sir jesus Posted March 25, 2009 Report Share Posted March 25, 2009 (edited) First let me introduce myself, I am Sir Jesus of the Melvin Republic and at the moment am writing up a factbook for my nation. I have been following CNRP for quite a while, and now I guess I’m beginning to immerse myself in this world. One thing I noticed it lacked was any economic measurement of the geopolitical realm, and in the real world economic strength is extremely important. Therefore, I have tried to make my best contribution to this world. Please excuse the wall of text, and please comment on and try out my system. B) I have spent days coming up with formulas and research into creating a GDP calculator. I know there will be several people claiming that they are too complex for CNRP, but I have made it pretty simple. If you want to know your GDP and GDP Growth Rate with ease, you can tell me the 6 simple variables and I will calculate it for you. If you are interested in economics or internal policy, you are able to calculate it for yourself. You may ask why it is important to have a GDP calculator… - Removes God-mode from people’s nation decisions. Sure you can build a fantastic space structure or super-tunnel, but there should be costs. - Makes internal policy interesting, RPers will be able to focus on growing their nation strong and economically powerful. - Realistically calculates the costs of warfare. Using this GDP system, government spending is “unlimited,” or at the complete discretion of the ruler. However, extensive government expenditure will result in severe inflation and government budget deficit will reduce market investment. Other checks and balances exist within the calculator. - Will stimulate more international activity since the benefits of trade become measurable. I foresee the implementation of trade tariffs and economic blocs, and the resulting wars and conflicts. Acquisition of land, while costly, will have the economic benefit of more natural resources. - If every nation uses the same GDP calculator, it will be easier to compare the relative combat strength of every nation. Obviously technology and strategy play a huge role, but in total warfare the production capacity of a nation is extremely important. Therefore, nations will need to keep in mind their peer’s economic strength when deciding geopolitics. Mathematical breakdown of the GDP calculator can be found in the 2nd post. My personal sample available in the 3rd post. Fill out the following to have your nation’s economy “calculated:” 1) IG Average citizen income 2) IG Citizen count 3) Average children born per mother 4) Income Tax Rate 5) National Interest Rate (between 1-20%) 6) Total Government Expenditure, broken down by money amount in each category The following information is determined… Basic Revenue Base GDP: Tax Revenue: Government Expenditure: Government Budget: Inflation Rate: Components of GDP % Investment Expenditure: % Government Expenditure: % Consumption Expenditure: % Net Exports: Total Investment Expenditure: Total Government Expenditure: Total Consumption Expenditure: Total Net Exports: Market Strength and Growth Real GDP: Market GDP (I+C) Growth Rate: Explanation of the calculator’s mechanics: The calculator uses an aggregate supply-demand model to determine overall effects on the national economy. Market GDP Growth represents advances in aggregate supply (and thus potential GDP), or basically the ability of the economy to perform. Instantaneous GDP changes represent changes in aggregate demand, or the actual performance of a nation. For more information on the AD/AS model, follow http://www.investopedia.com/categories/economics.asp The five components of Market GDP Growth (AS) are: -Population growth +determined by (Avg. Children/Mother – 2.1)/2 -Capital Investment as a % of GDP +determined by the relationship between savings supply and willingness to invest. +Savings supply increases with an increase in: interest rate + government surplus +Willingness to spend increases with a decrease in interest rate (opportunity cost). -Changes in Productivity +Determined by fiscal policy, institutions, laws, etc. -Changes in Input Prices +Determined by amount of import and varying acquisition of natural resources (through improved farming, annexed land, better mining, etc.) -Inflation Rate +Determined exponentially by government expenditure as a % of GDP + G20%->2% G30%->4.5% G40%->8% G50%->12.5% etc… +Subtracts directly from GDP growth Automatic Changes in GDP (AD): Consumer Spending -Increases by 1% for every 1% reduction in taxes and vice versa (base = 30%) -Increases by 1% for every 1% reduction in savings rate (base = 5%) Investment Spending -Increases by .5% for every 1% reduction in taxes (base = 30%) Government Spending -Any increase or decrease in Gov Spending is directly tacked onto GDP Net Export = (Exports-Imports) Notes: -One fiscal year = 20 days in real time (tax collection cycle IG). I will be keeping an economic record for all participating nations in constant time once enough people start using it (like 5 or more). -If your government runs a deficit, a higher interest rate will be desirable. This is due to a “crowding out” effect, in which the government subtracts from the total possible Saving Supply. The opposite is true for a budget surplus, where the government will add to the Saving Supply. -Exports and Imports must be decided upon by two different parties, and must be within reason. Everyone should start out using the calculator with zero net exports. -GDP growth only affects Consumer and Investment spending, as these grow "naturally" and cannot be commanded by the government. Rates of Return on Government Expenditure -I will use these rates based on the following articles, but are just a sampling. If you propose a different form of spending or RoR, please provide sources to back it up. Education = 14%1 Healthcare = 4%2 Infrastructure = 17%3 Research + Development = 30%1 Last Comment: Please do not suggest new additions to the calculator just at the moment. I have a ton of new ideas, but they would make this more complex and would be detrimental. However, I’m definitely open to suggestions to change certain aspects of it. Also, if we have any true commies out there, we're gonna have to talk. 1 http://www.dfid.gov.uk/research/returns-to-research.pdf 2 http://www.sciencedirect.com/science?_ob=A...da7ce8bc#bbib33 3 http://www.iiasa.ac.at/Research/RMS/june99/papers/pflug1.pdf Edited March 25, 2009 by sir jesus Quote Link to comment Share on other sites More sharing options...
