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GDP elasticity question

  1. Sep 29, 2004 #1
    Hello, hope this is the right place for my question;
    Someone can help me with this one? I have got the results of a study about the growth of the chemical industry in a certain region. I got in discussion with the authors of the study because I saw that certain chemical projects which will come on stream in the future are not reflected in the projected figures.
    Their answer was that they used a scientific prdicting method based on "GDP elasticity". Can anybody explain me the basics of this?

    Keep it simple please! :yuck: Thanks a lot!
  2. jcsd
  3. Sep 29, 2004 #2


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    Typically, Elasticity in supply/demand is defined as the percentage change in the quantity supplied/demanded resulting from a given percentage change in the price of the commodity.

    I'm not sure what GDP Elasticity is, but I'll guess that it is a percentage change in the contribution to the GDP resulting from a changing price.

    If x% change in price causes and x% change in supply/demand, the commodity is said to be unit (or unitary ?) elastic.

    If you draw the supply demand curves on a logarithmic scale, a low slope represents a high elasticity.

    That's all I can tell you....wait a little bit for the experts to come along. I may be completely on the wrong track. :eek:
  4. Sep 29, 2004 #3
    Thanks, its a start!
  5. Sep 29, 2004 #4


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    Moving this to Social Sciences (which includes Economics) - where's Njorl? :confused:
  6. Sep 29, 2004 #5


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    I get the feeling this thread would have fared better in Gen. Disc. or Politics. I know that many of the folks that are regulars in the Politics and World Affairs section are quite knowledgeable in economics, and most of them will also browse thru Gen Disc.

    I haven't seen Njorl in like ages now.
  7. Oct 30, 2004 #6
    Surely it is the responsiveness of agreggate demand/ supply to inflation?
  8. Oct 30, 2004 #7


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    When in doubt, google. Here is a little tutorial on elasticity. Scroll down to elasticity of macroeconomic variables and you will see that GDP can have elasticity with respect to a number of variables.
  9. Nov 28, 2004 #8

    GDP elasticity in the context you mention it would be in the form

    % change in GDP / % change in chemcal projects ( probably measure in $)

    they would (should) have projected the impact of future chemical projects based on a calculated elasticity using available data. The elasticity could be used in a regression to better estimate the growth of the chemical industry in a region.

    If you constructed a regression in the form
    where y is the value of

    y = Const + 0.12RegGDP + 0.0016PChemProd

    then you could construct another variable around the amount invested in new chemical projects adding something like 0.00012AnnRegChemInvst where the 0.00012 would be the elasticity in question (AnnRegChemInvst would be the monetary value of the certain chemical projects you mention). Giving

    y = Const + 0.12RegGDP + 0.0016PChemProd + 0.00012AnnRegChemInvst

    Something like anyways

  10. Dec 3, 2004 #9
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