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An Overview of Economic Analysis and Interlinkages in the Economy for Efficient Decision Making

This introduction delves into key concepts essential for analyzing the economy, focusing on growth, stability, and equity. It explores economic relationships, macroeconomic accounts, and the interlinkages across divisions, aiding in a comprehensive evaluation of the economy. The visually oriented presentation, utilizing color-coding and big blocks, simplifies understanding. The discussion covers GDP, balance of payments stability, government finances, and behavioral relationships, enabling a deeper insight into economic dynamics. The conclusion emphasizes the importance of ongoing learning and utilization of economic tools.

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An Overview of Economic Analysis and Interlinkages in the Economy for Efficient Decision Making

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  1. An introduction to key concepts commonly used in the analysis of the economy by the Research Department Michael Adams 23 June 2014

  2. MFSM/GFS GFS SNA MFSM SNA BOP

  3. Introduction • Visually orientated introduction • Economists usually focus on economic growth, stability and equity • Evaluating the state of the economy: • Economic growth SNA 1993 • Full employment (BC) • Balance of payments (BoP) stability BPM5 • Price and financial market stability MFSM2000 • An equitable distribution of income GFSM2001 QB March 2011

  4. Reason for chart • Three fold • Cannot analyse economy without taking into account all four macroeconomic accounts • According to the four manuals • Three accounts accrual basis (SNA, BoP, MFSM) • 1ST January to 31ST December • One account cash-flow (GFS) ? Semi • 1st April to 31ST March • Adjustments between cash and accrual (challenged) • Economic analysis /inter linkages in the economy across divisions • Staff training and development

  5. Economic analysis/interlinkages • Design of the Chart • Colour coded • Segments 1-38 • Follow format of the Quarterly Bulletin • BIG BLOCKS • SNA • Domestic output • Gross domestic expenditure • GFS • General government • Public corporations • All institutions must fit in somewhere in the four macroeconomic accounts

  6. Economic relationships • Identity relationship: • GDP = GDP agriculture + GDP mining + GDP manufacturing ………… GDP Gov.Services • Trade account = X mining + X agriculture + X manufacturing - M mining – M agriculture – M manufacturing • Money supply = M1 + M2 +M3 • Credit extension = Households + corporates • G -T= Deficit • Behavioural relationship: • Ct = a + b.Ydt + d.interestratet+ ɛt QB March 2011

  7. Economic interpretation QB March 2011

  8. Booklet Definitions Flow of chart Use for Pre-MPC (discussion) Various forms being used in the Department (NO1, B03, C68 and F02) Balance sheet or income statement Balance sheet – stock position Income statement – flow position Government cash-flow position 8

  9. Economic chart QB March 2011

  10. CONCLUSION • No means exhaustive • Each division use area to expand • Time series structure • Overview • Reasons for changes • Read the Quarterly Bulletin and the economic overview of the country

  11. Thank you Michael.adams@resbank.co.za Tel: +27 12 313 3874 Fax: +27 12 313 4014 QB March 2011

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