Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ
22 August 2017 | Pago Pago, American Samoa
22 August 2017 | Pago Pago, American Samoa
22 August 2017 | Pago Pago, American Samoa
22 August 2017 | Pago Pago, American Samoa
22 August 2017 | Pago Pago, American Samoa
22 August 2017 | Pago Pago, American Samoa
09 August 2017 | Pago Pago, American Samoa
09 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa
08 August 2017 | Pago Pago, American Samoa

Understanding Sectoral Analysis

08 August 2017 | Pago Pago, American Samoa
Kimball Corson
We all know that GDP (Gross Domestic Product) is the value of all goods and services sold within a country during one year. GDP is a flow variable. Flows come from from the national income accounting relationship:

1) Y = C + I + G + (X – M)
where Y is GDP (expenditure), G is government spending, X is exports and M is imports (so X – M = net exports), C, consumption and I investment.

But national income accounting shows households can use their total income for consumption, savings and to pay taxes:
2) Y = C + S + T

The assumption then becomes everything feeds through to households so corporations are just transparent.

You than then make the two equations Y is equal to, equal each other
3) C + S + T = Y = C + I + G + (X – M)

Subtracting C from both sides and you get:
4) S + T = I + G + (X – M)

Rearranging, this becomes the sector balance accounting equation

5) (S – I) = (G – T) + (X – M)

The sectoral balances equation says that total private savings (S) minus private investment (I) has to equal the public deficit plus net exports. Net exports represent the net savings of non-residents.

This is alway true. It is an accounting identity.

For example, if Savings increase and Investment and net exports remain unchanged, then the deficit (G - T) has to increase. Who'da thought? Now the next question is economically why.
Comments
Vessel Name: Altaira
Vessel Make/Model: A Fair Weather Mariner 39 is a fast (PHRF 132), heavily ballasted (43%), high-aspect (6:1), stiff, comfortable, offshore performance cruiser by Bob Perry that goes to wind well (30 deg w/ good headway) and is also good up and down the Beaufort scale.
Hailing Port: Lake Pleasant, AZ
Crew: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
About:
Kimball Corson: I am a 75 year old solo sailor, by choice. However, I did take on a personable, but high maintenance female kitten, now a full grown cat, named KiKiPoo when she is sweet, or KatKatPo after she has just killed something like a bird or bat. [...]
Extra:
Although I was a lawyer and practiced law with good success for thirty years, creating significant new law, I never really believed in the law, the politics of law or in the over reaching self-interest of most lawyers I met. Too much exposure to Nietzsche and other good and seriously thoughtful [...]
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Profile

Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2016
Port: Lake Pleasant, AZ