gordeeva_o_g_praktikum_po_perevodu_ekonomicheskih_tekstov_s

a set of equations, representing the behavior of the economy, that has been estimated using historical data.

Clearly, forecasting is as much art as science in our uncertain world. Still, the strength of economic forecasting is that, year in and year out, professional forecasters provide more accurate forecasts than do those who use unsystematic or unscientific approaches.

Samuelson P.A., Nordhouse W.D.Economics (16th edition) , 1998.

NOTES

GDP - gross domestic product валовой внутренний продукт (ВВП): совокупная стоимость товаров и услуг, созданная внутри страны за определённый период

GNP - gross national product валовой национальный продукт: суммарная стоимость товаров и услуг, произведенных как внутри страны, так и за её пределами за определённый период (обычно год); от ВВП отличается на величину, равную сальдо расчетов с зарубежными странами

plant - 1. завод, фабрика 2. оборудование: имущество/ активы, используемые компанией для осуществления производственной деятельности (часто употребляется сочетание «машины и оборудование».

leading indicators - «опережающие» (ведущие) индикаторы (США) : показатели экономической активности, предвосхищающие д в и же н и е д е л о в о го ц и к л а ; 1 2 п о ка з ат е л е й д в и же н и я экономического цикла, включаемые в индекс, который ежемесячно публикует министерство торговли (фондовые цены, денежная масса, заимствования, разрешение на новое строительство, средняя продолжительность рабочей недели, изменения в товарных запасах и т. д.)

VOCABULARY

to expand, expansion to prosper, prosperity, recession

to depress, depression output

to profit, profit income

to decline, decline

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bottom

to recover, recovery boom

sustained

to inflate, inflation to slump, slump interest rates

to contract, contraction to peak, peak

trough downturn, upturn GDP, GNP

consecutive, (2 consecutive quarters) to fluctuate, fluctuation

to consume, consumer, consumption inventories

business, a business

plant, plant and equipment crude materials

wages, wages and salaries

to invest, investor, investment an index of leading indicators to estimate, estimate

А. Translate the following into Russian. Consult a dictionary if necessary.

pattern of demand; pattern of trade; output expansion; business cycle expansion; business recession; the Great depression; total output; world (global) output; profit before tax; gross profit; net profit; income on investments; annual income; rate of inflation; rate of growth; tax rate; exchange rate; expansion rate; interest rate; unemployment rate; bottom of cycle; to bottom out; economic recovery; recovery of prices; investment boom; boom and bust; booming sales; sustained growth; consumer demand; domestic demand; slack demand; to restrain inflation; price inflation; slump in demand; price fluctuations; domestic consumption; business decline; price decline; the economy is bottoming out;

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В. Find in the text the English for:

экономический рост и процветание; затянувшаяся депрессия; объём производства и реальный доход; уровень безработицы; низшая точка экономического цикла; рост уровня жизни; спад; рост и падение процентных ставок; страны с рыночной экономикой;

прогнозировать длительность цикла деловой активности; объем потребительских закупок; запасы товаров длительного пользования; инвестиции в машины и оборудование; спрос на кредиты;

Business Cycles

The United States and all other modern industrial economies experience significant swings in economic activity. In some years, most industries are booming and unemployment is low; in other years, most industries are operating well below capacity and unemployment is high. Periods of economic prosperity are typically called expansions or booms; periods of economic decline are called recessions or depressions. The combination of expansions and recessions, the ebb and flow of economic activity, is called the business cycle.

Business cycles as we know them today were codified and analyzed by Arthur Burns and Wesley Mitchell in their 1946 book Measuring Business Cycles. One of Burns and Mitchell’s key insights was that many economic indicators move together. During an expansion, not only does output rise, but also employment rises and unemployment falls. New construction also typically increases, and inflation may rise if the expansion is particularly brisk. Conversely, during a recession, the output of goods and services declines, employment falls, and unemployment rises; new construction also declines. In the era before World War II, prices also typically fell during a recession (i.e., inflation was negative); since the 1950s prices have continued to rise during downturns, though more slowly than during expansions (i.e., the rate of inflation falls). Burns and Mitchell defined a recession as a period when a broad range of economic indicators falls for a sustained period, roughly at least half a year.

