WO1989003090A1

WO1989003090A1 - Graphic display apparatus

Info

Publication number: WO1989003090A1
Application number: PCT/GB1988/000812
Authority: WO
Inventors: Koji Fusa
Original assignee: Koji Fusa
Priority date: 1987-10-02
Filing date: 1988-10-03
Publication date: 1989-04-06
Also published as: GB9005393D0; AU2523788A; GB8723193D0; GB2228809A

Abstract

The economic models generated by known Purchasing Power Parity doctrines are difficult to comprehend. This invention discloses a graphic display apparatus which can illustrate the relationship between tradable commodity and financial sector quantities to allow spot exchange rate and equilibrium exchange rate positions to be readily understood.

Description

GRAPHIC DISPLAY APPARATUS

FIELD OF THE INVENTION

The present invention is concerned with graphic display apparatus for displaying economic information and a method of processing data to provide such a display.

When foreign exchange rates are permitted to float the spot rate at any time tends to be very volatile, depending as it does on dealings in the foreign exchange market which tend to flow and ebb with the mood of the market. It is perceived that it would be very helpful to determine with some precision the currency exchange rates between a home country and trading partner countries which would result in substantial equilibrium in overall trade between the two countries.

Also, in any International business dealings, a precise knowledge of the effect of exchange rates on the financial outcome of the deal would be extremely valuable. Hitherto, available means for determining the effect of exchange rate on the financial soundness of a proposed International deal, particularly such deals involving the transfer of tradable goods between countries, have been imprecise.

STATEMENT OF THE INVENTION

The present invention sets out to provide apparatus which, making use of economic data, performs a novel computation of this data and provides a novel display which can greatly facilitate on the one hand the identification of the ideal exchange rate between the currencies of two countries which should result in equilibrium trade, and on the other hand confirmation of the viability of exporting or importing commodities between the two countries. The present invention also sets out to provide a method of processing data to give such a novel display.

According to the present invention graphic display apparatus comprises computing means arranged to compute, from data supplied and for each of a range of tradable commodities, a figure for the basic ratio between (a) the cost of production of each commodity in a target country expressed in the currency of the target country, and (b) the cost of production of the respective commodity in a home country expressed in the currency of the home country, and to tabulate against said basic ratio figures relative values of the total production in the home country of the respective commodities, and further comprising display means selectively controlled by said computing means to provide a calibrated bar graph display of said relative total production value as the ordinate against said basic ratio figure as the abscissa for at least a selected one of said commodities and further to mark on the display the position along the abscissa of the current spot exchange rate between the currencies of the home and target countries.

It will be appreciated that the basic ratio of production costs in the currencies of the two countries is representative of an exchange rate between those currencies which would result in production costs in the two countries being identical. Thus, in a simplest form, the invention may provide a display which can immediately demonstrate to a viewer those commodities produced in his country, the home country, for which the production costs are favourable relative to the costs in a target country, such as to give production in the home country a competitive advantage with the potential perhaps of exporting to the target country. The term "country" used herein is not limited to only a single country but may embrace a number of countries. For instance, in multilateral trading calculations, the target country may be the rest of the world, i.e. the international market. In addition the term "range" used herein may extend to only a single commodity. Furthermore, the term "tradable commodities" used herein may extend not only to commodities such as oil or manufactured goods such as television sets but also to equities and bonds.

Preferably, the computing means is further arranged to tabulate against said basic ratio figures also relative values of the total consumption in the home country of the respective commodities and to control the display means to display additionally along the ordinate axis in a visually distinguishable manner said relative total consumption value for the or each selected commodity whereby, when a plurality of commodities are selected providing a range of basic ratio figures along the abscissa, a ratio figure along the abscissa can be observed on the display at which consumption and production of the particular one of said commodities are substantially equal. It will be appreciated that the basic ratios as described above for particular home and target countries for a range of industrially produced commodities representing the economies of the countries as a whole will be spread over a range of values on either side of the current spot exchange rate for the currencies of the two countries. It can then be expected that commodities or industries which have basic ratios less favourable than the current and recent actual exchange rates will show a national consumption"in excess of national production since it should be more economic for the commodity in question to be manufactured in the target country and imported. On the other hand for commodities and industries which show a basic ratio figure which is favourable to the home country relative to the actual exchange rate, indicating a competitive advantage to the home country, should show production values in excess of home consumption, the balance being exported. If the various industries of the economy of the home country provide a continuous range of basic ratio figures there may then be a value of ratio figure at which the bar graph representing production values crosses over the bar graph representing consumption values in the home country.

