national accounts framework
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National Accounts Framework
Operational Material
2
Outline
Topics to be covered Lessons learned from 2005
Comparability problems
Data and Metadata
System of National Accounts
Exhaustiveness of GDP
GDP expenditure aggregates valuation
Comparison-resistant areas
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What is the ICP?
Using PPPs instead of market exchange rates makes it possible to compare the output of economies and the welfare of their inhabitants in real terms.
ICP is a worldwide statistical initiative to collect comparative price data and estimate purchasing power parities (PPPs) of the world’s economies.
PPP Vs. Exchange
Rate
Main Objectives
Provide international price and volume comparisons of Gross Domestic Product (GDP) and its component expenditures
Measure the differences in price and volume levels of GDP and GDP per capita of various expenditure aggregates and sub-aggregates
between countries within a region
between countries in different regions
Objectives
Copyright 2011, The World Bank Group. All Rights Reserved
By Households
By NPISHsIndividual
Consumption Expenditure
110
Price
By Government
By GovernmentCollective Consumption
Gross Fixed Capital
Formation
Machinery & Equipment
Construction & Civil Eng.
Others
Other Components
Changes in inventories
Net Exports
Value
From ICP Objective to N.A. in ICP
Quantity
Volume Ratio Value ratio PPP
GDP Expenditure Values for 155 Basic Headings, for the reference year 2011
Prices for over 2000 representative products collected over one year in 2011
4
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Pressures caused by the need to develop new procedures to collect and validate data led to insufficient attention to the national accounts until late in the process
5
Identified issue
Goals for 2011 ICP to focus on
Improving the quality of real expenditures by collecting national accounts data earlier in the process
Identifying the basic headings that are most likely to have a significant impact on the consistency between economies
Lessons from the 2005 ICP
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1993 SNAThe ICP requires national accounts estimates based on the 1993 SNA
Exhaustiveness of GDP
Various terms are used to describe parts of GDP that fall outside the scope of admin records and statistical surveys on which the national accounts are based
― underground economy, black economy, non-observed economy, informal economy
All economic activities have to be included, whether legal and illegal
Comparability Problems
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Observed
Non-Observed
Legal
Illegal
FormalInformal
Terms do not always refer to the same thing across economies
Informal economy and the non-observed economy may largely overlap
It is likely that GDP in most economies includes some of the informal economy
Subsistence production/consumption is a potential area of understatement
The scope of economic surveys may exclude some businesses
Comparability Problems [Cont’d]
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8
Major Aggregate Data
• Validated major aggregate data• Metadata• Population and exchange rate data
Basic Heading Data
• Validated basic heading data• Metadata• Population and exchange rate data
Latest Data Available between 2006-2009
Final Data and Metadata
2011 Data
Preliminary Data and Metadata
Final Data and Metadata
Data & Metadata
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Global Office recommends 5 approaches
• Direct estimation
• Extrapolation from a recent year or 2005
• Borrowing a per capita volume related to a particular basic heading from an economy in the same cluster
• Borrowing from an economy in the same cluster a structure related to a class, sub-group or group related to a particular higher level heading
• Splitting a value using expert opinion
Estimating basic headings expenditures
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A summary measure that captures the economic activities
Gross Domestic Product
System of National Accounts
A comprehensive, integrated set of economic accounts, balance sheets,
and other tables describing the economic processes taking place within
a country and the associated stocks
1993 SNA
2008SNA
System of National Accounts
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• The SNA provides the concepts, definitions, classifications, and accounting rules often used as standards for economic statistics in general.
Household expendituresGovernment expenditures Investment International trade
WagesProfits
Industry:agriculturemanufacturingconstruction. etc.
System of National AccountsProductionIncomeConsumptionCapital formationBalance of paymentsInput-output (supply-use)Financial accounts (flow-of-funds)Balance sheetsVolumes
Institutional sectors: Households
Nonprofit institutions serving households (NPISHs)Financial corporationsNonfinancial corporationsGeneral government
Rest of the world
Economic statistics collections
National Accounts as a Framework
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Comprehensive
Consistent
Integrated
All designated activities and the consequences for all agents in an
economy are covered.
Identical values are used to establish the consequences of a single action for
all parties concerned using the same accounting rules.