Business cycles are dated according to when the direction of economic activity changes. The peak of the cycle refers to the last month before several key economic indicators—such as employment, output,

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and retail sales— begin to fall. The trough of the cycle refers to the last month before the same economic indicators begin to rise. Because key economic indicators often change direction at slightly different times, the dating of peaks and troughs is necessarily somewhat subjective. The National Bureau of Economic Research (NBER) is an independent research institution that dates the peaks and troughs of U.S. business cycles.

In many ways, the term “business cycle” is misleading. “Cycle” seems to imply that there is some regularity in the timing and duration of upswings and downswings in economic activity. Most economists, however, do not think there is. Expansions and recessions occur at irregular intervals and last for varying lengths of time. For example, there were three recessions between 1973 and 1982, but, then the 1982 trough was followed by eight years of uninterrupted expansion. The 1980 recession lasted just six months, while the 1981 recession lasted sixteen months. For describing the swings in economic activity, therefore, many modern economists prefer the term “short-run economic fluctuations” to “business cycle.”

Causes of Business Cycles

Just as there is no regularity in the timing of business cycles, there is no reason why cycles have to occur at all. The prevailing view among economists is that there is a level of economic activity, often referred to as full employment, at which the economy could stay forever. Full employment refers to a level of production in which all the inputs to the production process are being used, but not so intensively that they wear out, break down, or insist on higher wages and more vacations. When the economy is at full employment, inflation tends to remain constant; only if output moves above or below normal does the rate of inflation systematically tend to rise or fall. If nothing disturbs the economy, the full-employment level of output, which naturally tends to grow as the population increases and new technologies are discovered, can be maintained forever. There is no reason why a time of full employment has to give way to either an inflationary boom or a recession.

Business cycles do occur, however, because disturbances to the economy of one sort or another push the economy above or below full employment. Inflationary booms can be generated by surges in private or public spending. For example, if the government spends a lot to fight a war but does not raise taxes, the increased demand will cause not only an increase in the output of war matériel, but also an increase in the take-home pay of defense workers. The output of all the goods and

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services that these workers want to buy with their wages will also increase, and total production may surge above its normal, comfortable level. Similarly, a wave of optimism that causes consumers to spend more than usual and firms to build new factories may cause the economy to expand more rapidly than normal. Recessions or depressions can be caused by these same forces working in reverse. A substantial cut in government spending or a wave of pessimism among consumers and firms may cause the output of all types of goods to fall.

Another possible cause of recessions and booms is monetary policy. The Federal Reserve System strongly influences the size and growth rate of the money stock, and thus the level of interest rates in the economy. Interest rates, in turn, are a crucial determinant of how much firms and consumers want to spend. A firm faced with high interest rates may decide to postpone building a new factory because the cost of borrowing is so high. Conversely, a consumer may be lured into buying a new home if interest rates are low and mortgage payments are therefore more affordable. Thus, by raising or lowering interest rates, the Federal Reserve is able to generate recessions or booms.

The Concise Encyclopedia of Economics

№ 1.2

Translate into Russian. Pay attention to the underlined words.

1.Consumption is driving growth, which will continue through to next year. The economy has gathered enough momentum to carry it through the next one to two years.

2.The U.S. economy shows signs of stabilizing but still faces significant risks before a substantial recovery can begin.

3.The economy expanded at a 0.2% pace in the fourth quarter, fueled by a 5.4% rise in consumer spending.

5.The global slowdown during the year led to drops in both exports and imports.

6.The government announced Wednesday that the country's economy shrank at 0.4% annual pace in the third quarter, the first decline in eight years and the biggest in a decade, likely heralding the start of a new recession.

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7.For the first time in 20 years growth in the 30 industrialized membercountries of the OECD is contracting.

8.A growing number of economists believes Europe is in the early stages of a mild recession.

9.These data provide another signal that an economic recovery is under way.