If the home country as a whole has a current account deficit, this may be apparent from the display. In such circumstances, foreign exchange dealers might expect to see the spot exchange rate, which is marked on the display, trading somewhat to the left of the ratio figure at the cross over of the bar graph, i.e. a lower exchange rate for the home currency.

In a preferred embodiment of the invention, the computing means is further arranged to compute from data supplied a figure for the inwards corrected ratio between (a) the total cost, expressed in the currency of the target country, of both production of each commodity in the target country and also transferring the commodity from the target country to the market of the home country and (b) the cost of production of the respective commodity in the home country expressed in the currency of the home currency, and is then arranged to control the display means so that the bars of the bar graph have a width extending from said inwards corrected ratio figure to at least said basic ratio figure for the or each selected commodity.

This embodiment takes account of the cost, if any, of "transferring" the particular commodities from the target country to put them on the market in the home country on an equal footing with home produced commodities. The word "transferring" has been used so as to include not only the costs of transportation as such but also other costs which may arise including tariff costs etc. The resulting display shows the bars for each commodity extending over a range of ratio figures. This makes it very easy for a trader to observe that if the indicated spot exchange rate falls within the width of the bar, then it may still be preferable for the commodities to be produced locally even though the actual production costs appear cheaper in the target country.

The computing means may be still further arranged to compute from data supplied a figure for the outwards corrected ratio between (a) the cost of production of each commodity in the target country expressed in the currency of the target country and (b) the total cost, expressed in the currency of the home country, of both production of the commodity in the home country and also transferring the commodity from the home country to the market of the target country, and is then arranged to control the display means so that the bars of the bar graph have a width extending from said outward corrected ratio figures to at least said basic ratio figure for the or each selected commodity. With this arrangement by comparison, the effect of the additional cost of exporting home produced commodities is clearly apparent from the display. If the spot exchange rate lies within the width of the bar on the graph between the basic ratio and the outwardly corrected ratio, then it may still not be economic to export the commodity even though home production costs appear lower.

Preferably, the bars have a width extending from said inwards corrected ratio figure to said outwards corrected ratio figure, whereupon the computing means is arranged to control the display to produce a visually distinct line in each bar at the position of said basic ratio figure. In this way the basic ratio figure for actual production costs is still apparent from the display but is clearly related on the display to the effects of the importing and exporting costs respectively.

Further details of examples of the present invention will now be described with reference to the accompanying drawings in which: Figure 1 is a block schematic diagram of the display apparatus;

Figure 2 is a representation of a graphic display produced by the apparatus in one example of the invention; and Figure 3 is a representation of a further graphic display produced in another example of the invention.

According to Figure 1, the hardware of the apparatus may comprise a central processor 10 working with memory 11 and containing programmes for computing ratio figures and the like in accordance with aspects of the invention. Data to be worked on by the programmes in the CPU 10 may be supplied via a data input device 12 e.g. keyboard, magnetic tape reader or disk drive.

The data supplied to the CPU 10 should comprise sufficient data to define the production costs in a home country, say the United Kingdom, for a range of tradable commodities e.g. motor vehicles, and similarly the production costs for the same range of commodities in a target country, say Japan. The costs for production in the UK should be expressed in sterling and the costs for production in Japan in Japanese Yen. Additionally, the input data should include data defining the total cost of transferring the commodity produced in Japan for sale in the United Kingdom market (expressed in Yen) and similarly the total cost of transferring the commodity produced in the United Kingdom for sale in the Japanese market (expressed in pound sterling) . Still further, the input data should include data defining the total value of the commodity in question produced in the United Kingdom and also data defining the total value of this commodity consumed in the United Kingdom. This data should be provided for each of a range of commodities preferably reflecting the balance of the United Kingdom economy as a whole. In particular such data should be provided for predetermined important commodity items, e.g. motor cars, T.V. sets, steel bars, integrated circuit components, computers, jet engines, manufactured foodstuffs and drinks.

The CPU 10 is programmed to process this input data to produce for each of the commodity items in question a basic ratio figure comprising the ratio of the cost of production of a commodity in the UK, expressed in sterling, versus the cost of production of the same commodity in Japan expressed in yen. This ratio figure will represent a conversion rate between sterling and yen at which the cost of production of the commodity item in the two countries would be identical.

