Cristina continues to sell Argentina down the river

[toongeorges]

Your first graph is per capita Nominal GDP in LEVELS.

Your second graph is Total Nominal GDP in LEVELS.

Krugman graph is an INDEX of Real GDP with base year 2000 = 100. As it is an index, it tries to show growth since 2000 and not overall level as your two graphs show.

IMF data=World Bank data=Krugman data.

The graphs are not the same, but this does not mean you cannot make comparisons.

The first graph says that in 2000, Argentines earned on average more than twice as much as Brazilians, while in 2012 they earn less. Unless the Argentine population has more than doubled in these 12 years (has it?), the Argentina economy cannot have grown faster than the Brazilian one.

The second graph says that the economy of Brazil in 2012 is 3,8 times what it was in 2000, while the economy of Argentina in 2012 is 1,7 times what it was in 2000, so the Argentine economy has not grown faster than the Brazilian one in the period 2000-2012 as Krugman claims.

Maybe Krugman used PPP and not nominal rates, but then that is a choice and I prefer to look at nominal rates.

edit:

indeed, if you look at the PPP rates instead of the nominal rates, the Brazilian economy is only 1,94 times bigger in 2012 as it is in 2000, while the Argentine economy is 2,24 times bigger in 2012 as it is in 2000. The discrepancy between the PPP and nominal evolution implies that the inflation in Brazil must be higher than in Argentina or ... the inflation data is not reliable, which one you think is correct?

 

[expatinowncountry]

The graphs are not the same, but this does not mean you cannot make comparisons.

The first graph says that in 2000, Argentines earned on average more than twice as much as Brazilians, while in 2012 they earn less. Unless the Argentine population has more than doubled in these 12 years (has it?), the Argentina economy cannot have grown faster than the Brazilian one.

The second graph says that the economy of Brazil in 2012 is 3,8 times what it was in 2000, while the economy of Argentina in 2012 is 1,7 times what it was in 2000, so the Argentine economy has not grown faster than the Brazilian one in the period 2000-2012 as Krugman claims.

Maybe Krugman used PPP and not nominal rates, but then that is a choice and I prefer to look at nominal rates.

edit:

indeed, if you look at the PPP rates instead of the nominal rates, the Brazilian economy is only 1,94 times bigger in 2012 as it is in 2000, while the Argentine economy is 2,24 times bigger in 2012 as it is in 2000. The discrepancy between the PPP and nominal evolution implies that the inflation in Brazil must be higher than in Argentine or ... the inflation data is not reliable, which one you think is correct?

No you cannot make comparison as you are missing a key variable... the exchange rate. I was sloppy in my explanation... your graphs are in Nominal and Current dollars while Krugman (actually IMF=WB) are in Real and Constant dollar.

Let me give you an example using some simple numbers. Imagine (it is an example! not actual data) the GDP of Argentina in 2000 was 10 pesos and the GDP of Brazil was 10 reales. Assume there was no inflation between 2000 and 2010. Imagine the exchange rate in 2000 was 1 peso= 1 us dollar and 1 real = 1 us dollar. So the GDP of both countries was 10 us dollars in year 2000. Imagine the data tells you that the GDP of Argentina is 60 pesos in 2010, and the GDP of Brazil is 50 reales in 2010. Imagine the exchange rate in 2010 is now 3 pesos=1 us dollar and 2 reales=1 us dollar. What you have is that using US current dollars the GDP of Argentina is 20 in 2010 (60/3) and 25 in Brazil (50/2). This is the type of data you have in your figures (plus inflation, here assumed zero for the example to focus only in the difference between current and constant dollars). If you want to get the GDP figures of 2010 but in 2000 US Constant dollars, then you need to use the old exchange rate (the 1 peso=1 real = 1 us dollar of year 2000). In that case the GDP of Argentina in 2010 would be 60 (60/1) us dollars and the one from Brazil is 50 (50/1).
So I constructed an example where the data of your graph and Krugman's are compatible.
If you think about it, the peso devaluated far more than the real since year 2000.

 

[expatinowncountry]

Dear Camberiu, I give you a quick answer cause we need to come to an end regarding this:

I agree with you that Krugman is wrong with what he implies from the data because a GDP growth trend does not tell you almost anything (we do not have the counterfactual, ie: without the mess up of the Argentine government the growth rates could have been even higher).

I agree with you that this may be due to his particular agenda and that he is not been either intellectually honest or not bothering in providing better evidence to fundament his claim (usual the case in journal columns).

I do not agree with you with your statement about IMF data. I have not worked at the Fund but I had done it across the street in the World Bank and your description does not fit how things are worked it out there. I can't tell 100% for the Fund but I would not expect to be much different.

I do not agree with you with the disqualification of the analysis because of the deffective data as using the "correct" growth rate it would be still true the statement that Argentina grow faster (since 2000) than Brazil. The problem in the analysis is the logical jump from "Argentina grew faster than Brazi" then "Argentine should be doing fantastic things."

And of course I was kidding you with the statement that Maradona was better than Pele... we all know the best one was Zidane

 

[toongeorges]

Let me give you an example using some simple numbers.

