EU Economics System v2 BETA 1.0

[Kingdom of Reitzmag]

Hey there lads!

It's been a while and I've been tinkering with real life economics systems to make our RP experience more realistic, while also maintaining simplification where possible. As such, I present to all of you the first BETA version of the EU Economics System v2.

Now what's new you may ask?

As of the moment, we've scrapped the entire system in favour of one that is easier to compute, less reliant on NationStates random numbers, more flexible to players, and takes into account RP situations.

Let me explain how the new system works.

The new system only relies on 2 data from NS, the population and average income. The population data is still computed the same way as before, but we're figuring out a new way of computing this to counteract the bias in population growth for smaller countries. The average income is still 1/6th of what is in NS, but now it is immediately treated as a value expressed in Euros instead of the former treating the computed value as Local Currency Unit.

This new system focuses on computing a GDP expressed in Euros. To help you better understand the system, here's a sheet for you to try experimenting values with.

Econ_Sheet_v1_INSERT.xls

This sheet will be important, as my proposal involves nations having to utilize a sheet of their own to make projections, with official data released by the ECB every 3 months from reports made by countries using their individual sheets.

From here, you can read either the longer explanation on computations, or the shorter and simpler version at the bottom.

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MAIN EXPLANATION

First, let's go over to how the GDP is calculated.

In real life, the GDP has multiple ways of being determined, but we'll focus on the expenditure approach. This utilizes the following formula:

GDP = Personal Consumption + Business Investment + Government Consumption + Net Trade

Personal Consumption
Personal Consumption, which is also expressed as Household Final Consumption Expenditure (HFCE), is the amount spent by every individual on goods and services to meet their everyday needs. This is computed by multiplying Average Consumption with the population.

Business Investment
Business Investment, which is also expressed as Gross Fixed Capital Formation (GFCF), is the value of domestic investments made by private individuals in the country. We've simplified this by taking the average value invested by an individual on local businesses and multiplying it by the population.

Government Consumption
Government Consumption, which is also expressed as Government Final Consumption Expenditure (GFCE), is the amount spent by the government on goods and services, excluding payments to manpower and bond holders. This is computed as a percentage of the Government Budget, which can be adjusted by setting a percentage of the Budget under the value Budget Consumption %.

Net Trade
Net Trade, also known as Net Exports, is the value of international trade volume involving that country. It is computed by subtracting the Total Value of Imports from the Total Value of Exports.

Now that we've established some terms, let's go over the values needed to compute these parts of the GDP.

Average Consumption
HFCE requires the Average Consumption (basically HFCE per capita), which is determined as a percentage of the Average Income spent by individuals on goods and services they need to live. This is like the average cost of living before taxes. You can adjust this by setting a certain percentage of the Average Income under the value Average Income Exp. % with the sheets. You may look at the Sample RL Values Sheet on Row 11 for references on real life examples. However, it is much more recommended to look at the value of HFCE while setting the Average Income Exp. % and compare it with RL values on Row 8, or on https://data.worldbank.org/indicator/NE.CON.PRVT.CD?most_recent_value_desc=true&view=map. to see if you have a reasonable and realistic amount.

Average Investment
GFCF requires the Average Investment (basically GFCF per capita), which is determined as a percentage of Average Income invested by individuals on local enterprises. This does not automatically mean that everyone invests in businesses, but rather shows how much of the average income is invested by each person theoretically that equates to the value of private investments in the country when combined. This can be adjusted by setting a certain percentage of the Average Income under the value Investment per capita %. For a realistic value, you can also compare your % with values on Row 36 in the Sample RL Values sheet.

Government Budget
Government Budget is used in determining the GFCE, and is determined by multiplying the government revenue per capita with the population. The government revenue per capita shows how much the government earns from individuals on average, which may be in the form of taxes or other sources of capital. The government revenue per capita can be adjusted by setting a percentage of Average Income under the value Government Spending %. For a realistic value, refer to Row 24 of the Sample RL Values sheet when coming up with a value for Government Spending %, and Row 25 of the Sample RL Values sheet when coming up with a value for Budget Consumption %.

Trade System
The trade system sounds complicated at first, but it's actually pretty simple when you get the grasp of it.

Players will be able to set a maximum value of Imports that enter their country, which may not exceed 10 trillion Euros or 75% of the Gross National Income (computed as Average Income x Population). Whichever limit has a lower value will apply

Other countries will then negotiate with that player to get a share of the Import Value, in exchange for shares on Export Value, Defence Pacts, or other bargaining chips. Shares of the Import Value correspond to a part on Export Value of the Import shareholder.

The maximum Value of Exports a country may have shall not result in a Trade Surplus or Deficit of more than 1 trillion Euros.

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IN A NUTSHELL...

AVERAGE CONSUMPTION

Average Consumption = Average Income Exp. % * Average Income

Average Income Exp. % is the adjustable value, expressed as percentage of Average Income.. Mean Average Consumption in EU countries value at around € 18,174.45 in 2022.

GOVERNMENT REVENUE PER CAPITA

Government Revenue PC = Government Spending % * Average Income

Government Spending % is the adjustable value, expressed as percentage of Average Income.. Average Government Spending % in EU countries are around 24.94% in 2022.

AVERAGE INVESTMENT

Average Investment = Investment per capita % * Average Income

Investment per capita % is the adjustable value, expressed as percentage of Average Income. Average Investment per capita % in EU countries are around 20.95% in 2022.

HOUSEHOLD FIXTURES CAPITAL EXPENDITURE (HFCE)

HFCE = Average Consumption * Population

HFCE in EU countries range from € 25,967,000,000.00 to € 2,722,786,000,000.00 in 2022, with larger and more developed countries having higher values. Refer to https://data.worldbank.org/indicator/NE.CON.PRVT.CD?locations=EU&most_recent_value_desc=true for more real life EU values.

GOVERNMENT FIXTURES CAPITAL EXPENDITURE (GFCE)

GFCE = (Government Revenue per capita * Population) * Budget Consumption %

Budget Consumption % is the adjustable value, expressed as percentage of Government Budget. Government Consumption in EU countries are around 79.85% of their Government Budget. GFCF in EU countries range from € 4,578,559,220.00 to € 901,613,925,680.00 in 2022, with larger and more developed countries having higher values. Refer to https://data.worldbank.org/indicator/NE.GDI.FTOT.CD?locations=EU&most_recent_value_desc=true for more real life EU values.

GROSS FIXED CAPITAL FORMATION (GFCF)

GFCF = Average Investment * Population

GFCF in EU countries range from € 4,578,559,220.00 to € 901,613,925,680.00 in 2022, with larger and more developed countries having higher values. Refer to https://data.worldbank.org/indicator/NE.GDI.FTOT.CD?locations=EU&most_recent_value_desc=true for more real life EU values.

NET TRADE

Net Trade = Total Export Value - Total Import Value

Total Import Value is the adjustable value, set from a % of Gross National Income (Average Income multiplied by population). Maximum Value is 10 trillion Euros or 75% of GNI (whichever limit is lower).

Total Export is based on the total value of imports that other countries accept from you. You have to negotiate with other countries for shares of their Total Import Value to increase your Total Export Value. The limit on your Total Export Value depends on the net trade, which cannot have a deficit or surplus value exceeding 1 trillion Euros. It is recommended to reach out to admins or other players for assistance on this, as this is the trickiest part of the system.

GROSS DOMESTIC PRODUCT (GDP)

GDP = HFCE + GFCE + GFCF + Net Trade