The First Session (Continued)

Usually I don’t issue a blog for each half-session but, since the start of this semester has been punctuated by a holiday, I’ve made an exception!

Tomorrow ( Wednesday 9 Sep) at 9.00am London time we’ll pick up from where we left off – GDP data. Again, I cannot over-emphasise how important data gathering, analysis and interpretation are. The course is all about macro models. Good models need the best data we can muster; data are always imperfect but we should work hard to ensure that foundations are as solid as they can be. Without that, it’s just garbage in, garbage out.

So we shall start with a discussion on that US GDP exercise I left you with. Hopefully, you have used the opportunity to explore the joys of growth calculations, extracting numbers from FRED and brushing up on natural logs, exponentials, power terms, etc.

Unfortunately, getting and “cleaning” data are not the only obstacles to overcome before we get down to building our first model – the Solow growth template.

There are many other practical and conceptual hurdles concerning

  • Aggregation
  • Volatility (please have the chart below handy when we meet)
  • Revisions
  • Boundaries
  • Product quality
  • Happiness

Moreover, GDP is a handy single metric but it’s just a flow for a period of time. What about stocks and sustainability? These are massive issues for the 21st century brought into clear focus by pandemic and climate change challenges.

I look forward to seeing you all tomorrow and hope you had a relaxing holiday.

SPH
8 Sep 2020