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Long-Term Projections Compared

Published online by Cambridge University Press:  26 March 2020

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Extract

In quick succession, three sets of figures about the possible future of the British economy have been published. In July, the latest in the series of Programme for Growth volumes, describing the research being undertaken in Cambridge under the directorship of Professor J. R. N. Stone, appeared under the title Exploring 1970. The Cambridge calculations (hereafter referred to as SAM—Social Accounting Matrix) start with the economy as it was in 1960 and present a possibility for 1970 which can be expressed in terms of annual compound rates of growth over the decade for sectors of the national product and for particular industries. The National Institute study, published in September as The British Economy in 1975, (hereafter referred to as BECKERMAN) also starts with the actuality of 1960 but extends the look into the future as far as 1975. The National Plan, published in September, and prepared by the Department of Economic Affairs (hereafter called PLAN), takes the actual figures of 1964 as the base and looks forward to 1970.

Type
Research Article
Information
National Institute Economic Review , Volume 34 , November 1965 , pp. 30 - 39
Copyright
Copyright © 1965 National Institute of Economic and Social Research

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References

Notes

note (1) page 30 ‘Exploring 1970 : some numerical results’, A Programme for Growth, Part 6, Chapman and Hall for The Department of Applied Economics, University of Cambridge, July 1965.

note (2) page 30 W. Beckerman and Associates, The British Economy in 1975, Cambridge University Press, September 1965.

note (3) page 30 The National Plan, HMSO, September 1965.

note (4) page 30 ‘Arithmetic of the long-term balance of payments problem’, National Institute Economic Review No. 33, August 1965, page 18.

note (1) page 31 This method of interpolation for 1970 is not quite straightforward. Consider a series of items x1, x2,… xn (be they components of consumers' expenditure or sub sections of an industry or whatever) which added up to X in 1960. Let r 1, r 2,. rn be the corresponding BECKERMAN growth-rates to 1975, then the corresponding total for 1975 will be x1(1+r 1)15+x2(1+r 2)15+ … and this can be written X(1+R 15)15. That is to say, there is an overall growth-rate R 15 of the total implicit in the growth-rates of the various sectors. If we do the same exercise over 10 years only, we shall obtain another overall growth-rate R 10 implicit in the same rates of growth for the sections. There is no reason in logic why R 10 should be equal to R 15. In practice, they will not differ significantly in the cases where the r's are small or else of the same order of magnitude, but where r 1, r 2, … etc. differ from one another substantially, then there can be a not negligible difference between the implicit growth-rates over 10 and 15 years respectively for the total. In the event, we found this problem did not cause much trouble.

note (2) page 31 PLAN (table 2.2, page 32) gives 3.4 per cent a year for the period 1960-64 and 3.8 per cent a year for 1964-70, which is equivalent to an average of 3.64 per cent a year over the decade. PLAN figures for 1960-64 had been adjusted to ‘take account of the three methods of measuring gross domestic product and of cyclical changes’.

note (1) page 32 See The British Economy in 1975, Chapter VIII, for a detailed discussion of this point.

note (1) page 33 By chance it happens that the growth-rate of consumption 1960-1970 at 1964 prices in SAM is 3.2 and so is the average rate of growth found by linking 1960-1964 actual with PLAN 1964-1970. The original BECKERMAN consumption growth-rate is also 3.2 when taken over the period 1960-70.

note (2) page 33 Presumably partly because it shows a much bigger increase than the other two in expenditure on motors, PLAN shows a much smaller increase in expenditure on other durables. PLAN is alone in expecting a fall in average running costs per vehicle.

note (1) page 34 See footnote (4), page 30.

note (1) page 35 See Economic Trends, September 1965, page vii.

note (1) page 36 The National Plan, op. cit., page 77.

note (2) page 36 The British Economy in 1975, op. cit., pages 136-138.

note (3) page 36 The National Plan, op. cit., page 131.

note (4) page 36 The National Plan, op. cit., Part II, page 214; and The British Economy in 1975, op. cit., page 128.

note (5) page 36 The National Plan, op. cit., page 79 and Part II, page 214.

note (1) page 39 See The British Economy in 1975, op. cit., pages 161-165 and A. Maizels, Industrial Growth and World Trade, pages 384-385 and 391-392.