A P P L I E D EC ON OM I CS

WEEK 2
SIR JHOEY POBLETE
ECONOMIC THEORY VS APPLIED ECONOMICS
ECONOMETRICS

•ECONOMETRICS IS THE APPLICATION OF STATISTICAL

AND MATHEMATICAL THEORIES TO ECONOMICS FOR THE
PURPOSE OF TESTING HYPOTHESES AND FORECASTING
FUTURE TRENDS
TYPES OF ECONOMETRICS

•THEORETICAL
• APPLIED
WHY STUDY ECONOMICS?

•DECISION MAKING SKILLS

•PROBLEM SOLVING SKILLS
•JOB OPPORTUNITIES
BASIC ECONOMIC PROBLEM

•SCARCITY (THE ROOT OF ALL PROBLEMS)

• -REFERS TO THE TENSION BETWEEN OUR LIMITED RESOURCES AND OUR UNLIMITED WANTS AND NEEDS
ECONOMIC QUESTIONS

•WHAT TO PRODUCE
•HOW TO PRODUCE
•FOR WHOM TO PRODUCE
 PH BASIC ECONOMIC PROBLEMS
•UNEMPLOYMENT
• HOW TO RESPOND TO UNEMPLOYMENT:
• A. APPROPRIATE ECONOMIC POLICIES FOR LABOR-INTENSIVE INDUSTRIES.
• B. IMPROVEMENT IN THE EDUCATIONAL SYSTEM OF THE COUNTRY ESPECIALLY IN THE RURAL AREAS.
• C. MINIMIZE RURAL-URBAN MIGRATION BY IMPROVING THE ECONOMIC ENVIRONMENT IN THE RURAL AREAS.
• D. PROVISION OF MORE INVESTMENT OPPORTUNITIES TO ENCOURAGE LOCAL AND INTERNATIONAL
INVESTMENT LIKE TAX INCENTIVES.
UNEMPLOYEMENT CONT’D…
• E. PROPER COORDINATION BETWEEN THE GOVERNMENT AND THE PRIVATE SECTOR TO SOLVE THE
PROBLEM OF JOB MISMATCH

• F. DECREASING THE RETIREMENT AGE FROM 65 TO 60 FOR PUBLIC SECTOR TO GIVE CHANCE TO YOUNGER
GENERATION TO ENTER THE LABOR MARKET BUT PROVIDING AN ATTRACTIVE WELL-DEFINED BENEFIT
PENSIONS AND RETIREE HEALTH CARE FOR RETIREES.

• G. SLOWING POPULATION GROWTH.

PH BASIC ECONOMIC PROBLEM: POVERTY
WHAT CAN BE DONE TO SOLVE POVERTY PROBLEM?
• A. REDUCE UNEMPLOYMENT.
• B. APPROPRIATE POLICY ON LABOR INCOME.
• C. PROMOTE ECONOMIC GROWTH TO IMPROVE THE STANDARD OF LIVING.
• D. PROVISION OF UNEMPLOYMENT BENEFITS FOR THOSE WHO WILL BE UNEMPLOYED DUE TO NATURAL AND
MAN-MADE CALAMITIES.

• E. INCREASING SOCIAL SERVICES LIKE EDUCATION, HEALTH CARE AND FOOD SUBSIDIES LEADS TO SUSTAINABLE
POVERTY REDUCTION.
PH BASIC ECONOMIC PROBLEMS: QUALITY OF
INFRASTRUCTURE
WHAT CAN BE DONE TO IMPROVE THE QUALITY OF INFRASTRUCTURE?
• A. QUALITY INFRASTRUCTURE INCREASES MACRO-LEVEL COMPETITIVENESS AND ENCOURAGES INVESTMENTS. IN ORDER TO EASE
INFRASTRUCTURE CONSTRAINTS, THE PHILIPPINES NEED TO ACHIEVE A GRADUAL INCREASE IN INFRASTRUCTURE INVESTMENTS TO AT LEAST 5
PERCENT OF GROSS DOMESTIC PRODUCT (GDP), AND AN INCREASE IN THE EFFICIENCY OF SPENDING.

• B. THE GOVERNMENT SHALL IMPLEMENT FISCAL REFORM PROGRAM.

• C. CONTINUES REFORM IN KEY SECTORS-PARTICULARLY POWER, ROADS, AND WATER-TO IMPROVE COST RECOVERY, COMPETITION, AND
INSTITUTIONAL CREDIBILITY, AND TO SHARPLY REDUCE CORRUPTION

• D. IMPROVING CENTRAL OVERSIGHT OF THE PLANNING AND COORDINATION OF INVESTMENTS.

• E. FOCUS ON INVESTMENTS THROUGH PUBLIC-PRIVATE PARTNERSHIPS TO ADDRESS KEY BOTTLENECKS, AND ACHIEVE QUICK GAINS IN SERVICE
DELIVERY.
PH BASIC ECONOMIC PROBLEMS: INCOME INEQUALITY

CAUSES
• POLITICAL CULTURE
• INDIRECT TAXES
• INCOME TAXES
INCOME INEQUALITY CONT’D…
SOLVING INCOME INEQUALITY

• A. DIRECT MONEY TRANSFERS AND SUBSIDIZE FOOD PROGRAMS FOR THE URBAN AND RURAL POOR.
• B. DIRECT GOVERNMENT POLICIES TO KEEP THE PRICE OF ESSENTIAL PRODUCTS LOW.
• C. REFORM PEOPLE’S POLITICAL CULTURE. D. ENCOURAGE AND EXPAND COLLECTIVE BARGAINING E.
ENCOURAGE PROFIT SHARING
RUNDOWN ON UR ACTIVITIES….