Additionally, the computer is programmed to calculate an inwardly corrected ratio figure comprising the ratio of the total cost of both production of the commodity item in Japan and also its transferral to the market in the United Kingdom all expressed in yen, versus just the production costs in the United Kingdom expressed in sterling. This ratio should represent the exchange conversion rate at which the British manufactured commodity and the Japanese manufactured commodity can compete at exactly the same price in the United Kingdom market. Still further, the computer is arranged to compute the outwardly corrected ratio figure comprising the ratio of the cost of production of the commodity in Japan, expressed in yen, versus the total cost of both production of the commodity in the United Kingdom and its transferral for sale on the Japanese market, expressed in sterling. This ratio figure should represent an exchange rate at which the commodity manufactured in the United Kingdom and in Japan could compete at the identical price in the Japanese market.

The CPU 10 is then further programmed to provide data defining these ratio figures and the total values produced and consumed of the respective commodities in the United Kingdom over an output line 13 to a display controller 14. The display controller 14 drives a display 15, for instance a CRT display, in accordance with selecting instructions from a data select keyboard 16. It will be appreciated that the display and keyboard may be at a remote location, e.g. a financial trading room, at which the displayed information and the manner of its display has very particular value. The display controller 14 may also comprise a printer and the display 15 may then be the paper upon which the data is printed. Commonly, a CRT display will be used in conjunction with a paper printout.

Referring now to Figure 2, in one mode, the display controller 14 is instructed by the data select keyboard 16 to provide on the display 15 a bar graph display such as illustrated in the Figure. The bars of the graph in Figure 2 are distributed along an abscissa (x axis) representing the range of ratios between the currencies of the home and target countries in question (in this example United Kingdom and Japan) . Thus the abscissa may be calibrated in units of yen per pound sterling. The abscissa is labelled ERPL, this being an acronym for "external relative price level", i.e. basic ratio. The bars of the graph each represent a particular commodity for which a basic ratio figure has been calculated as described above by the CPU 10 from data provided. Thus the location of the bars along the abscissa identify the basic ratio calculated for that commodity. In the Figure each commodity is represented by two closely parallel vertical lines. The length of these lines, along the ordinate direction (vertically) represent respectively the total value in pound sterling of the commodity produced in the United Kingdom and the total value of the commodity consumed in the United Kingdom. In the illustrated Figure, the value produced is represented by the right hand vertical line of each pair and the value consumed by the left hand vertical line.

Also shown on the Figure is the location along the abscissa of the current spot exchange rate [SER] for yen to sterling. This is shown as a point marked along a second x axis in this Figure, but may alternatively be represented by a vertical line on the graph in the form of a cursor. It will be appreciated from Figure 2 that those industries producing commodities which have the greatest competitive advantage for UK industry relative to Japan appear on the graph furthest to the right, corresponding to a relatively high value yen/sterling basic ratio figure. Those industries and commodities at a competitive disadvantage appear on the Figure to the left. In theory, and ignoring the costs of transferring commodities from one country to the other, e.g. transportation costs, any commodity appearing to the right hand side of the spot exchange rate cursor should be at a competitive advantage and be exportable to Japan, whereas any commodity appearing to the left of the cursor is at a disadvantage and may be imported from Japan.

Importantly also, it will be noted that commodities to the right of the usual spot exchange rate tend to have a value produced in excess of a value consumed in the United Kingdom, the balance being exported, whereas commodities to the left of the exchange rate cursor have values produced less than values consumed, tending to be imported.

In practice, the spot exchange rate actually prevailing on a particular day may somewhat deviate from what would appear to be the ideal position precisely separating those commodities which are being imported from those commodities which are being exported on the graph.

The illustrated bar graph in Figure 2 is representative of the current condition using latest data for production costs, and value produced and consumed in the home country. A forecast picture may also be produced by supplying to the CPU 10 additional data defining the elasticity of the industry in the countries concerned under various trading conditions, including variations in actual exchange rate. The computer 10 may thus be programmed additionally to simulate a variety of possible exchange rates and compute forecasts of the values produced and consumed in the different industries, and then further to identify the exchange rate which results in equilibrium between the total values consumed and produced, i.e. balance in the long term current account. The bar graph display of this forecast can then be employed to illustrate the equilibrium exchange rate which will be at the cross over point of the forecast values produced and consumed in the United Kingdom.

For the purpose of actual trading in the commodities between the two countries under consideration, or forecasts on the outcome of proposed financial dealings involving transfers of commodities between the countries, it is desirable to consider additionally the effect on competitiveness of the cost of transferring commodities produced in one country for sale in the market place of the other country. It should be understood that these costs include not only the cost of transportation, but also additional costs such as tariff barriers and special marketing arrangements in the respective countries. It will be appreciated that the additional cost of transfer of a commodity produced in Japan to the United Kingdom market effectively increases the total cost in yen of providing the Japanese produce commodity on the UK market. Thus, the inwardly corrected ratio figure incorporating this transfer cost from Japan to UK will be further to the right on the bar graph of Figure 2 than the basic ratio figure. Similarly, if the cost of transferring UK produce commodity to the Japanese market is considered, the resultant outwardly corrected ratio figure is further to the left on the Figure 2 graph than the basic ratio.

