GNI*

The report of the Economic Statistics Review Group, and response of the CSO, are available here. There is lots of detail in both that goes beyond the publication of a modified aggregate measure, GNI*.

9 thoughts on “GNI*”

  1. The EU doesn’t seem to be worried enough about confusion to stop it from running two different definitions of GNI simultaneously.

    It is to be hoped that Irish GNI* will be reasonably comparable with GNI for other EU countries, and that this will facilitate Irish policy discussions to move away from nonsensically benchmarking expenditures, taxes etc. as percentages GDP and GNP.

    I look forward to economic forecasters headlining their GNI* forecasts, and hiding GDP and GNP forecasts in the small print. I look forward to GDP and GNP being managed as satellite accounts in future Irish macro models built on GNI*.

  2. It’s more than a tad ironic that all these Big Brains had to be assembled to try to address the Alice in Wonderland statistical fictions about the Leprechaun economic model just when, following the Brexit vote and the election of Donald Trump, the model is starting to break down.

    The Big Brains are always wheeled out to analyse and to craft proposals to react to the fallout of entirely predictable but unwelcome events. They’re never used to consider courses of action that might help to prevent the incidence of these unwelcome events – or to mitigate their impact. It was ever thus. Since the timing of these events is unpredictable there is no incentive to incur the costs of prevention or mitigation in the present. Let it be someone else’s problem in the future.

    The incentives to incur the cost of prevention or mitigation are even weaker – and the incentives not to much, much stronger – when the dominant economic actvitiy in the domestic economy is rent extraction.

  3. What’s the actual purpose of estimating another unreliable statistic? Its simply another ‘Meaningless Mean’. OK, so it provides comfort blanket (of a sort) to the political folks and some others. But to the iPublic its completely meaningless as a reliable indicator of the current state of our general economic activity. It simply beggars belief that so-called intelligent folk could be so seduced by this sort of nonsense – that a single estimate is capable of providing useful information about a very complex, dynamic process.

    “GNI represents total primary income receivable by resident institutional units: compensation of employees, taxes on production and imports less subsidies, property income (receivable less payable), gross operating surplus and gross mixed income. It corresponds to the better known gross domestic product minus primary income payable by resident units to non-resident units, plus primary income receivable by resident units from the rest of the world.”

    The above is an extract from the link above (h/t DOCM). It would appear that our CSO does go to a great deal of toil-and-trouble to gather raw economic data – but then artfull mashes, massages and homogenises it into a meaningless statistical pap. Interesting.

    What would be far more useful – for some of us, would be for the CSO (or whomever) to publish a reliable estimate of the proportion of the working age population (18 – 65?) engaged in different categories of employments (full-time; part-time; other). And how this estimate is trending. And, employee compensations (by deciles) would also be helpful – and its trend line? And consumer credit and debt levels – and their trends? And, how about actual savings – that is, real deposits and not a combo of deposits and mortgage repayments are trending? And how about cost trends in basic food stuffs (whatever they are) and other sorts of ordinary, domestic household expenses? The data is actually available. Inconvenient estimates? Hmmmmm.

    Inflation is another bug-bear of mine. I learned a while back that Inflation is about the increase in the money supply – its not about general price or personal compensation increases. Could we please get back to that distinction? Its not unimportant where we have very large increases in fiat money supply via electronic fabrications of various sorts. So where does that ‘magic money’ actually go to? Now I know from physics that water can occassionaly flow upward, but eventually it must flow downward (gravity and all that stuff): but money? Appears that money behaves in the exact opposite manner to water. It can flow downward for some time; but then it reverses direction and must flow toward areas of high concentration of money. Funny that. Or maybe not.

    Hey, lets start a ‘war’ on single, meaningless statistical estimates. Won’t be over by Christmas – and that’s a raving certainty!

    1. @Brian Woods Snr: You just posted: “Inflation is another bug-bear of mine. I learned a while back that Inflation is about the increase in the money supply – its not about general price or personal compensation increases. Could we please get back to that distinction?”

