arklems

1. MEASURING ARGENTINA’S GDP GROWTHJustStilysedFactsAriel Coremberg-ARKLEMS+LAND-UBA1st draft working paper This paper has been written as a tribute to Alberto Fracchia, recently died, a historic and well recognized expert on national accounts and statistics of Argentina and Latin America. He was the founder of the National Accounts Bureau in Argentina, and expert of several Latin American countries. He transmitted me the “love” for numbers and economic series. After 2007, His pupils had to follow their careers outside the official institutions of Argentina or in other countries. www.arklems.org

2. OBJETIVO PROYECTO ARKLEMS+LAND UBA • Contraparte Argentina Academica Proyecto KLEMS coordinado desde U Harvard-Groningen • Medicion Fuentes del Crecimiento, Productividad y Competitividad: Servicios de Capital: TIC´s, , Infraestuctura, Capital Humano, Factor Trabajo • Argentina: +RN: Tierra y Activos Subsuelo

3. OBJETIVE • Measuring Argentina GDP Growth analyze and discuss methodologies and numbers • We don‘t pretend judge: composition and sustainability of macroregimes in terms of other important variables: welfare, income distribution, employment, fiscal or competitiveness

4. OBJETIVE • We don’t measure the GDP we like: joint output in agric.; productivity in services or quality change in output • Just Stylized Facts about Argentina GDP GROWTH trying to Reproduce GDP as traditional National Accounts Methodology 1993-2012

5. Main Methodological Points • Revision of Quarterly GDP activity level from supply side (also demand side) base year 1993 to review growth: period 1993-2012 by data published today from similar sources and series as cited in: • Methodology see SNA Argentina (1999) • This is not change base year, or GDP at current prices (or GDP per capita u$s)

6. No es objetivo original del Proyecto ARKLEMS medir actividad económica mas allá que el modulo 1 KLEMS implica la revisión de la medición del output ajustada por cuestiones adicionales (tornquist, prod. en servicios, p. básicos, etc.) • Pero es imprescindible revisión ante crisis estadística para medir correctamente productividad • Nada sustituye el Resultado del Trabajo de una Oficina de Estadísticas Creíbles y Consistentes, con Capital Humano formado y acumulado en décadas

7. STRUCTURE OF PAPER • LEMMAS AND CONTEXT • BACKGROUND AND FRAMEWORK OF HISTORICAL NATIONAL ACCOUNTS OF ARGENTINA AND LAC • MAIN RESULTS: LEVEL GAPS AND GROWTH GAPS: AGGREGATE AND BY INDUSTRY • MYTHS, LEGENDS AND TYRANNY OF NUMBERS • METHODOLOGICAL MYTH • GROWTH ACCELERATION MYTH • SUSTAINABLE GROWTH MYTH • CHAMPIONSHIP OF LATINAMERICA MYTH

8. EQUIPONDERACION: • CONSISTENCIA MODELOS PARA ANALISIS ECONOMICO (Canavese) • CALIDAD Y CONSISTENCIA DATOS QUE LO VALIDAN (Fracchia) • EL PIB NO ES UNA ESTADISTICA. ES EL AGREGADOR CONSISTENTE DE LOS DATOS O SERIES QUE LO VALIDAN SISTEMA DE CUENTAS NACIONALES (2008) PARA MEDIR LOS PRINCIPALES VARIABLES Y AGREGADOS ECONOMICOS • EL PIB ES LA PIEDRA FUNDAMENTAL DE LA MEDICION Y ANALISIS NO SOLO DEL CRECIMIENTO ECONOMICO SINO TAMBIEN DEL BIENESTAR

9. CONCLUSIONES Policy makers usually questioned official figures of Inflation, Growth and Welfare during Recessions or Crises In Countries with Institutional and Congress and cross public opinion controls, policy makers (president but also congress) responses with creation of more research, more indexes, more statistics and academics reports pushing the limit of measurement

