did you get net property income from abroad, and in what way did you add it.

[Dinner]

I find it highly suspicious that they chose the end date of 2002, when the US was in recession, to make their comparison. Why not do a ten year comparison between 1990-2000 or use the latest numbers available 1990-2004? Unless of course there is something to hide and someone is trying to make one party look good and another party look bad?