Thanks for trying to explain. I understand that if you look at the data with nominal current dollars, you look what the economy is worth as if you invested in dollars in the economy? If you look at the data with constant dollars, you look what the economy is worth in the local currency?

When the exchange rate of the USD/EUR drops from 1,50 to 1,30 and everyone in Europe keeps earning exactly the same, then in constant dollars, the economy grows with 0%, while the value of the economy in dollar terms decreases with 13,33% (?)

 

[expatinowncountry]

Thanks for trying to explain. I understand that if you look at the data with nominal current dollars, you look what the economy is worth as if you invested in dollars in the economy? If you look at the data with constant dollars, you look what the economy is worth in the local currency?

When the exchange rate of the USD/EUR drops from 1,50 to 1,30 and everyone in Europe keeps earning exactly the same, then in constant dollars, the economy grows with 0%, while the value of the economy in dollar terms decreases with 13,33% (?)

Your example of the USD/EUR is right on. To avoid measuring changes in the level of activity due only to variations in the exchange rate we use constant dollars. The same way we use constant prices to avoid measuring changes that are only due to price changes.
You can make things even more complicated if you use PPP measures where you try to measure how much you can afford. The construction of PPP measures imply many obscure assumptions and therefore are subject to many criticism... but people using them anyway.

 

[nicoenarg]

Don't want to get into this (very mature ) argument but it seems like both expatinowncountry and camberiu are very similar in their debate tactics.

expatinowncountry countered the article linked to by Napoleon by saying, "Nobel prize winner says otherwise" and camberiu refuted (or rebated, hehe) that claim by saying that Krugman has an agenda. And then both of them went after each other.

I also wanted to point out that Krugman didn't say more than 5 lines in the article. If any article should be discussed here is the article on slate by Matthew Yglesias, which is the article Krugman says is awesome.

In this respect, I agree that Krugman was being lazy but throwing around terms like "Nobel prize winner" (even though its a big deal, as opposed to the moronic Nobel peace prize, it doesn't add to the facts on the ground) or "Keynesian!!" (the day you can formulate Keynes' ideas into one formal theory, please let me know, and Krugman or any other modern economist CAN NOT be labelled as solely Keynesian) do not help.

I do like the idea of discussing economics as I too was a student of economics (which doesn't make me an expert seeing that economics is one of the most vast and exciting subjects out there) before I changed my allegiance to computer science (), however I see that this debate has already managed to irritate the parties involved so I am going to sit this one out.

Good luck to both expatinowncountry and camberiu!

 

[expatinowncountry]

Don't want to get into this (very mature ) argument but it seems like both expatinowncountry and camberiu are very similar in their debate tactics.

expatinowncountry countered the article linked to by Napoleon by saying, "Nobel prize winner says otherwise" and camberiu refuted (or rebated, hehe) that claim by saying that Krugman has an agenda. And then both of them went after each other.

I also wanted to point out that Krugman didn't say more than 5 lines in the article. If any article should be discussed here is the article on slate by Matthew Yglesias, which is the article Krugman says is awesome.

In this respect, I agree that Krugman was being lazy but throwing around terms like "Nobel prize winner" (even though its a big deal, as opposed to the moronic Nobel peace prize, it doesn't add to the facts on the ground) or "Keynesian!!" (the day you can formulate Keynes' ideas into one formal theory, please let me know, and Krugman or any other modern economist CAN NOT be labelled as solely Keynesian) do not help.

I do like the idea of discussing economics as I too was a student of economics (which doesn't make me an expert seeing that economics is one of the most vast and exciting subjects out there) before I changed my allegiance to computer science (), however I see that this debate has already managed to irritate the parties involved so I am going to sit this one out.

Good luck to both expatinowncountry and camberiu!

Boy, I think it was an interesting and (for online standards) quite civilized debate. I acknowledge that mentioning the nobel prize was not very smart... It was a moment of wekness because I was pissed off because people often take what they read in Clarin as the revealed truth so I though to show that someone qualified enough (and not the Argentine government) has a different opinion (right or wrong).
In the way, we discussed a lot about economics without insulting anyone (but Krugman) and at the end I think we were able to express how each side sees the issues with the agreements and disagreements. Personally, I am looking forward to meeting camberiu (and the others) in person to talk about economics. You cannot understand Argentina without understanding its political economy. I hope during the meeting, the purist like you will be able to put with someone who makes mistakes in English. Otherwise, the meetings will have to be in French or Spanish.

 

[surfing]

Aside from anything else, your efforts to remain civil and rational did not go unnoticed; the internet would benefit immensely if others acted similarly.

 

[willwright]

Aside from anything else, your efforts to remain civil and rational did not go unnoticed; the internet would benefit immensely if others acted similarly.

What nonsense! Who in their right mind would want to listen to civil and thoughtful discourse when you can watch Fox news or listen to Rush Limbaugh.

 

[camberiu]

Not to kick a dead horse, just thought some people might find the article bellow relevant.


More Data Manipulation: Argentinian GDP is another inflated index
http://brazilianbubble.com/more-manipulation-argentinian-gdp-is-another-inflated-index/