Creative tensions between statistics and economics: The data-ink ratio
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Creative tensions Creative tensions between statistics and between statistics and economics: The data-ink economics: The data-ink ratio ratio SERC – Plenary Session 5 Danny Quah Professor of Economics, LSE 08 August 2009
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Creative tensions between statistics and economics: The data-ink ratio. SERC – Plenary Session 5 Danny Quah Professor of Economics, LSE 08 August 2009. Creative tensions… outside. Global economic crisis: “Spread the joy, feel the burn” Finance and macroeconomics - PowerPoint PPT Presentation
Transcript of Creative tensions between statistics and economics: The data-ink ratio
Creative tensions between Creative tensions between statistics and economics: statistics and economics: The data-ink ratioThe data-ink ratio
SERC – Plenary Session 5Danny QuahProfessor of Economics, LSE08 August 2009
Creative tensions… Creative tensions… outsideoutsideGlobal economic crisis: “Spread
the joy, feel the burn”◦Finance and macroeconomics◦Asset pricing and economic
fluctuations
Examples:1.Global imbalances2.BRICs in the evolving global
economic landscape3.Global growth and poverty
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1. Global imbalances1. Global imbalancesGlobal savings glut, Asian thriftFlood of cheap capital onto world
marketsEver-more innovative, extreme
financial engineering“Asymmetric obligations”
Causality?
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US trade deficit and a GDPUS trade deficit and a GDP
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0
200
400
600
800
1000
1200
1980 1985 1990 1995 2000 2005
Billions US$
US Trade Deficit
India GDP
US trade balanceUS trade balance
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-300
-250
-200
-150
-100
-50
0
1980q1 1985q1 1990q1 1995q1 2000q1 2005q1
US trade balance
US-China bilateral trade US-China bilateral trade balancebalance
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-80
-70
-60
-50
-40
-30
-20
-10
0
10
1980q1 1985q1 1990q1 1995q1 2000q1 2005q1
US bilateral trade balance
China
US bilateral trade balanceUS bilateral trade balance
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-80
-70
-60
-50
-40
-30
-20
-10
0
10
1980q1 1985q1 1990q1 1995q1 2000q1 2005q1
US bilateral trade balance
China
Oil exporters
EU
US bilateral trade balanceUS bilateral trade balance
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-80
-70
-60
-50
-40
-30
-20
-10
0
10
1980q1 1985q1 1990q1 1995q1 2000q1 2005q1
US bilateral trade balance
China
Oil exporters
EU
Oil+EU
2. BRICs2. BRICsGrowth, convergenceβ, σ convergence; unit roots,
cointegration; convergence clubs; dynamic distributions
It’s just “Brazil, Russia, India, China” (Goldman Sachs thought leadership)◦“The rise of the rest”◦“The Asian century/hemisphere”
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Shifts in the global Shifts in the global economy’s centre of gravity economy’s centre of gravity … in flat world… in flat world
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Shifts in the global Shifts in the global economy’s centre of gravity economy’s centre of gravity … in flat world… in flat world
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Shifts in the global Shifts in the global economy’s centre of gravity economy’s centre of gravity … in flat world… in flat world
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Shifts in the global Shifts in the global economy’s centre of gravity economy’s centre of gravity … in flat world… in flat world
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3. Global growth and 3. Global growth and inequalityinequalityTradeoff between growth and
inequality? (Kuznets curve, Okun leaky bucket)
Cross section? Time series? Panel?
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World growth and povertyWorld growth and poverty
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World growth and povertyWorld growth and poverty
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World growth and povertyWorld growth and poverty
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World growth and povertyWorld growth and poverty
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ConclusionsConclusionsDiscussion on methodology… but
also substantive examplesOur methods come up short on
the really big questions, those observable from outer space
Edward Tufte’s data/ink ratioWhat is our value/statistic ratio?
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Creative tensions between Creative tensions between statistics and economics: statistics and economics: The data-ink ratioThe data-ink ratio
SERC – Plenary Session 5Danny QuahProfessor of Economics, LSE08 August 2009