The CPU 10 and display controller 14 can be selected, from the keyboard 16 to display not only the basic ratio figure for selected commodities but also the inwardly and/or outwardly corrected ratios. Referring to Figure 3, a display is illustrated which shows the variation to the ratio figures produced by the importing and exporting costs. Figure 3 shows ratio figures for four selected commodities. The basic ratio for commodity A is 260 yen per pound but the cost of exporting brings the effective competitive ratio in the Japanese market to 243 yen per pound. This is illustrated in Figure 3 by widening the bar for commodity A in the bar graph to extend from the basic figure 260 to the outwardly corrected figure 243. Similarly, for importing from Japan the competitive ratio is 275 and the bar for commodity A has also been extended in width between the basic figure and the inwardly corrected figure. The entire bar on the bar graph for commodity A may be in a visually distinct pattern or colour from other bars represented on the display. It should be noted however that the basic ratio figure should still be visually distinct in the bar, e.g. by enhancing the brightness at this point.

Similar bar graphs are provided for each of additional commodities B, C and D. It may be noted that commodities C and D have the same basic ratio figure and are shown in the bar graph stacked one on top of the other. Thus, the total value of the selected commodities produced at the basic ratio figure of 200 yen per pound is represented by the top of the bar for commodity D. However this total value is made up of a value for commodity C plus the value for commodity D. The different transfer costs both inwardly and outwardly for commodities C and D are also clearly visable in the display. It may also be noted that for commodity C the outwardly corrected ratio figure is closer to the basic ratio than the inwardly corrected figure, indicating that the total effective cost of importing from Japan is for some reason considerably higher than the cost of exporting to Japan. This may arise through an imports tariff barrier for example.

In producing the display illustrated in Figure 3, the display controller 14 and CPU 10 is arranged to follow certain rules. In particular, the bar graph for each displayed commodity must be visually distinct from each other bar graph e.g. by appropriate patterning, or colour coding on a colour display. Where two commodities with the same basic ratio figure (within a predetermined tolerance) are to be displayed simultaneously, then they are displayed stacked one on top of the other so that the total height of a composite bar represents the total value produced of all the commodities having that basic ratio figure. The components of value produced for the commodities so stacked are readily discernable from the colour coding and from different widths of bar resulting from differing transferral costs. For any two bars which overlap in width, the shorter bar, representing a lesser value produced, retains its colour over the full width.

By following these rules, a composite display may be produced such as illustrated in Figure 3, which is novel and provides substantial advantage for persons considering International trading decisions.

As can be seen from Figure 3, the current spot exchange rate for yen/sterling is marked on the display by a vertical line or cursor at a value of

236 yen per pound sterling. At this value, it can be seen at a glance from the display that it is competitively advantageous to import commodities C and D from Japan, in spite of the substantial importing cost of commodity C. On the other hand there is a substantial competitive advantage in exporting commodity A to Japan. For commodity B, although the production costs in the UK are less than those in Japan, the cost of transferring or exporting to Japan still render it uneconomic. There appears no competitive advantage in trading in commodity B in either direction between the two countries.

The CPU 10 may also be programmed to plot the data illustrated in the accompanying figures against time plotted on a third axis. The three dimensional solid thereby generated may be particularly useful as an aid to for instance, visualising accomulated profit or loss in certain circumstances, as well as important trends which may allow a more accurate assesment of future spot exchange rates.

This variant has not been depicted since those skilled in the art would readily appreciate it without graphical assistance.

Claims

1. Graphic display apparatus comprising computing means arranged to compute from data supplied and for each of a range of tradable commodities, a figure for the basic ratio between (a) the cost of production of each commodity in a target country expressed in the currency of the target country, and (b) the cost of production of the respective commodity in a home country expressed in the currency of the home country, and to tabulate against said basic ratio figures relative values of the total production in the home country of the respective commodities, and further comprising display means selectively controlled by said computing means to provide a calibrated bar graph display of said relative total production values as the ordinate against said basic ratio figures as the abscissa for at least a selected one of said commodities and further to mark on the display the position along the abscissa of the current spot exchange rate between the currencies of the home and target countries.

