national accounts - european commission · history of national accounts •early attempts in 17th...
TRANSCRIPT
![Page 1: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/1.jpg)
National Accounts
EMOS Course
March 2015
![Page 2: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/2.jpg)
Structure of the session
• The history of National Accounts and their development
• The compilation of national accounts in Europe
• Economic actors and how they are represented in national accounts
• Production, Expenditure and Income
• Flow accounts and balance sheets
• The link to financial accounts and balance of payments
• Key macroeconomic aggregates such as GDP; their strengths and weaknesses
2
![Page 3: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/3.jpg)
History of National Accounts
• Early attempts in 17th century
• Petty and King
• Boisguillebert and Vauban
• New Deal, Kuznets, Clark, Leontief
• Keynes, Stone and Frisch
• Marshall Plan and economic reconstruction
3
![Page 4: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/4.jpg)
History of national accounts – part II
• UN involvement – international cooperation
• Successive frameworks, covering
• Services and Financial Accounts
• Prices and volumes
• Quarterly data
• SNA 2008 now the worldwide standard
4
![Page 5: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/5.jpg)
National accounts in Europe
• ESA10 largely consistent with SNA 2008
• Introduced from Sept 2014
• Legal Regulation >> directly applicable EU
• Administrative uses
• EDP
• EU Budget (Fourth Resource)
• Structural Funds
5
![Page 6: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/6.jpg)
Compilation in Europe
Compilation and publication by National Statistical Institutes
• Exception: National Bank of Belgium
Compulsory transmission of data to Eurostat
>> EU/EA aggregates, publication
Quality checks and validation
6
![Page 7: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/7.jpg)
Overall structure of national accounts
To faithfully represent the trillions of activities in the economy in a period of time: simple structure needed
Production is the source of value
Value is distributed to recipients, and then spent or saved
Financial instruments act as mediums of exchange and stores of wealth
7
![Page 8: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/8.jpg)
Key features
Delimitation of the economy
Economic Actors
Nature of transactions
Aggregate measures (GDP, GNI etc)
Definition of income (narrow vs Hicks)
Consistency (Symmetry and counterparts)
8
![Page 9: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/9.jpg)
The actors: Institutional Sectors
Grouping of institutional units:
S.11 Non-financial corporations
S.12 Financial corporations
S.13 General Government
S.14 Households
S.15 Non-profit institutions (NPISH)
S.2 Rest of the World (ROW) > Balance of Payments
9
![Page 10: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/10.jpg)
The actors: Industries
Grouping of Kind of Activity Units "KAUs"
Aggregation by activity ("NACE")
Secondary activities possible
Some overlap with sectors but not complete
Input/Output tables…
10
![Page 11: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/11.jpg)
11
A map of national accounts flows
Production Value added
Income
Expenditure Saving
Changes assets & liabilities
Non-financial assets Financial assets
![Page 12: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/12.jpg)
12
The production boundary in NA
All production of goods and
services under control of an
institutional unit
Includes:
• own-account production for own final
use
or gross capital formation
• dwelling services of owner-occupiers
• employing paid domestic staff
• volunteer activities that result in goods
• illegal and hidden activities
Excludes:
- Natural processes
- Household services
(cleaning, cooking,
caring, etc.)
![Page 13: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/13.jpg)
13
Production and Value added
seeds
wheat
Farmer
wheat
bread
flour
Mill Bakery
flour
700 700
500
1200 1200
600
1800 1800
800 Value
added
Interm.
cons.
![Page 14: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/14.jpg)
14
Importance of valuation
• Wine producer makes a bottle of wine for 10 euro at basic price, i.e. total costs plus profit = 10 €
• Excise duty = 20% = 2 €
• Total transport costs from producer to wholesaler = 2 €, from wholesaler to supermarket = 3 €, total 5 €
• Margins taken by wholesaler = 3 € and by supermarket = 5 €, total 8 €
• VAT = 20% of (10+2+5+8) = 20% of 25 = 5 €
• Bottle is sold for 30 € at purchaser’s price
![Page 15: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/15.jpg)
GDP (Production) at market prices
SUM OF ALL VALUE ADDED
+ TAXES ON PRODUCTS
- SUBSIDIES ON PRODUCTS
15
![Page 16: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/16.jpg)
Measuring government output
Government produces non-market services
>> Zero or artificially low prices
Government output is sum of costs:
Compensation of employees
Intermediate consumption
Consumption of fixed capital (depreciation)
16
![Page 17: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/17.jpg)
Expenditure
Household final consumption expenditure
Government final consumption expenditure
Investment
Trade (Exports, imports)
C + G + I + (X-M) = GDP 17
![Page 18: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/18.jpg)
Income
• Compensation of employees and mixed income
• Taxes and subsidies
• Primary incomes (interest, dividends, rent…)
• Secondary incomes (social benefits, transfers…)
18
![Page 19: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/19.jpg)
Challenges I: Dealing with hidden activities
• Despite reconciliation of a variety of sources, there are gaps!
• Various techniques to estimate missing parts (between 3 and 15%...):
• Use of labour data
• Use of energy and materials
• Official studies (e.g. VAT)
• Illegal activities (smuggling, drugs, prostitution) estimated... normally quite small (<1%).. Introduced alongside ESA 2010...
• Example: UK (0.9 – 1.5%) – mostly drugs 19
![Page 20: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/20.jpg)
Challenges II: globalisation
National accounts are compiled for national economies
But many companies cross national borders…
Dealing with Amazon, Google, Apple…
20
![Page 21: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/21.jpg)
Flows and balance sheets
Balance sheets are stocks at a point in time
Flows explain the changes between balance sheets
Flows can be:
Transactions
Revaluations (price changes)
Other…
21
![Page 22: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/22.jpg)
22
GDP = Grossly distorted picture?
• GDP is measure of net output of goods and services ≠ measure of welfare
• Best traditional measure probably NNI: Net national income, but difficult to measure
• GDP is not a wealth measure (see Balance Sheets)
• GDP to be complemented by other measures (eg on environment, leisure time, etc.)
• Actions under the “Stiglitz report”; "GDP and Beyond"
![Page 23: National Accounts - European Commission · History of National Accounts •Early attempts in 17th century •Petty and King •Boisguillebert and Vauban •New Deal, Kuznets, Clark,](https://reader034.vdocuments.site/reader034/viewer/2022042123/5e9e0925ee9f3373d24f2650/html5/thumbnails/23.jpg)
Thank you for listening
• Any questions?
23