10.The euro area's two largest economies (Germany and France), which together account for more than half of the region's output, are both slowing steadily as the global economy deteriorates.

11.Britain’s economy has taken a turn for worse, with manufacturing and services sectors contracting sharply over the last two months.

12.In Japan industrial production expanded by 0.3% in January, leaving it 2.1% higher than a year before.

Economic and financial indicators

Hiring in America slowed, as companies, excluding farms, added just 51,000 workers to their payrolls in September. Nonetheless, unemployment edged down from 4.7% in August to 4.6% in September. And the Bureau of Labour Statistics is expecting a big upward revision in the payroll numbers. It estimates that an additional 810,000 non-farm jobs were created in the year to March.

Industrial production in Germany rose by 7.3% in the year to August, the largest annual increase since 1990. In France it went up by 1%. Germany’s merchandise-trade surplus, seasonally adjusted, grew to $15.5 billion in August.

Annual inflation in Britain declined to 2.4% in September, from 2.5% in the previous month, because of cheaper petrol prices. The unemployment rate increased to 5.5% in the three months to the end of August, up from 5.4% during the previous three months. Average pay, including bonuses, rose by 4.2% in the year to August.

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Consumer prices in Canada declined, because the price of petrol dropped. Annual inflation fell to 0.7% in September, down from 2.1% the month before. Core prices, excluding those of food and energy, rose by 1.6% on the year.

The immediate industrial outlook in the euro area is still good. New orders rose by 3.7% in August, more than expected. That left them 14.3% higher than a year before, thanks to higher demand for transport equipment and metal products.

A weaker yen bolstered Japanese exports, widening the country’s trade surplus to $8.5 billion in September, 6.9% more than a year earlier. Exports to America went up by 20.4% and those to China by 19.8%, thanks to rising demand for cars and electronics.

America’s GDP grew at an annual pace of 1.6% in the third quarter, compared with 2.6% in the three months before. It was the slowest rate of growth since 2003, largely because of a 17.4% decline in residential construction – the biggest such contraction in more than 15 years.

The Economist October – November 2006

Many economists doubt heft of Europe recovery

Don’t count on Europe to float the global economy yet.

Despite a lot of good news on the corporate front, cheap global competition has kept wages and job creation flat in most of the 12-nation euro currency zone. That is a problem, because in the past it was the shopping spree following hiring and wage rises that produced fullblooded economic recoveries.

“This economic cycle is different from others,” says Ken Wattren, chief euro zone economist at BNP Paribas in London. “It’s been great news for the corporate sector but not for the household sector.”

The U.S. managed to get round that problem, producing surging growth in its post-2001 recovery even as wage levels and initially employment stayed flat. But that was because American consumers, encouraged by rising property and stock prices, racked up huge credit-

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card bills and borrowed against their home equity to buy more cars and flat screen TVs. Continental Europeans, however, won’t or can’t do that.

The result: Many economists believe that euro-zone growth rates will top out at around 2%, widely considered the floor for growth in the United States – let alone the tiger economies of the emerging East.

There has been a lot to celebrate lately in the core euro-zone economies. Buoyant corporate profits, fueled by exports to the U.S.. Asia and oil-producing countries are pushing business-sentiment sky high. Companies are finally investing their higher profits at home, especially by buying new equipment. And the stock market has risen 28% in the past year, compared with 3% for the Dow.

But the bad news is that on its own, an export-led recovery probably can only go so far. Domestic consumption makes up 57% of gross domestic product in the euro zone. That makes it vital for sustained 3%-plus growth rates of the kind that Germany, France and Italy used to enjoy in the 1980s. So far though, consumers aren’t running out to shop, because they aren’t getting any more money in their pay packets.

Economists predict euro-zone GDP will grow by about 2% to 2.2% this year, up from an expected 1.5% in 2005. But many believe the growth rate will decline to below 2% again the year after, because of the risk that U.S. and Asian demand for European goods will slow down, while domestic consumption fails to compensate.

