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  #381  
Old Posted May 25, 2018, 5:42 AM
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Originally Posted by Vlajos View Post
Their economies don't run on dollars.
But they are measured by dollars.

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You are clueless. But that is clear to everyone here.
Blah Blah Blah Call the IMF, World Bank, World Economic Forum and CIA and tell them they are clueless. In the meantime deal with it.
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  #382  
Old Posted May 25, 2018, 6:04 AM
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Originally Posted by Shawn View Post
PPP vs Nominal: take it from a guy with a Master's in International Political Economy - you're both right. PPP allows you to compare real prices as expressed in actual goods and services. If you're a big Western FMCG brand and you're assessing a new market's potential profitability by line of business, nominal GDP won't help you one bit. But if you're the IMF and you use Nominal GDP as an accounting measure to determine a government's ability to repay infrastructure loans, PPP has zero bearing on the discussion.

They're just quantification tools - they're only as good as their application by someone who knows when to use which.
Yeah thanks, I am aware that they are both relevant in different ways.

I just believe that the total unadjusted value of all activity is the only apples to apples comparison that accurately measures the actual size of one national economy vs another.
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  #383  
Old Posted May 25, 2018, 6:26 AM
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Originally Posted by dimondpark View Post
I just believe that the total unadjusted value of all activity is the only apples to apples comparison that accurately measures the actual size of one national economy vs another.
Sure, I can see that. But no one quantitatively measures values purely to measure values, right? I mean, other than people on SSP who like to make comparisons for comparisons' sake. There's always a reason why you compare A to B, and if we're comparing Economy A to Economy B, it's probably because we want to understand what A and B can actually do with their economic outputs in real-world situations, and what they can do differently from one another. And in the real world, currencies don't exist in a vacuum - they're all relative to one-another.

Economy A produces 100 units of nominal GDP per year. Economy B produces 102 units of nominal GDP per year. Economy B's currency drops 5% over night vs. Economy A's. Did the actual, in-market value of what Economy B produces also suddenly drop by 5% over night, and now Economy A actually outproduces Economy B on the ground, in Economy B Land? Of course not.

Nominal GDP necessarily assumes a static exchange rate. It's an precise snapshot of a single moment in time. You can think of it as a "Current Dollar GDP without adjusted inflation figures." PPP smooths this out and adjusts for over /under-valuations in exchange rates. Nominal GDP also has trouble accurately accounting for currencies which don't float. The yuan is a great example: can you assume nominal GDP "works" at comparing economic output of the US, Japan, UK, and China when the British pound floats against the USD and JPY, but the yuan is pegged and can only move 2% vs the other fiats on any given day? This is an artificial distortion and makes the apples-to-apples comparison tough.
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  #384  
Old Posted May 25, 2018, 3:00 PM
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Originally Posted by Shawn View Post
Sure, I can see that. But no one quantitatively measures values purely to measure values, right? I mean, other than people on SSP who like to make comparisons for comparisons' sake. There's always a reason why you compare A to B, and if we're comparing Economy A to Economy B, it's probably because we want to understand what A and B can actually do with their economic outputs in real-world situations, and what they can do differently from one another. And in the real world, currencies don't exist in a vacuum - they're all relative to one-another.

Economy A produces 100 units of nominal GDP per year. Economy B produces 102 units of nominal GDP per year. Economy B's currency drops 5% over night vs. Economy A's. Did the actual, in-market value of what Economy B produces also suddenly drop by 5% over night, and now Economy A actually outproduces Economy B on the ground, in Economy B Land? Of course not.

