Measurement Issues Arising from the Growth of

Transcript:Measurement Issues Arising from the Growth of:
Measurement Issues Arising from the Growth of Globalization Susan Houseman Upjohn Institute for Employment Research Kenneth Ryder National Academy of Public Administration Presentation for the FESAC, December 17, 2010 Project Motivation Increased globalization of U.S. economy: Value of imports and exports reached 25-30% GDP in recent years Import growth especially rapid – driven by growth from emerging economies – led to widening trade deficit Growth of trade underscores need for reliable international statistics to understand effects of trade, formulate policies, but Aspects of globalization—e.g. global production chains, expansion of business services trade—greatly complicate collection of data Funding for international statistics programs not kept pace with growth of trade Concerns: Measurement problems associated with growth of globalization may result in significantly biased aggregate and industry statistics Analyses of globalization based on these data may be biased Critical data gaps limit ability to understand effects of globalization on U.S. workers and businesses New Research in this Report AEA and Upjohn-NAPA reports complementary: AEA report provides comprehensive overview of international statistics and issues (biases and gaps) based on existing literature Our conference project supported new research on a subset of those issues Funding from BEA and Sloan Foundation supported new studies by academics and researchers in BLS, BEA and Census that examined Import prices: Biases to import & input price indexes from shifts in sourcing Gaps in import and export services prices Data gaps in tracking use of imports in economy—accuracy of import comparability assumption Data gaps in measuring services offshoring Data needed to assess labor market impacts from offshoring Importance of Import (and Export) Prices in Computing Key Domestic Statistics Used in computing real GDP growth GDP growth – computed from expenditure side GDP=C+I+G+(X-M) All domestic expenditures, imports and exports must be deflated Used in computing real value added growth in industry statistics Deflated inputs—including imported intermediates—must be netted out from deflated shipments BEA constructs input price deflators from import price indexes and the PPI If growth of real imports understated (because of biased import price indexes) GDP and industry value added growth rates overstated Industry and aggregate productivity growth measures overstated Bias in Import Price Indexes from Shifts in Sourcing Rapid shift in sourcing of consumer products and intermediate inputs used by businesses, especially in last decade. Hypothetically, price declines from low-cost foreign supplier could be captured in import & input price indexes if: Foreign supplier enters U.S. market with price