Chained dollars redux

Enrique Diaz-Alvarez enrique at anise.ee.cornell.edu
Mon Jul 19 11:38:52 PDT 1999


Doug Henwood wrote:
>
>
> Problem is it doesn't work this way. Chained real growth figures
> aren't additive, as they say; each component is adjusted separately,
> and you can't add up all the components to get the whole.

How do you get the whole, then? If investment category A increases by X, category B by Y, how come total investment doesn't grow by X+Y?

(Sorry if this is a stupid question)

(The
> difference, in the jargon of the trade, is called the residual.) For
> example, in 1998, real computer investment was up $137 billion, but
> producers durable equipment, the larger category, was up $109
> billion. Burke's exercise, then, is fairly meaningless.
>
> Nominal spending on computer investment contributed just 2% of
> nominal GDP growth in 1998, though, and the broader category of info
> processing equipment, just 5%; people talk as if this is the whole
> enchilada these days, but in purely dollar terms, it's more like
> salsa.

I assume you meant nominal spending _growth_ on computer investment and info processing

equipment?
>
> Doug

-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique



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