05 capital services - unece€¦ · capital services capital services figure in two separate issues...
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United Nations Economic Commission for EuropeStatistical DivisionUnited Nations Economic Commission for EuropeStatistical Division
Capital Services
Baku, 24-26 September 2008
Presentation 5
* The presentation is making use of a presentation by Charles Aspden, OECD, at the UNECE/Eurostat/OECD Meeting on National Accounts, Geneva, April 2008
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 2
Capital services in SNA93
• 1993 SNA does not explicitly recognisecapital services provided by non-financial assets
• 1993 SNA recognises consumption of fixed capital (CFC) but it is only part of the cost that the owner incurs
• OECD Manual on Measuring capital (2001) defines capital services
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Presentation 5 Tiina Luige - UNECE Statistical Division Slide 3
Capital services
� Capital services figure in two separate issues that were under review:� the general inclusion of the cost of capital
services in the SNA; � the replacement of depreciation with the cost
of capital services when summing inputs to measure non-market output.
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 4
Capital services in 2008 SNA
� New chapter – no. 20, in Volume II� Draft ready, deadline for comments over� Capital services recognised but
implementation left up to countries
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Capital services – market production
• Recommendation for assets used in market production (issue 15)� Estimates to be included in supplementary
tables rather than core accounts� Confirmed that capital services and capital
stock measures should be complied in an integrated manner
� Basic concepts presented in SNA, details in the OECD Manual
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 6
Capital services – explanation (1)
� non-financial assets used in production � contribute more to output than their initial cost� operating surplus is the return to capital used in
production� Perpetual Inventory Method (or PIM) to derive
estimates of the 3 capital-related measures: the asset value, a return on capital and consumption of fixed capital (CFC) � detailed recommendations in an updated OECD
Manual
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Capital services – explanation (2)
There are two aspects to capital:� Wealth aspect (a storage of wealth)
• Captures the market value of capital goods• The appropriate entry for balance sheets• Corresponds to the net capital stock in the SNA93
� Production aspect (a role in the production of goods and services) • Captures the flow of productive services from capital into
production• The appropriate variable for productivity measurement• Requires a different stock measure – the productive stock
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 8
Capital services – explanation (3)
� Volume of capital services• Assumed to be proportional to the productive stock • Then, volume growth of productive stock = volume
growth rate of capital services
� Productive stock• Takes into account efficiency loss of older asset � an
age-efficiency profile is applied
� Wealth stock• Takes into account total value loss of older asset � an
age-price profile is applied
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Presentation 5 Tiina Luige - UNECE Statistical Division Slide 9
Capital services – explanation (4)
� Price of capital services = User costs per unit of productive stock• Main elements of user costs:
� Real rate of return (r)� Rate of CFC (d) � Real holding gains/losses (left out in simplified approach)
� Total value of capital services• Price of capital services (K) * Productive stock (p)• Simplest form: (r+d)p*K• This corresponds to the user cost approach towards
owner occupied housing (ignoring intermediate inputs)
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 10
Capital measures in SNA93Time series of GFCF by
type of asset all expressed at same mid-
year prices
Retirement profile
Net capital stock
Balance sheets
Net domesticproduct
Consumptionof
fixed capital
Age-price or depreciation
profile
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Presentation 5 Tiina Luige - UNECE Statistical Division Slide 11
Age-efficiency
profile
Time series of GFCF by type
of asset all expressed at
same mid-year prices
rate of return
Retirement profile
Age-priceprofile
Deprieciationprofile
Productive capital
stock/capital services by
asset
Net capital stock
Consumptionof fixedcapital
Balance sheets
Total capital services
User costsof capital
Net domesticproduct
Integrated system of capital measures – 2008 SNA
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The distinction between net capital and capital services matters empirically: example USA
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Purpose of capital services measures (1)� Normally, no link between value-added
and capital, except for CFC as the difference between Gross Operating Surplus & Net Operating Surplus
� Capital services measures establish the link between capital input and value-added
� Total value of capital services can be equated with GOS (plus the capital part of mixed income)
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 14
� The income side of the account can be de-composed into: • Price component: wages and prices of capital
services (= user costs)• Volume component: numbers employed and
volume of capital services
� With volume measures for labour and capital, measures of volume inputs can becomputed
� Volume output/volume input = MFP
Purpose of capital services measures (2)
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Presentation 5 Tiina Luige - UNECE Statistical Division Slide 15
Capital services - non-market production
Recommendation for assets used in non-market production (issue 16)�Maintain the present treatment�ISWGNA to undertake more research:
� Test thoroughly the impact on GDP� Take into account the differing degrees of
data availability around the world
Presentation 5 Tiina Luige - UNECE Statistical Division Slide 16
Impact on GDP
� Assets used in market production – no impact� Assets used in non-market production - if
adopted, then non-market output, and thus GDP, would be higher, it was not – no impact
� Implications – no new data collections required, but• Need to develop systems for estimating capital stock
and CFC in order to generate estimate of capital services in integrated way