macro integration
DESCRIPTION
Macro integration. Presented by. Piet Verbiest Statistics Netherlands . Macro integration. Reconciliation of inconsistent statistical data on a high level of aggregation. - PowerPoint PPT PresentationTRANSCRIPT
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Eurostat
Macro integration
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Presented by
Piet Verbiest
Statistics Netherlands
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Macro integration
Reconciliation of inconsistent statistical data on a high level of aggregation
Balancing is reconciling inconsistent statistical information from independent sources brought together in an ‘accounting’ framework consisting of well-defined variables, accounting identities on combinations of variables and other less strict relations between the sets of variables.
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Macro integration
National accounts an example
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National accounts• Comprehensive overview of all economic transactions in
a country• Quarterly and annual report of a country
Key indicators Gross domestic product (GDP): economic growth; Gross national income Consumption of households, investment, foreign trade Government debt Employment
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Labour accounts
National accounts in the Netherlands
Supply and use tables
Sector accounts
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Supply and use tables
Variables and basic identities identities(1) P + M = IC + C + I + E(2) Y = P - IC(3) Y = C + I + E - M(4) Y = W + OS/MI
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What we want:
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GDP production method 930 - 460 = 470GDP expenditure method 350 + 90 + 300 - 270 = 470
P M IC C I EThe Netherlands ltd 930 + 270 = 460 + 350 + 90 + 300
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What we get:
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P M IC C I EThe Netherlands ltd 930 + 245 ≠ 450 + 350 + 90 + 275
GDP production method 930 - 450 = 480GDP expenditure method 350 + 90 + 275 - 245 = 470
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P M IC C I EThe Netherlands ltd 930 + 245 ≠ 450 + 350 + 90 + 275
Whisky 5Other 930 + 240 ≠ 450 + 350 + 90 + 275
Macro integration / balancing
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GDP production method 930 - 450 = 480GDP expenditure method 350 + 90 + 275 - 245 = 470
5355
475355
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Macro integration / balancing
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P M IC C I EThe Netherlands ltd 930 + 245 ≠ 450 + 355 + 90 + 275
Whisky 5 5Crude oil 40 20
Other 930 + 200 430 + 350 + 90 + 275
GDP production method 930 - 450 = 480GDP expenditure method 355 + 90 + 275 - 245 = 475
Industry dataRefineries
Production Fuel 30
Intermediate consumptionCrude oil 20other 5
Value added 5
20
225
495225
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Macro integration / balancing
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GDP production method 930 - 450 = 480GDP expenditure method 355 + 90 + 275 - 225 = 495
P M IC C I EThe Netherlands ltd 930 + 225 ≠ 450 + 355 + 90 + 275
Whisky 5 5Crude oil 20 20Tablets 60 30 10
Components 50Other 870 + 200 ≠ 380 + 320 + 80 + 275
Industry dataComputer industry
ProductionTablets 60
Intermediate consumptionComponents 50other 5
Value added 5
20
295 275
295
50
465
275
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SUPPLY USEOutput of
industries Impo
rt
Tota
l
Input ofindustries
Cons
Expo
rt
Inve
st.
Tota
l
Com
mod
ities
YTotal P M IC+Y C E I
Value added
=P IC+ Y = GDP
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SUPPLY USE
Output of
industries Impo
rt
Tota
l
Input ofindustries
Cons
.
Expo
rt
Inve
st.
tota
l
Com
mod
ities
Y
Total P M IC+Y E C I
P - IC = Y = GDP P–IC = Y =C+I+E-M
P M IC C IE+ + ++=
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Commodities: 500 Industries: 150 Final expenditure: 20 Simultaneous: cup and cop
Domestic production Imports Total Final Totalsupply expenditure use
basic prices cif
Valuation
Taxes/
margins
subsidieson products
Value addedTotal output
Intermediate consumption
purchasers prices excl. VAT
Use tableSupply table
Total output
Non deductable VAT
trade andtransport
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Eurostat
Macro integration
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Mathematical models
2+9=10
5=7
15/2=722=17
1=0
3+7=106=6
22=17+5
Mathematical Models
12+3+10=25
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Mathematical models• Can be automated
• Reproducible results
• Flexible
• Large scale applications
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BUT: Small discrepancies, without known cause
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Example 1: WhiskyImports = Consumption
Given:
Imports = 5, Consumption=0
Model outcome could be: Imports= 2.5 Consumption = 2.5
NOT DESIRABLE!
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Example 2: Remaining discrepancies
Production (P) = 930 Imports (M) = 275 Interm. Cons. (IC)= 450 Cons. Invest. Export (CIE)= 740
P+ M = IC + CIE 1205 ≠ 1190 P – IC = CIE – M 480 ≠ 465
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Example 2: Remaining discrepancies
Production (P) = 930 928Imports (M) = 275 272Interm. Cons. (IC)= 450 455Cons. Invest. Export (CIE)= 740 745
P+ M = IC + CIE 1205 ≠ 1190 1200=1200P – IC = CIE – M 480 ≠ 465 473=473
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Different models• RAS/IPF/RAKING
- easy, numerical technique - for a specific problem• STONE - broad scope of applicability
- mathematical optimization• DENTON (benchmarking)
- Time component (quarterly and annual data)
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STONE’s Method• Broad applicability
• Achieves consistency by solving a minimum adjustment problem
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STONE’s MethodSearches for a result with minimum deviation from the input.
Mathematical:Translation to a least squares optimization problem
Consistency rules translate to constraints of the model.
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STONE’s MethodLinear constraints, like:
• Total is the sum of components: Manufacturing = Food + Textiles + Clothing;• Commodity balances; Total use = Total supply;• Definitions: Value added = Output – Intermediate consumption
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ExtensionsInequality constraints:
Total Use ≥ 0Soft constraints:
Stocks of perishables goods ≈ 0Ratio constraints:
Value added Tax / Supply = 0.21
Refineries: use of crude oil / output ≈ 0.7
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A man with a watch
knows what time it is
A man with two watches
is never sure
(Segal’s Law)
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Reliability weightsImportant instrument to steer the results.
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Example 2: Remaining discrepancies
Production (P) = 930 928 Imports (M) = 275 272 Interm. Cons. (IC)= 450 455 Cons. Invest. Export (CIE)= 740 745
P+ M = IC + CIE 1200=1200 P – IC = CIE – M 473=473
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Example 2: Remaining discrepancies
Production (P) = 930 928 930Imports (M) = 275 272 270 Interm. Cons. (IC)= 450 455 450Cons. Invest. Export (CIE)= 740 745 750
P+ M = IC + CIE 1200=1200 1200=1200P – IC = CIE – M 473=473 480= 480
green = p and IC more reliable
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Conclusions
Mathematical methods powerful instrument
Elaborate modelling constructions possible
But should be used properly!