sir jesus Posted March 25, 2009 Author Report Share Posted March 25, 2009 (edited) How It Works Base GDP = Citizen Count * Daily Income * 36500 Tax Revenue = Income Tax *GDP Government Expenditure = Total costs of government Government Budget = Taxes – Expenditure Market GDP (C+I) Growth = See formula below. % of GDP as Investment = (SS * (10 - (IR*50))) / GDP SS = Savings Supply IR = Interest rate [in decimals] Saving Supply = (SR*GDP) + (Gov. Budget/4) Savings Rate = Interest rate/2 % of GDP as Government Expenditure = Total Gov Spending / Base GDP % of GDP as Consumer Expenditure = 1.0 – I% – G% –NX% % of GDP as Net Exports = (Exports - Imports) / Base GDP (G)Total Government Expenditure = Obvious... (I)Total Investment Expenditure = I% * Base GDP ©Total Consumer Expenditure = (C% * Base GDP) + (C% * Base GDP)*(.3-tax rate) + (C% * Base GDP)*((.1 - interest rate)/2) (NX)Total Net Exports = Exports - Imports Real GDP = G + I + C + NX Market GDP (C+I) Growth = See formula below. Market GDP Growth Rate ^%Population + (I%*10) + (^%Productivity) + (^%Input Prices) – (%inflation) - ^%Population = ((Avg. Children/Mother)-2.1)/2 - I% = Investment as percentage of GDP - ^%Productivity = Change in productivity as percentage change of how much “better” the economy runs, usually brought about through fiscal policy. Measured: (Societal Rate-of-Return * Expenditure)/GDP. - ^%Input Prices is the decrease/increase of input costs to production. Obtained through more efficient acquirement of domestic resources and imports... ^%Input Prices = (Total Imports / GDP)/3 -%inflation = (%Government spending/GDP)2 / 2 Automatic Changes in GDP: Consumer Spending -Increases by 1% for every 1% reduction in taxes and vice versa (base = 30%) -Increases by 1% for every 1% reduction in savings rate (base = 5%) Government Spending -Any increase or decrease in Gov Spending is directly tacked onto GDP Net Export = (Exports-Imports) -Increases in exports directly increase GDP and vice versa -Increases in imports directly decrease GDP and vice versa Edited March 25, 2009 by sir jesus Quote Link to comment Share on other sites More sharing options...
sir jesus Posted March 25, 2009 Author Report Share Posted March 25, 2009 (edited) Economy of the Melvin Republic 1) IG Average citizen income: $450.08 2) IG Citizen count: 142,184 3) Average children born per mother: 2.7 4) Income Tax Rate: 30% 5) National Interest Rate (between 1-20%): 10% 6) Total Government Expenditure, broken down by money amount in each category Military - $50 Billion Education - $150 Billion Healthcare - $50 Billion Infrastructure - $100 Billion Research and Development – $200 Billion Police and Authorities - $25 Billion Total: $575 Billion Economy GDP: $2.33 Trillion Market GDP Growth: 4.8% per fiscal year Tax Revenue: $700 Billion Government Expenditure: $575 Billion Government Budget: $125 Billion Surplus National Composite Interest Rate: 10% National Income Tax Rate: 30% Total Exports: $0 Total Imports: $0 Avg. Children per Mother: 2.7 Inflation Rate: 3.0% Components of GDP % Investment Expenditure: 31.6% % Government Expenditure: 24.6% % Consumption Expenditure: 43.8 % % Net Exports: 0% Total Investment Expenditure: $736 Billion Total Government Expenditure: $575 Billion Total Consumption Expenditure: $1.02 Trillion Total Net Exports: $0 Savings Supply: (.05*$2.33T) + ($125B/4) = $147 Billion Investment as % of GDP = (147B * (10 - (.1*50)))/2.33T = 31.6% % of GDP as Government Expenditure = $575B / $2.33T = 24.6% % of GDP as Consumer Expenditure = 1.0 – .316 – .246 – 0 = 43.8% Market (I+C) GDP Growth Rate ^%Population + (I%*10) + (^%Productivity) + (^%Input Prices) – (%Inflation) (.3%) + (3.2%) + (4.3%) – (3%) = 4.8% Growth in I + C Factors -Population Growth (Children/Mother) -> (2.7-2.1)/2 = .3% -Capital Investment -> .32*10 = 3.2% -Change in Productivity Education - $150 Billion +14% Rate of Return *21 Billion added to GDP annually Healthcare - $50 Billion +4% RoR *2 Billion added to GDP annually Infrastructure - $100 Billion +17% RoR *17 Billion added to GDP annually Research and Development – $200 Billion +30% RoR *60 Billion added to GDP annually Total = +100 Billion GDP = 2.33 Trillion …….. .1/2.33 = 4.3% -No Imports or Resource Improvements = 0% -Inflation -> .2462 = .060 -> .060/2 = 3.0% Note: Keep in mind that my nation is economically based (weak military) and I probably have above average growth. Questions? Comments? Edited March 25, 2009 by sir jesus Quote Link to comment Share on other sites More sharing options...
