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KBE Dipl.- konom Klaus Bartsch Econometrics

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KBE Dipl.- konom Klaus Bartsch Econometrics

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    1. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 1

    2. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 2 The Structure of the Presentation The general purpose of macroeconometric modelling and possibilities for the peoples movement Demonstration of these possibilities by the simulation of two antagonistic “left wing” and “right wing” concepts with a highly advanced Macroeconometric Model for Germany Towards the building of “A Peoples Model for Venezuela “ : A general outline of the structure of the model and the process of its realization Concluding remarks to the use of price based national account statistics and its limitations with regard to the labour value approach

    3. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 3 1. The general purpose of macroeconometric modelling The general purpose of macroecometric modelling: Giving a realistic and reliable “moving picture” of economic dynamics in the real world. On the base of a well specified macroeconometric model, tracking with sufficient reliability the “history” of economic development in the estimation period, forecasts can be done. But supporting business cycles forecast is not the main purpose of macroeconometric modelling: The main purpose is the ex ante evaluation of different policy options, based on the understanding of the complex dynamics of the economy, captured in the structure of the model.

    4. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 4 Origin and historical aspects of the use of the instrument Although the Dutchman Jan TINBERGEN stood at the cradle of macroeconometric modelbuilding as we understand it today Karl MARX outlined, in reception of the works of Francois QUESNAY, very early not only the concept of a national account statistic, but also, in his reproduction schemes, a model of macroeconomic dynamics. Until the 80ies the occupation with the task of econometric modelbuilding was restricted to relatively few persons, because the hard- and software and also the data needed were very expensive. So macroeconemetric work mostly reflected the “rich mans view”. Today, the situation has changed fundamentally: concerning the hardware and software resources needed, a 500 $ laptop, in combination with a 500 $ software will do it. Many fundamental macroeconomic databases, also for Venezuela, are available on the internet for free.

    5. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 5 Possibilities for the peoples movement Well specified models, focussed on labour interest, allows the evaluation of concepts developed by the social movements themselves; but in principle also the evaluation of every policy program of the political adversary found in the political debate. Affiliated with and applied in democratic social movements, using the specialized scientists/economists related to this movements as “operators”, this models may contribute to a more democratic and participative debate on the theoretical and practical outlines of macroeconomic policy conduct and the true intentions of proposed politics.

    6. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 6 Brief Survey of the LAPROSIM-Model for Germany The Model is optimized for the simulation of complex economic policy strategies, containing in the core model alone now 927 equations, thereof 187 behavioural equations and further 158 technical relations. There are several hundred additional equation linkable with LAPROSIM for special tasks, as for example regional econometric analysis. It is based mainly on national account and central bank data, completed by data of international organisations, mainly the OECD and the UNCTAD. For practical purposes, it is mainly estimated by simple OLS. For most behavourial Equations, the estimation period includes data from the first quarter 1970 to the fourth quarter 2007; some equations base on an even longer estimation period, starting 1960, so that you retrieve reliable long term relationships.

    7. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 7 The model consists of complete, national account based interdependent sub-models for economic supply and demand, labour markets and distribution that reflects economic development in a highly endogenous way: - Formation of the capital stock - Formation of educational “capital” - Production of Value Added (main sectors of the economy) - Distribution of income, both functional (primary and secondary) and personal - Use of GDP (Consumption, Investment, external trade, all disaggregated) - Employment, disaggregated for “secure” jobs and mini-jobs Prices - Money, credit, shares and government bonds (basics) - Public Sector / State (differentiated for different levels of regional administrative bodies and the branches of the social security system

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    19. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 19 Outline of the recommended general structure of a “ Peoples Model for Venezuela” based on “traditional” National Account Statistics For simulating more complex political strategies and for assessing simultaneously its effects on the output and employment in different branches of the economy and both volume and structure of the income for different social groups demand structure, both domestic and foreign fiscal households and public infrastructure in a broad sense prices and monetary aggregates a highly differentiated model is needed.

    20. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 20 What has to be done? Estimation of a set of equations for (potential) output and employment, and maybe also investment, wages and prices in the main sectors of the Venezuelan Economy, what means at minimum: petroleum sector Nonpetroleum sector, with Mining Manufacturing Electricity and water Construction Trade and Repair Services Communications Financial institutions and insurance Real Estate, entrepreneurial and renting services Private non-profit Services Government services The Problem of the informal sector has to be mentioned in an explict manner.

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    22. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 22 Functional income split into: Gross and Net Wages Gross and Net Profits, probably split into income from wealth (mainly rents, interest payments, dividends) and other profit income. Gross and Net Transfer Payments Personal income split into at minimum five quintiles.

    23. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 23 Statistical explanation of the development of volume and structure of macroeconomic demand Private Consumption, possibly disaggregate by groups of goods and services Private Investment, disaggregated for equipment, non housing construction, housing construction an inventories Public Consumption, possibly disaggregated for main public tasks Public Investment, see above Exports, oil and non-oil, goods and services, in a possible further step by main categories and main regions Imports, goods and services, later on possibly by main categories and regions

    24. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 24 Employment has to be disaggregated for Wage earners, both occupied public and in the private business sector Self employed persons; I would recommend a disaggregation into “capitalists” making their income mainly from exploitation and “non-capitalists”, small producers of goods and services, living mainly from their own work. Further on it should be disaggregated for “regular” and “informal” employment. Also already at a first stage, the model must contain behavioural equations for all main demand side deflators for taking account of price developments. Also basic equations for monetary aggregates should be included.

    25. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 25 The main receipts and expenditures of the government, disaggregated at minimum for the different levels of the regional administrative bodies, should be depicted: Receipts: Oil revenues Direct Taxes from wages and profits Indirect taxes by main sort Taxes on wealth Social security taxes Others Expenditures Wages Non-wage consumption Social Welfare Investment Others Expenditure could in addition be differentiated for the main fields of public spending by task.

    26. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 26 The process of building a Venezuelan model of 250 + Equations would include the following overlapping rough tasks: Setting up the data base, in close cooperation the Statistical Office and the BCV of Venezuela and taking account of the “informal sector”. The Estimation of the model. For some of the base equations, first estimates will be possible already parallel to the middle and end phase of the data bank generation process. Although foreign expertise might be helpful in one or the other way, the technical side of the building of the model should be done in very close cooperation between Venezuelan econometricians, for example from the BCV, and experts from abroad. For the laying the foundation of a “democratic exploit” of the use of this method, from the beginning members of the peoples movements must be involved in the development and discussion process of the models specification and its economic implication, preventing the model from the beginning of getting a ”black box” – thing for some experts. That will surely take more time than the rising up of such a model by a group of workoholic experts, but is crucial for the task of developing the democratic potentials of this method. Testing the model: Intense testing of consistency and reliability of the model concerning its behaviour in the estimation period is necessary. Afterwards, a lot of testing concerning the simulation properties has to be done, also involving members of the peoples movements the model is dedicated to. Overall, the process of generating a first working model of the specified type will take not under a year. The important and crucial integration of the people´s movement in the process makes it much more difficult to calculate the time needed, than it is for a typical “expert project”. But only if the processes figured out by the model are not hidden in a “Black Box”, the democratic potential of the method can be realised.

    27. KBE Dipl.-Ökonom Klaus Bartsch Econometrics 27 Remarks on actual National Accounts and the Labour Value Aproach

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