10. GDP AND BEYOND: Policy makers questioned contra cyclical Official Statistics during Bad years • GDP doesn´t include all welfare concepts (health, education and quality outcome, human capital, culture, time use, household and other non-market activities, also inflation measured is different to inflationary perceptions of average households • R. Kennedy (1968), Pension Funds crises (1985), Clinton (1990’s), Sarkosy (2008), Obama (2009) • Responses of Policy Makers in Democracy: • Amplify the frontier of measurement. More CPI, WPI and U indexes in USA. Changing of Law of Pension Funds • Boskin report • Stiglitz-Sen-Fitoussi Report. • Subjetive Well-being of Nations (2007) NTA vs NIA: A.B. Krueger, Daniel Kahneman, David Schkade • NEVER MANIPULATION ON EXISTING ECONOMIC SERIES AND STATISTICS

11. CONCLUSIONES Confronting Inflation in Argentina Instead of change the political economy or swap the bonds with another clauses, Argentina open the Pandora box of manipulation and Also Non-schumpeterianDestruction of Statistical System. Why alternative CPI and GDP could exists: because Argentina was the historical leader of the region in statistics. Argentine official GDP could not evade the so-called “Pandora Box” effects, caused by the political intervention of official statistics

12. ASPECTOS METODOLOGICOS

13. ANTECEDENTES Y EXPERIENCIA ACUMULADA Argentina y America Latina

15. BACKGROUND AND FRAMEWORK OF HISTORICAL NATIONAL ACCOUNTS OF ARGENTINA AND LAC

16. OLD METHODS (FIX LASPEYRES INDEX) • OLD BASE YEAR • 2004 ECONOMIC CENSUS OLD • CAPTURE OF SUBTERRANEAN, INFORMAL AND BLACK ECONOMY OLD • BUT NEITHER OF THIS PROBLEMS IS KEY IN ORDER TO MEASURE PRESENT GDP DEBATE, NO CPI MANIPULATIOM (ONLY SMALL SHARE) • Analogy with CPI banal debate: inflation measurement problem is not related with plutocratic effects, weights, biased avergare level prices comes from different zones (urban vs rural, middle class neighborhoodvs poor zones) or commercial type (“supermarkets vschinostores”. Are the prices supposely surveyed. • GARBAGGE IN, GARBAGGE OUT

17. Main Methodological Points • Traditional approach of quarterly GDP estimation from supply side in Argentina • Exhaustiveness, representativeness and Consistent Criteria: capture the output volume by representative indicators • Not all Surveys have enough representation of the global output by industry • V.I. obtained through Deflated Values from Surveys could be distorted under High Inflation

18. Main Methodological Points • Most of Sectors ‘ve been traditionally measured through representative volume index indicators (chambers, official institutions), • avoiding non-representativeness of surveys and high inflation distortion problem • Only Financial Intermediation depends on CPI deflator

19. Main Methodological Points • Commodity Flow: Trade, Cargo Transport through IO coef. by industry • Intermediate input demand: f.ex.wearing apparel; dressing • Demand functions in some services: restaurants, non-regular passengers transport (from 2002 only income elasticity) • Non-Market services by employment indicators: education, health, public administration, other services

20. Main Methodological Points • Try to reproduce GDP volume index at 93 prices as SNA Ar, not the desire GDP: vrg. ex. Productivity of services or quality changes of outputs • Taking into account these traditional methodology and similar data sources as SNA Ar (1999) with published series today at very high detail level (4-5 ISIC digit rev.3) from 1993 to test the reproduction and correlation of Activity Level with official figures without any econometric imputation

21. PRINCIPALES RESULTADOS

23. 2007-2012: 15,9% vs 29,4%

25. MYTH 1: LEVEL GAP DUE TO CPI. NO! Industry Contribution to Argentina GDP gap (ratio between Official GDP and ARKLEMS reproducible GDP 2012 level -total GDP 2007-2012 Gap level=100% (12.2%).

