Evaluation of GDP growth in Poland in 1996-2005 and in a longer-term perspective by use of discounting methods
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The paper explains how some discounting cash flows (DCF) methods can be adapted to analyses of macroeconomic trends, related e.g. to long-term changes in GDP. Average annual growth rate in GDP in Poland in 1996-2005 has been evaluated by use of the method analogous to that used for calculation of the Internal Rate of Return (IRR) in microeconomic analyses. Contrary to the generally used geometric mean, the proposed average growth rate (equivalent to that proposed earlier by I. Timofiejuk) takes into account the accumulated volume of the GDP generated over the whole analysed period, and not merely the ratio of the GDP volume in the last year to that of the base one. This prevents the bias favouring a potential choice of the 'delayed growth' trajectory, yielding identical growth index for the last year of the period as some other (uniform or accelerated) growth patterns, but characterised by a lower volume of the GDP accrued over that period. Calculation of current value of GDP flows for past or future multi-year periods has a sound economic meaning and can be a valuable tool of macroeconomic analyses and studies of growth policy options, adding new arguments for possible 'growth now' trajectories. It has been found out that the 'internal growth rate' of GDP in Poland amounted to 4.8% annually in 1996-2003, as compared to 4.0% geometric average rate for that period. The corresponding IRR rate for the years 1996-2005 has been estimated at 4.5-4.6%, against 4.2%-4.3% geometric average. Final section deals with comparative trends in GDP in Poland and other EU member states. Strong economic upturn in Poland in 2003-2004 has been a surprise to many experts. The growth has been faster than forecast by the European Commission and OECD. It is supposed to continue after the accession.
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