Use Annualized Growth NumbersComments for Use Annualized Growth Numbers at http://www.cepr.net , comment 1 to 5 out of 5 comments
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http://www.cepr.net/index.php/blogs/beat-the-press/use-annualized-growth-numbers#comment-1390
Thanks, but I purposely chose a number that was a factor of 10 larger than DB's to illustrate the difference between the approximation and the correct calculation. In any case, what I wrote is, by itself, correct. - JCWed, 07 Jul 2010 16:30:22 +0100...
http://www.cepr.net/index.php/blogs/beat-the-press/use-annualized-growth-numbers#comment-1389
Almost right, JC. DB stated that the quarterly rate was 0.3%, which is 0.003, and that would make the annualized rate = (1 + .003)^4 - 1, or 0.012054...., or 1.2054%.
- terryhWed, 07 Jul 2010 14:59:44 +0100...
http://www.cepr.net/index.php/blogs/beat-the-press/use-annualized-growth-numbers#comment-1383
Actually, DB describes the procedure incorrectly. If r_q is the quarterly rate, say r_q = 0.03, then to get the annualized rate, r_a, do
r_a = (1 + r_q)^4 - 1
= 0.126
Taylor expansion (valid for small r_q) gives
r_a approx 4*r_q
- JCWed, 07 Jul 2010 06:32:28 +0100...
http://www.cepr.net/index.php/blogs/beat-the-press/use-annualized-growth-numbers#comment-1375
4th power? Can you explain how an exponent is involved? Do you mean 4 decimal places? - fuller scmidtWed, 07 Jul 2010 04:03:12 +0100...
http://www.cepr.net/index.php/blogs/beat-the-press/use-annualized-growth-numbers#comment-1373
In the interest of consistent comparability and accuracy, credit card companies in the US will now be responsible for reporting all measures of annual GDP growth in the same way they report measures of annual percentage rate (APR) charges for credit cards. Despite the necessity of reading one thousand pages of fine print to understand it, the net positive benefits of this innovation in economic education are considered worth it. - izzatzoWed, 07 Jul 2010 03:06:14 +0100