Monday, September 2, 2013

Then what is the correct view of macroeconomics?

In some countries, such as China, Thailand, South Korea, and Vietnam, nominal GDP growth was driven to a large extent by real growth. Moreover, according to the soon-to-be-published Atlas of Economic Complexity, these economies began producing more complex products, a harbinger of sustainable growth. Angola, Ethiopia, Ghana, and Nigeria also had very significant real growth, but nominal GDP was boosted by very large terms-of-trade effects and real appreciation. Ricardo Hausmann

Finite networks of distribution, otherwise known as Shannon optimal flow models. The model I pioneered, if I might say so. Complexity is the deliver and subdivide network that moves goods through the economy and out to consumers. An economy that maintains a complex, but minimal, distribution tree delivers the greater variety of goods under sustainable conditions. And that, under the correct model, is GDP growth.

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