All the consequences of a single action by one agent are necessarily reflected in the resulting accounts, including the impact on the measurement of wealth
captured in balance sheets.
Bird’s-eye view of the economy
Comparison across countries
on the same ground
Source: System of National Accounts 2008.
Justification of the National Accounts
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Final consumption expenditure
Taxes less subsidies on production
Net savingConsumption of fixed capital
Intermediate consumption
Output
Changes in inventories
Gross fixed capital
Net acquisition of valuables
Value added
Exports and imports
Goods and services
Transactions with rest of the world
Accumulation
Production
Distribution and use of income
ECONOMY
Diagram of the Integrated Accounts
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Household final consumption expenditure
Final consumption expenditure by NPISHs
Government final consumption expenditure- Individual consumption expenditure by government- Collective consumption expenditure by government
Gross fixed capital formation
Change in inventories
Net acquisitions of valuables
Balance of exports and imports of goods and services
General rule: Transactions are valued at the market prices (or purchasers’ prices).
GDP Expenditure Aggregates Valuation
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• Valuation – Recorded as the purchasers’ prices paid by households,
including any taxes on products that may be payable at the time of purchase
Price difference
Market imperfections
Deliberate price discrimination
Price collectors need to consult with the national accountants.
Household Final Consumption Expenditure
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NPISHsIntermediate consumption
Government
Compensation of employees
Consumption of fixed capital
Other taxes, less subsidies, on production
A sum of costs incurred in their
production
Input-price approach
Nonmarket production
No market for collective services such as defense
Differences between the types and quality of services provided when sold alongside the nonmarket services
Productivity differences between countries need to be carefully factored in.
Non Market Services
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• Valuation – Cannot be valued at the prices at which they sell their
output because these prices are “not economically significant.”
– Estimated as the sum of their costs of production
Intermediate consumption
NPISHs
Compensation of employees
Consumption of fixed capital
Other taxes, less subsidies, on production
A sum of costs incurred in their
production
Less any payments received from households for services provided
Input-price approach
NPISHs
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1. Individual consumption expenditure by government
• Valuation
2. Collective consumption expenditure by government
• Valuation– Valued at cost using cost components similar to those listed for
NPISHs
Production of services by government for the benefit of
individual households
Purchase by government, from other producers, of goods and services that are then passed
on to households
Valued at cost in the same way as for NPISHs
Valued at purchasers’ prices —cost to government of buying the goods and services from
other producers
Government Final Consumption Expenditure
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• Valuation– Valued at purchasers’ prices, including the cost of transport,
the cost of installation, and any fees or taxes for transfer of ownership
1
2
Own-account production of fixed
capital assets
Valued at basic prices (equal to
producers’ prices, minus product
taxes)
The 1993 SNA does not include
R&D expenditures.
The 2008 SNA includes R&D
expenditures as capital formation.
Gross Fixed Capital Formation
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• Valuation
1
2
Inventory
Valued at the prices at which they could have been sold when first produced
Valued at the prices at which they can then be sold
Recording
Change in inventories
Valued at the average prices ruling during the year
avg
BB
avg
EE P
PBVPPBV
BVE =book values of inventories at the end of the yearBVB=book values of inventories at the beginning of the yearPE= price index of inventories at the end of the yearPB= price index of inventories at the beginning of the yearPavg= price index of average inventory prices for the year
Changes in Inventories
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• Valuation – Participating countries are requested to report both the
purchase (acquisitions) and sales (disposals) of valuables . – A reference PPP will be used for valuables in the 2011 ICP.
Acquisition of Valuables
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• Valuation
Exporting country
Importing country
f.o.bprice
c.i.f.price
– Only the total export (import) values for the ICP, so that valuation on either an f.o.b. or a c.i.f. basis does not affect the values
– A reference PPP (exchange rates) will be used because of the different structure of exports and imports in countries.
Net International Trade
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Government services
Conceptually Comparison-Resistant Practically Comparison-Resistant
Own-produced goods
Barter transactions
Income in kind
Rent of owner-occupiers
FISIM
Health and education
Construction
Imputed expenditures
Comparison-Resistant Areas
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• ICP Web site• National Accounts Framework in ICP • System of Accounts 1993• System of Accounts 2008
Sources of References
Thank You
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