      Could you please display some elementary knowledge of monetary economics before posting stuff like this.

  4. John S. Comment noted. Thanks.

    There must be a clear blue-water distinction between money supplies and prices or costs of commodities and services. They are two, totally, completely, altogether different things. At least that’s what I believe Prof Milton F seems to have alluded to when he defined ‘inflation’ as a monetary phenomenon or was it vise-versa (please correct me if I’m mistaken about this).

    Money supply is measured in units of currency issued (or removed). Prices are the cost (in currency units) of a unit of commodity or a service. Yes? If the answer is yes, then these two economic performance characteristics must be ‘labelled’ appropriately – and defined distinctly. And, any changes in both must be seperately measurable, not conflated into a mishmashed, meaningless numerical variable. Money inflates (or deflates). Prices increase (or decrease). Simple really. Or is it?

    Cheers.

  5. Some useful recommendations regarding the presentation of our national accounts, many of which the CSO are to implement, but not sure about GNI*, and I doubt if will be tripping off the tongue. The term itself is confusing as it adjusts for the depreciation of foreign owned capital assets, which presumably makes it partly a net income concept. GNI is itself not an often quoted figure ( it is GNP adjusted for net EU subsidies, which are small) so GNPX might be better, but still not ideal.

    The fact is that all international comparative stats use GDP as the denominator, including the respective deficit and debt ratios in the Stability and Growth pact. and that will not change. The basic issue is simply the scale of multinational flows relative to the indigenous economy so why not publish GDP excluding multinational flows altogether- call it GDPX. Norway publishes an onshore GDP figure, excluding oil production.

  6. I think the income approach proposed will produce a more useful indicator than an output approach that carves multinationals out of the standard GDP indicator. Multinationals form an important part of the real economy, and an indicator that excludes them entirely would err towards the downside as an estimate of real economic activity. The €10.5bn in annual payroll costs (2015 data) paid by multinationals is an important part of the real economy picture that GNI* should capture.

  7. Someone at the NYT also seems to have a problem with GDP:

    https://www.nytimes.com/2017/02/06/business/economy/what-is-gdp-economy-alternative-measure.html

    Though what might replace it seems to be as vague as the item itself. And our GNI* will be a more reliable indicator? I doubt it. An aggregate of heterogenous aggregates is equivalent to the de-skinning and de-boning of a chicken, putting the carcase in a pot with some lentils and barley and a soupson of liquour – then blasting the lot with a bender: hey presto you get a nice soup – but no chicken!

    In the Preamble to ‘Report of the Economic Statistics Review Group (ESRG) – December 2016’, there is considerable stress laid about the requirement “[to] meet user needs for insight into Irish Economic Activity …”. and that “[aggregate] indices of economic activity do not provide a sufficient guide to understanding the economic welfare of the population …”

    A question might be asked: “Who are these users then?” It sure ain’t Pat and Mary Citizen – is it? A single variable aggregate is simply gobbledgook as far as they are concerned.

    The Executive Summary (# 2) states that; “[Nevertheless] supplementary statistics that are more appropriate to the measurement of domestic economic activity are needed ….”

    This statement is surely correct. But then they go on and recommend – “[the] development of an adjusted level indicator.” What is missing here? Are the members of the review group so seduced and mesmerized by the concept of a single all embracing variable that they stopped short of considering the futility of such a variable – except to some nerdy wallahs in a distant place? Who is being served here? Those nerdy wallahs or us here in Ireland? This forum may be the only place that might actually come up with something appropriate – as per that statement above. Provided of course the folk with the power to decide these matters actually bother to read what’s posted up.

    In order to get some reasonable understanding about the activity in our domestic economy we need a smallish (3 – 5) number of different, but comprehensible performance indicators. OK – give the EU wallahs their GNI* , but could we please try to provide our domestic audience with a reliable set of economic stats that they can absorb, understand and relate to: afterall the data to accomplish this is already being collected and processed by the CSO. Is there a difficulty with this?

Comments are closed.