2. Apparatus as claimed in claim 1, wherein the computing means is further arranged to tabulate against said basic ratio figures also relative values of the total consumption in the home country of the respective commodities and to control the display means to display additionally along the ordinate axis in a visually distinguishable manner said relative total consumption value for the or each selected commodity, whereby, when a plurality of commodities are selected providing a range of basic ratio figures along the abscissa, a ratio figure along the abscissa can be observed on the display at which consumption and production of a particular one of said commodities are substantially equal.

3. Apparatus as claimed in claim 1 or claim 2, wherein the computing means is further arranged to compute from data supplied a figure for the inwards corrected ratio between (a) the total cost, expressed in the currency of the target country, of both production of each commodity in the target country and also transferring the commodity from the target country to the market of the home country and (b) the cost of production of the respective commodity in the home country expressed in the currency of the home country, and is arranged to control the display means so that the bars of the bar graph have a width extending from said inwards corrected ratio figure to at least said basic ratio figure for the or each selected commodity.

4. Apparatus as claimed in any preceding claim, wherein the computing means is further arranged to compute from data supplied a figure for the outwards corrected ratio between (a) the cost of production of each commodity in the target country expressed in the currency of the target country and (b) the total cost, expressed in the currency of the home country, of both production of the commodity in the home country and also transferring the commodity from the home country to the market of the target country, and is arranged to control the display means so that the bars of the bar graph have a width extending from said outwards corrected ratio figure to at least said basic ratio figure for the or each selected commodity.

5. Apparatus as claimed in claim 4 dependent on claim 3, wherein the bars have a width extending from said inwards corrected ratio figure to said outwards corrected ratio figure, and the computing means is arranged to control the display to produce a visually distinct line in each bar at the position of said basic ratio figure.

6. Apparatus as claimed in any preceeding claim wherein the computing means is arranged to control the display means to provide a display of data as defined in any preceeding claim, the data being plotted against time represented on a third axis.

7. Method of processing data to provide a display of the relation between tradable commodities and financial sector quantities comprising the steps of inputting data for a range of tradable commodities into a computing means; arranging for the computing means to compute from the data input a figure for the base ratio between (a) the cost of production of each commodity in a target country expressed in the currency of the target country and, (b) the cost of production of the respective commodity in a home country expressed in the currency of the home country; and further arranging for the computing means to tabulate against said basic ratio figures relative values of the total production in the home country of the respective commodities; displaying on a display means selectively controlled by said computing means a calibrated bar graph display of said relative total production values as the ordinate against said basic ratio figures as the abscissa for at least a selected one of said commodities and further marking on the display the position along the abscissa of the current spot exchange rate between the currencies of the home and target countries.

8. Method as claimed in Claim 7 comprising the further steps of arranging for the computing means to tabulate against said basic ratio figures also relative values of the total consumption from the home country of the respective comodities; controlling the display means to display additionally along the ordinate axis in a visually distinguishable manner said relative total consumption value for the or each selected commodity, whereby, when a plurality of commodities are selected providing a range of basic ratio figures along the abscissa, a ratio figure along the abscissa can be observed on the display at which consumption and production of a particular one of said commodities are substantially equal.

9. Method as claimed in Claim 7 or 8 comprising the further step of arranging for the computing means to compute from data supplied a figure for the inwards corrected ratio between (a) the total cost, expressed in the currency of the target country, of both production of each commodity in the target country and also transferring the commodity from the target country to the market of the home country and (b) the cost of production of the respective commodity in the home country expressed in the currency of the home country; arranging for the said computing means to control the display means so that the bars of the bar graph have a width extending from said inwards corrected ratio figure to at least said basic ratio figure for the the already selected commodity.

10. Method as claimed in any preceeding method claim, comprising the further steps of arranging for the computing means to compute from data supplied a figure for the outwards corrected ratio between (a) the cost of production of each commodity in the target country expressed in the currency of the target country and (b) the total cost expressed in the currency of the home country, of both production of the commodity in the home country and also transferring the commodity from the home country to the market of the target country; and arranging for the computing means to control the display means so that the bars of the bar graph have a width extending from said outwards corrected ratio figure to at least said basic ratio figure for the or each selected commodity.

11. Method as claimed in Claim 10 as dependent upon Claim 9, wherein the bars have a width extending from said inwards corrected ratio figure to said outputs corrected ratio figure, and comprising the further step of arranging for the computing means to control the display to produce a visually distinct line in each bar at the position of said basic ratio figure.

12. Method as claimed in any preceeding method claim comprising the further step of arranging for the computing means to control the display means to provide a display of data as defined in any preceeding method claim, the data being plotted against time represented on a third axis.