Nominal GDP necessarily assumes a static exchange rate. It's an precise snapshot of a single moment in time. You can think of it as a "Current Dollar GDP without adjusted inflation figures." PPP smooths this out and adjusts for over /under-valuations in exchange rates. Nominal GDP also has trouble accurately accounting for currencies which don't float. The yuan is a great example: can you assume nominal GDP "works" at comparing economic output of the US, Japan, UK, and China when the British pound floats against the USD and JPY, but the yuan is pegged and can only move 2% vs the other fiats on any given day? This is an artificial distortion and makes the apples-to-apples comparison tough.
Agreed on all points. Both Nominal and PPP have their flaws, my contention is that contrary to vlajos' incorrect comment, economists and data gathering entities that study gdp do indeed use nominal figures for comparative purposes all the time.
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  #385  
Old Posted May 25, 2018, 5:20 PM
Vlajos Vlajos is offline
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  #386  
Old Posted May 25, 2018, 5:24 PM
Vlajos Vlajos is offline
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Originally Posted by LosAngelesSportsFan View Post
Lmao, no, everything is not more expensive in California, especially produce, which is much cheaper here since so much of it is grown here
Of course everything is not more expensive. But California is one of the most expensive state in the country.

https://bea.gov/newsreleases/regiona...18/rpp0518.htm

pg 3 of the pdf has price comparisons by state.
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  #387  
Old Posted May 25, 2018, 5:58 PM
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Originally Posted by Vlajos View Post
It's very bizarre that you think those same organizations dont also compare countries by nominal gdp:

Here is nominal gdp according to the IMF
http://www.imf.org/external/datamapp...ADVEC/WEOWORLD

Here is the World Bank by nominal gdp
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD

Anything else?
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  #388  
Old Posted May 25, 2018, 6:58 PM
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Originally Posted by Shawn View Post
Sure, but this hypothetical example accurately describes the shortcomings of Nominal GDP when making one-to-one comparisons. You could replace "tomatoes" with "plumbus", "Mexico" with "Gazorpazorp" and "California" with "Planet Squanch" and the economic principles would still be right.
Haha, ya i understand, just wanted to correct that common misconception about costs in California. Sure, gas and housing are expensive, but everything else is not really all that more expensive than the majority of the country
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  #389  
Old Posted May 25, 2018, 7:35 PM
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Originally Posted by dimondpark View Post
No just the wannabe 'economists' on SSP who try to force their personal biases on everyone else.

The IMF and World Economic Forum have economists, no? They rank the world's largest economies by Nominal GDP:
https://www.weforum.org/agenda/2018/...omies-in-2018/

LOL


Yes its called Nominal GDP and that's how most of the world compares national economies.

China does not have a 23 trillion dollar economy and India does not have a 9 trillion dollar economy.

Get over it.


Speaking of meaningless^

PPP is simply the Nominal adjusted for relative costs.

I prefer raw numbers, and so does the IMF, and World Economic Forum.

Thanks tho.
You're contradicting yourself. How can you prefer raw numbers and then call them meaningless? What matters is what the economy actually produces, not how many pieces of paper people trade for those things. Like I said already (and many others have said) what matter to most people is what things they can buy with their money, not how many US dollars they can trade it for. China's economy produces more actual goods and services than the US economy does, the fact they do it much more cheaply doesn't change that fact.
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  #390  
Old Posted May 25, 2018, 8:30 PM
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China's economy produces more actual goods and services than the US economy does, the fact they do it much more cheaply doesn't change that fact.
Yes but I don't care because the actual dollar value of the goods and services produced in the United States is greater than the actual dollar value of all the goods and services produced in China. Sorry, but that's a fact.
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  #391  
Old Posted May 25, 2018, 8:31 PM
Vlajos Vlajos is offline
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Originally Posted by BrownTown View Post
You're contradicting yourself. How can you prefer raw numbers and then call them meaningless? What matters is what the economy actually produces, not how many pieces of paper people trade for those things. Like I said already (and many others have said) what matter to most people is what things they can buy with their money, not how many US dollars they can trade it for. China's economy produces more actual goods and services than the US economy does, the fact they do it much more cheaply doesn't change that fact.
Yep, GDP is calculating goods and services produced in a given place. Ignoring costs and using nominal exchange rates produces a very skewed number for comparing foreign countries.
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  #392  
Old Posted May 28, 2018, 5:44 AM
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California number one!
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