Using Chain Weighted Quantities

A cautionary tale for my undergraduate economics students

Reader Steven Kopits wonders why, in order to show the relative prominence of government spending, I don’t merely take the ratio of one real index to another real index. Specifically, he admonishes me:

I find this presentation confusing. … Is it not possible to present this data as a simple percent of GDP?

Links for 2013-05-01

Quick links to a few items I found of interest:

Some Textbooks

Public Service Announcement, for those who wish to talk intelligently about macro, instead of ranting. Here’s what I use (in response to Steven Kopits asking “What the he** do you teach your students, Menzie”). The following are free use, or older editions that have been superseded by newer.