Sumeragi Posted March 25, 2009 Report Share Posted March 25, 2009 Here's a post I wrote that might help you with this: http://forums.cybernations.net/index.php?s...t&p=1221422 Quote Link to comment Share on other sites More sharing options...
V The King Posted March 25, 2009 Report Share Posted March 25, 2009 Looks very neat and thoroughly thought, using actual economics aspects in order to do the calculations. Mind you, I find the topic of the thread is a wee misleading, taking into account the calculator also reveals budget breakdown, expenditures and such... "economy calculator" would be more appropriate. Also, I'm not sure if Birth Rate - or population growth in general - should be a factor in the calculations. Of course, I'm fully aware natural population growth is a pivotal aspect for determining how much an economy will grow or shrink in the long run - but in principle, more birth rates allow for more room for the economy to expand... guess what people are virtually always going to opt for? High fertility rates. Another issue is with the growth projections and fiscal years - they do make sense within the calculator - but CNRP runs at a different pace than "real life" (Usually three days per RL day; slowed down with major wars) - and actual growth is solely determined by how someone is managing their nation in-game - per instance, I have 2 Trillion as GDP and the estimates say that it'll grow 5% - to 2.1T, but what if I decide to blast some of my warchest and buy 2,000 infrastructure in-game? If I re-calculate my GDP the day after, it'll probably already be at around 2.4T or so. I'm not sure if you intended for the projections to have some actual worth, or if it is just supposed to be an indicator of how well an economy could be doing - so yeah, just throwing this in here. As a side note, I wonder what you are currently studying/working with? Quote Link to comment Share on other sites More sharing options...
sir jesus Posted March 25, 2009 Author Report Share Posted March 25, 2009 Also, I'm not sure if Birth Rate - or population growth in general - should be a factor in the calculations. Of course, I'm fully aware natural population growth is a pivotal aspect for determining how much an economy will grow or shrink in the long run - but in principle, more birth rates allow for more room for the economy to expand... guess what people are virtually always going to opt for? High fertility rates. I agree, and that is why I recommended people keeping it realistic. If you want to increase your fertility rate, then you will need to spend money on healthcare. In return, this will reduce the amount of savings available to capital investment as well as increase the rate of inflation. I spent a lot of time keeping this beast balanced. Another issue is with the growth projections and fiscal years - they do make sense within the calculator - but CNRP runs at a different pace than "real life" (Usually three days per RL day; slowed down with major wars) This may have been my hardest issue to deal with, and this is why I declared the time aspect in fiscal years. It can be completely unrelated to CNRP political or military time, or it can be if you guys want it to be. - and actual growth is solely determined by how someone is managing their nation in-game - per instance, I have 2 Trillion as GDP and the estimates say that it'll grow 5% - to 2.1T, but what if I decide to blast some of my warchest and buy 2,000 infrastructure in-game? If I re-calculate my GDP the day after, it'll probably already be at around 2.4T or so. I'm not sure if you intended for the projections to have some actual worth, or if it is just supposed to be an indicator of how well an economy could be doing - so yeah, just throwing this in here. Once you enter the "system", I do not believe you should be able to re-evaluate your GDP using IG parameters. I based this off of the General Guidelines ..... The first claim made by your nation must be within your in-game sphere of influence (SoI). Any claims outside of your sphere after your first claim must be roleplayed out and accepted by the general community. As a side note, I wonder what you are currently studying/working with? Economics, History, and Geography These types of things are my playground! Quote Link to comment Share on other sites More sharing options...
LeVentNoir Posted March 25, 2009 Report Share Posted March 25, 2009 Cool, I'll sign up. Quote Link to comment Share on other sites More sharing options...
V The King Posted March 25, 2009 Report Share Posted March 25, 2009 *nods in agreement with most replies* Once you enter the "system", I do not believe you should be able to re-evaluate your GDP using IG parameters. I based this off of the General Guidelines ..... Well, the main problem here is that people will enter their GDP at different times - so, through logical reasoning, people that enter their numbers later will consequently have more IG stats - thus, having a higher GDP. Unless calculations were periodically re-made at certain points (RP fiscal years), but I'd reckon that'd be far too much work. Quote Link to comment Share on other sites More sharing options...
sir jesus Posted March 26, 2009 Author Report Share Posted March 26, 2009 This is true. Theoretically, this should be overcome by the GDP growth rate and it would be more beneficial to sign up as soon as possible. I'm going to start a publication of Y01 GDP's, and being keeping track of everyone's growth. I'm definitely willing to do the work, I just need the data! Quote Link to comment Share on other sites More sharing options...
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