26. MYTH 1: LEVEL GAP DUE TO CPI: NO!!!!! • FACTS: WRONG!. • INDUSTRY CONTRIBUTION TO LEVEL GAP BY SECTOR POINT THAT THERE IS ABANDONMENT OF TRADITIONAL METHOD AND SOURCES of GDP growth (SNAar (1999)) base 93

27. The main difference is due to having withdrawn the traditional methodology that National Accounts of Argentina (Nar) for Quaterly GDP activity level 1993 base year (SNAar1999) . • A Great Part Of Methodology and Sources of Traditional Nar are VOLUME INDICATORS that could obtain because are published and comes from several institutions and chambers (See SNAar99)

28. MYTH 2: growthaccelerationbut Crecimiento Ma Non Troppo • Recuperacion-Crecimiento-Desarrollo • Recovery: NBER (Burns-Mitchell-Heymann-Coremberg) • GrowthAcceleration (Hausmann-Rodrik-Prichett-Rostow) • Crecimiento Continuo y Sostenido: Entre Max Ciclicos e intensivo en Productividad

29. MYTH 2: GROWTH ACCELERATION-CHINESE RATES • Per Capita growth: g • gt+n>3.5 ppa → Growth is rapid • gt+n>2.0 ppa → Growth accelerates • yt+n> max(yi), i≤t → Post growth output exceeds pre episode peak • Relevant time horizon is eight years (i.e., n = 7)

30. MYTH 2: GROWTH ACCELERATION-CHINESE RATES

31. MYTH 2: GROWTH ACCELERATION-CHINESE RATES • FACTS: NO SUSTAINABLE GROWTH ACCELERATION • BecauseNotClauses H-R-P: 1, 2 And 4. • g annual:1990-1998  2002-2012

32. MYTH 3 BEST GROWTH PATTERN OF ARGENTINA HISTORY STRUCTURAL CHANGE GROWTH PATTERN (MACRO NUMBER)

33. ILUSION DURANTE Y DESENCANTO EX-POST DE LA SOCIEDAD ARGENTINA CON LOS PERIODOS DE CRECIMIENTO ECONOMICO OBJETIVO: Obtener una serie única de Crecimiento PBI que permita analizar los diversos Reg. Macroeconomicos. No se pretende juzgar la composición y sostenibilidad de los reg macro y su crecimiento en términos de Competitividad y Sostenibilidad Social

34. MYTH 3: STRUCTURAL CHANGE GROWTH PATTERN: (MACRO NUMBER) and Best Growth Pattern of Argentina during last 100 years

38. MYTH 4: ARGENTINA WAS THE GROWTH CHAMPIONSHIP OF THE REGION: NO! Figure 4: Latin America GDP Growth, 2002-2012 (compound rate, %) Source: ARKLEMS and ECLAC

39. MYTH 4: ARGENTINA WAS THE GROWTH CHAMPIONSHIP OF THE REGION: NO!

40. MYTH 4: ARGENTINA WAS THE GROWTH CHAMPIONSHIP OF THE REGION: NO! Figure 5: Latin America GDP Growth, 1998-2012 (compound rate, %)

41. MYTH 4: ARGENTINA WAS THE GROWTH CHAMPIONSHIP OF THE REGION

42. CONCLUSIONES

43. CONCLUSIONES ARKLEMS reproducible showed a slower growth than official series. But contrary to several myths, the gap is not related with deflation with distort prices index, directly linked with the abandon of traditional methodology followed by argentinean national accounts.

44. CONCLUSIONES The paper showed that while Argentina growth was important during recent growth episode, similar to period 1990-1998; and it was not the growth championship of Latin America.

45. CONCLUSIONES Long run growth: 1998-2012: 2,4% Argentina grew less than Brazil and LAC. Little bit less than Historical Trend: 1913-2012: 2,8%

46. CONCLUSIONES Importancia no solo del Crecimiento Sostenido, sino de otro concepto olvidado: Crecimiento Continuado –Baja Volatilidad

47. CONCLUSIONES Why alternative CPI and GDP could exists: because Argentina was the historical leader of the region in statistics. Argentine official GDP could not evade the so-called “Pandora Box” effects, caused by the political intervention of official statistics

48. MUCHAS GRACIAS