DSGE
VIP Member
- Dec 24, 2011
- 1,062
- 30
- 71
Okay so first off, I don't see how this:
...logically follows into this:
Maybe you can shed some light onto that. But I'll clear up some stuff first:
Okay so you're making an accounting mistake here. imports are subtracted from GDP, therefore more imports means less GDP. Right? No. GDP is C + I + G + X - M. The reason we subtract imports, "- M", is to avoid double counting. See C, I and G all include in them both things produced domestically and things imported internationally and consumed, invested. GDP measures total domestic production. But if we measure C, I and G, we end up with all the goods produced domestically produced for consumption, investment, etc, but we also get the goods produced internationally that are being consumed invested. So we " - M", subtract imports, so that we get rid of counting foreign goods as being produced domestically. Imports do not lower GDP at all.
I'm not sure what this is even trying to say. Maybe an example would help?
Such as?
The expenditure method is among the simplest and most common method for calculating gross domestic product, (i.e. GDP). Nations’ entire final expenditures for goods and service products are included within their GDP.
The total value of the nation’s imports are subtracted from the importing nations’ and added to the producing nations’ GDPs.
The prices of many specific products do not reflect the entire costs of goods and services that supported the production of those specific products. For example there’s research and development costs that were provided at lesser cost by universities or other non-profit entities or infrastructure contributed by local governments as an inducement to relocate facilities. All of those production supporting goods and services are included within the producing nations’ GDPs; but they cannot be statistically identified and attributed to foreign trade.
The production of globally traded products may sometimes directly or indirectly support or induce additional production of non-globally traded products. These are additional instances of goods and services that contributed to the producing nations’ GDPs but could not be statistically identified and attributed to foreign trade.
...logically follows into this:
Nation’s net global balance of trade affects upon their GDPs are sometimes understated but they’re not overstated. Trade surpluses ALWAYs contribute and trade deficits are ALWAYS detrimental to their nation’s GDPs.
Maybe you can shed some light onto that. But I'll clear up some stuff first:
The total value of the nation’s imports are subtracted from the importing nations’ and added to the producing nations’ GDPs.
Okay so you're making an accounting mistake here. imports are subtracted from GDP, therefore more imports means less GDP. Right? No. GDP is C + I + G + X - M. The reason we subtract imports, "- M", is to avoid double counting. See C, I and G all include in them both things produced domestically and things imported internationally and consumed, invested. GDP measures total domestic production. But if we measure C, I and G, we end up with all the goods produced domestically produced for consumption, investment, etc, but we also get the goods produced internationally that are being consumed invested. So we " - M", subtract imports, so that we get rid of counting foreign goods as being produced domestically. Imports do not lower GDP at all.
The prices of many specific products do not reflect the entire costs of goods and services that supported the production of those specific products. For example there’s research and development costs that were provided at lesser cost by universities or other non-profit entities or infrastructure contributed by local governments as an inducement to relocate facilities. All of those production supporting goods and services are included within the producing nations’ GDPs; but they cannot be statistically identified and attributed to foreign trade.
I'm not sure what this is even trying to say. Maybe an example would help?
The production of globally traded products may sometimes directly or indirectly support or induce additional production of non-globally traded products.
Such as?
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