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Madrid, Apr 15 (EFE).- Confusing debt with public deficit, crisis with recession and talking regarding taxes as if they were all the same are frequent mistakes among the population, which in recent weeks has experienced an explosion of economic terms due to the Ukraine war.
The book “Language and Economics in the classroom and on the street” responds to these misunderstandings, which has just been published by the Universidad Pontificia de Comillas and which unites these two disciplines by the professors Pilar Úcar (Faculty of Human and Social Sciences) and Yolanda Fernández (Faculty of Economic and Business Sciences), with an eminently didactic character.
In an interview with EFE, Fernández explains that citizens “do not usually know what is behind the terms they usually hear”, for example, they tend to confuse recession with crisis when its economic effects “neither last the same nor have to be the same gravity”.
“Language and Economy in the classroom and on the street” can be a roadmap for the reader to select content, delve into concepts, forget what is known, explore what is ignored or properly apply the Spanish language.
In the current war context, Fernández affirms that one of the problems is not using soft words to express harsh situations, but using language incorrectly to explain “the breadth and interrelation of the socioeconomic effects” that the war is generating.
THE RISE IN THE CPI: INCOMPLETE AND INADEQUATE STATEMENTS
“For example, there is a lot of talk regarding the rise in the CPI (9.8%) and many comments are being made regarding it, but unfortunately they are incomplete or inappropriate statements. Do citizens know how that index is calculated? international comparisons so happily?” he asks.
The CPI collects the prices of a basket of products, the most consumed in families, weighted according to the weight they have in spending on food, housing or transport, and the statistical computation of all this is what has given a rate of 9.8%.
However, if unprocessed food and energy are subtracted from this calculation, “the advance figure for March drops to 3.4%; therefore, it might be said that what has caused this strong rise has been the war in Ukraine which has accentuated the rise in energy prices, the reactions of some productive sectors to the rise in fuel prices -which reduced the supply of food-, and the hoarding behavior of certain consumers and companies.
Thus, the conflict in Ukraine “has not been the only factor that has caused this price increase. They have already been rising since October 2021,” says the professor, who adds that the information is not being properly transmitted when comparisons are made with other European countries because the basket that makes up the CPI is different in each country, which is why the European Union established the Harmonized Consumer Price Index (IPCA).
That macromagnitude is what “should be compared and although it is true that Spain is above other countries, the inflationary trend is taking place in many European countries.”
Regarding the numerous predictions made by international organizations regarding the impact of the invasion, Fernández recommends taking them with caution since it is still “early” to know its real effect.
“Many forecasts had to be adjusted periodically because, in reality, it is the behavior of families, companies, the public sector and the economic interrelation of countries that determines the final effect at an economic level and all these agents can have unexpected responses.
GROWTH, GDP, PREDICTIONS…
Another misunderstanding occurs when talking regarding GDP and, in fact, when talking regarding its growth forecasts, the data published by prestigious entities do not coincide. Why?
Among other things because the GDP “is still the value of the production of final goods and services that have been generated within a country and that value, price per quantity, has many nuances, for example, what price do I use: that of cost of factors or the market cost; this year’s or a year with stable prices”.
The CPI is a macromagnitude that “concerns everyone” and that is taken into account to calculate increases in wages or pensions, but “few people know what it really entails and what factors influence its value, so certain changes in the data during a month scares them more than it should. Caution yes, chaos no,” he adds.
Another mistake is to refer to taxes as if they were all the same, when their variety is very wide.
There is also confusion between public deficit and public debt. The first is the difference between the income and expenses of the public administration, while the debt is one of the ways of seeking financing that the authorities have to pay their deficit.
(c) EFE Agency
