GDP/GNP

Tan Princess

Why exactly do they fluctuate against each other so much in Ireland for instance Q1 2008 GDP was -1.5 and now GNP is -2.1??

eamonnm79

From the BBC website: "Gross Domestic Product (GDP) is the most commonly used indicator of national income. It attempts to measure the sum of incomes received by the various wealth creating sectors of the economy: manufacturing, agriculture, service industries.
In the UK, this data is published and revised every three months. Essentially it tells us how much money was made in the economy over a certain period of time.

The figures are 'gross' because GDP does not allow for the depreciation of physical capital - wear and tear on factory machines, office equipment becoming outdated etc.

When the value of income from abroad is included - what domestic companies earn abroad minus what foreign companies earn here and expatriate - then the GDP becomes the Gross National Product (GNP)."

GNP is lower than GDP in Ireland because the amount of money foreign companies repatriating back home is greater than the amount of money Irish companies repatriate back here.

Tan Princess

I know that i'm just wondering why the fluctuate so much quarter to quarter in ireland.

eamonnm79

Not really sure what you are asking then?
can you post the table or source where you got your info?

Tan Princess

Well what I said above about Irish data for the first two quarters. How can you explain that in quarter one GDP was down and GNP was up a small amount and now they are both down but GNP moreso than GDP this time?

eamonnm79

Tan Princess wrote: »

Well what I said above about Irish data for the first two quarters. How can you explain that in quarter one GDP was down and GNP was up a small amount and now they are both down but GNP moreso than GDP this time?

You have only given two figures and you need to give 4. You say that GNP was up a small amount in Q 1 but you never gave the q 1 figure.

Tan Princess

Ok so:


Q1 Q2
GNP .8% -2.1%
GDP -1.5% 0.8%

Time Magazine

Not a big fan of macro, but I suspect that what you're looking at are the direct effects and indirect effects of hits to the US. That'll effect GDP almost immediately as we're suddenly not getting profits in from US companies for tax purposes. As our economy is a bit of an AR(1) of the US', you might expect that to hurt our GNP at a bit of a later date.

As I said though, I have no empirical evidence of this, it's just a hunch.

Tan Princess

David McWilliams wrote: »

Not a big fan of macro, but I suspect that what you're looking at are the direct effects and indirect effects of hits to the US. That'll effect GDP almost immediately as we're suddenly not getting profits in from US companies for tax purposes. As our economy is a bit of an AR(1) of the US', you might expect that to hurt our GNP at a bit of a later date.

As I said though, I have no empirical evidence of this, it's just a hunch.

Yeah but why doesn't GDP continue to fall as sharply in Q2 then??

nesf

Tan Princess wrote: »

Yeah but why doesn't GDP continue to fall as sharply in Q2 then??

Because they are "decoupled" to an extent. Ireland is unusual in how much of its GDP figure comes from FDI. The foreign sector here is sufficiently large in relative terms for our GDP and GNP to less correlated than other countries.