Another country

No matter where one goes in Argentina these days, evidence of the country’s remarkable economic recovery is hard to avoid. Since its collapse in 2001-02, Argentina’s economy has grown by a quarter. According to government estimates, it has finally surpassed its previous peak of May 1998. In another sign that the worst is over, on July 18th the government issued dollar bonds for the first time since its massive debt default of 2001.

But while the economy may have recovered its former size, it is different in many other ways. Some of the imbalances of the 1990s have been fixed: budget deficits have turned into surpluses; devaluation has ignited exports; and the public debt has been restructured. “It’s a less

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risky, less volatile country than it was,” says Miguel Braun of CIPPEC, a Buenos Aires think-tank. Yet many ordinary Argentines see a country that is more unequal, less prosperous and less economically secure than it was seven years ago.

Devaluation in 2002 prompted a temporary spike in inflation, and a lasting increase in food prices. As unemployment surged to 25%, real wages fell by an average of 30%. By June 2002, 56% of Argentines had fallen below the official poverty line. But as the economy recovered, so did employment. In the second quarter of 2004, each percentage point of output growth was matched by a full percentage point of new jobs. Unemployment has declined to 13% and poverty to 40%.

Many of the new jobs are in the informal sector: Argentina has the same number of formal-sector employees today as it did in 1980, while the number of informal workers has doubled. Such jobs pay less. Real wages in service jobs are still a quarter below their pre-crisis level. The overall share of wages in GDP has declined by 15%.

Wealthier Argentines have fared less badly: many of those who had withdrawn their dollar savings before a bank freeze poured them into property. That fueled a construction boom.

Devaluation has made travel abroad prohibitive for all but the wealthiest. Home ownership has become harder, too, since property is still priced in dollars. Since banks are weighed down with government debt, they lend little: mortgages and consumer credit are scarce.

Some of what workers lost has been gained by the state. The public sector now accounts for 27% of GDP, compared to 22% before the collapse. It has yet to turn that into better schools and infrastructure, partly because it must run a surplus to pay its debts.

Profits, too, take a larger share of the economy than in the past. But investment, though higher than it was, remains too low to sustain rapid growth once existing capacity is fully used.

Inevitably the pace of recovery is slowing. Now, for each percentage point of growth, jobs only increase by half as much. Unless companies are encouraged to invest more, and unless the government improves education and training, the social divide will continue to worsen. Inequality, job insecurity and low investment are hardly problems unique to Argentina. As it slowly becomes what the government likes to call “a serious country”, Argentines may find that their problems increasingly resemble those of their neighbors.

The Economist July 2005.

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Odd numbers

Why America’s advance GDP figures do not paint the whole picture As the old joke goes, statistics are like a bikini – what they reveal is

suggestive, but what they conceal is vital. America’s advance GDP figures tend to be more of a bathing suit than a bikini: they are a bit outdated and hide as much as they show. Nevertheless, on January 30th fourth-quarter numbers, showing an annualized growth rate of 0.6% (or less than 0.2% in quarterly terms), suggested that America’s economy was barely growing at the end of last year. It was lower than economist had expected.

Financial markets were initially thrown by the data. Toss in a revision or two and it is conceivable that they have marked the start of a recession – defined as two consecutive quarters of decline.

That could easily happen. Indicators for October and November were much stronger than for December. Many of the numbers for December were not available for the advance estimate, so statisticians had to make an informed guess, in some places using the stronger months as a guide.

That said, revisions could go the other way. A large fall in inventories subtracted 1.25 percentage points from fourth-quarter growth, making a far bigger dent than usual in the figures. Changes in inventories, however, are often subject to large revisions. They might well be adjusted upward later.

The first estimate of America’s GDP is notoriously imprecise, and is probably more so during times of wrenching economic change. According to the Bureau of Economic Analysis, which computes the GDP figures, around 25% of the required source data are not available for the first estimate and only partial information (for example two out of three months’ data) is on hand for a further 30% of sources.

The picture will become clearer on February 28th, when the second estimate of GDP is released. This iteration tends to include sharp revisions, because almost all of the final month’s numbers are available.

The Economist February 2008

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