GROSS NATIONAL INCOME INVENTORY (ESA 95)

DENMARK

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SUMMARY CONTENTS

Chapter 1. Overview of the system of accounts ................................................................................ 15

Chapter 2. The revisions policy and timetable for provisional and final national accounts ........ 88

Chapter 3. GDP by the production approach ................................................................................... 90

Chapter 4. GDP by the income approach........................................................................................ 241

Chapter 5. GDP by the expenditure approach ............................................................................... 287

Chapter 6. The balancing procedure and main approaches to validation ................................... 341

Chapter 7. Overview of allowances and adjustments for exhaustiveness .................................... 359

Chapter 8. Transition from GDP to GNI ........................................................................................ 372

Chapter 9. Transition from GDP to GNP (ESA 79 definition)...................................................... 377

Chapter 10. Main classifications used .............................................................................................. 389

Chapter 11. Main data sources used................................................................................................. 401

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Foreword

This description of the sources and methods underlying the Danish estimates of gross national incomeat market prices has been drafted with reference to Article 4 of the GNP Directive (89/130/EEC,Euratom) on the harmonization of the compilation of gross national product at market prices. Carehas also been taken to keep closely to the common layout of the new GNI documentation for the EUcountries approved by the GNP Committee at its meeting on 29 October 1999. Further requirementswere set out in the Commission Decision (97/178/EF, Euratom) on the definition of a methodologyfor the transition between the European System of National and Regional Accounts in the Community(ESA 95) and the European System of Integrated Economic Accounts (ESA second edition). Thenew common layout will make comparisons between countries much easier than hitherto, since thecalculations for a given area will have the same number in the table of contents of the documentationfor the different countries.

This framework for the description of sources and methods has led us to concentrate on factors whichare important for the estimate of GDP and GNI (GNP)∗ at current prices, whilst factors which are notimportant for the levels of these major aggregates are dealt with only briefly, if at all. It also meansthat in some cases the description follows a stricter logic and has more detail - focusing on final ratherthan provisional accounts and on levels rather than growth rates - than would be expected fromdocumentation on national accounts written primarily for researchers and short-term economicanalysts. However, exhaustive documentation on the most detailed national accounts calculationsystems should be of considerable interest to researchers and analysts, too.

The documentation is set out so that the text itself discusses the primary statistics underlying theestimates and explains in detail the calculation methods used. The actual documentation on theprimary statistics has been collected together in Chapter 11 and consists mainly of links to the"declarations of contents" which Danmarks Statistik∗∗ makes available to users, to enable them, interalia, to assess the reliability of the individual statistics.

The documentation on the estimate of GNI at market prices consists of eleven chapters. Chapter 1presents the overall design of the national accounts calculation systems. It looks at them in relation tointernational manuals and classifications and discusses the timetable for the calculations ofprovisional and final accounts. There then follows a brief description of the estimate of GDP, GNIand the Danish national accounts in general. Chapter 1 is thus in the nature of a summary, and can beread independently of the rest of the book. As for all the other EU countries, Chapter 1 will beavailable to the public. In some countries, one or more of the chapters which follow will not beaccessible to the public, but will be available only to the Commission, the Court of Auditors and themembers of the GNP Committee. This restriction does not apply in Denmark's case, where all thedocumentation is in the public domain.

Chapter 2 discusses the production cycle and revisions policy for the Danish national accounts.

∗ N.B: Footnotes against asterisks are translator's notes, whereas numbered footnotes are in the original Danish text.Text in square brackets has also been added by the translator.

The Danish term has not changed: both GNI and GNP are "bruttonationalindkomst".

∗∗ As in many previous texts translated in the Commission, the name has been left in Danish in this paper, even though ithas an official name in English, "Statistics Denmark".

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Chapters 3, 4 and 5 are then a detailed review of sources and methods underlying the initial estimatesof GDP using the output, income and expenditure∗ approaches respectively. For output and income,they deal more particularly with the accounting statistics database which forms the nucleus of thecalculation system for resident producer units. Chapter 6 then describes how the national accounts arebalanced to give a single adjusted value for gross domestic product derived from a set of balancedsupply and use tables. These are subsequently used to compile input-output tables which are an exactmatch with the published national accounts. The fixed-price calculations in the final Danish nationalaccounts are also at this detailed product balance level.

Chapter 7 gives a general description of the initiatives introduced into the calculation process toensure that all economic activity which falls within the production boundary and takes place onDenmark's economic territory is included in GDP as calculated by each of the three approaches. Thischapter quantifies the explicit allowances for fringe benefits, underreporting and hidden activity["work in the black economy"].

Chapter 8 documents sources and methods underlying the transition from GDP to GNI whilst Chapter9 describes the transition from GDPas compiled according to the ESA 95 definitions to GNP ascompiled according to the old European national accounts system, the ESA 79.

The figures and tables in the documentation refer to 1995, for two reasons: firstly, the nationalaccounts figures for that year are final, and secondly the Member States have to supply especiallydetailed documentation for that year on the transition from estimates of GNI according to the ESA 95definitions to estimates based on the ESA 79 definitions. In addition, 1995 is the basis for the fixed-price calculations. In a few cases, estimates are included for years other than 1995 - usually 1992 - toillustrate sources and methods. The new national accounts system introduced in 1997 was developedon the basis of five benchmark years, namely the period 1988-1992, figures for which could becompared with final figures in the previous national accounts system. It should be stressed, however,that by far the largest share of GNI in the Danish national accounts is calculated from independentestimates of levels for a given year. 1988-1992 were generally chosen as benchmarks simply becausethere are various alternative calculations available for those years which, when taken together, haveprovided a basis for deciding on the sources and methods described in the present publication.

∗ The Danish word for the third way of estimating GDP translates literally as "use".

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CONTENTS

Chapter 1. Overview of the system of accounts.................................................................................151.1 Introduction.................................................................................................................................151.1.1 Main approaches used for the Danish national accounts ....................................................151.1.2 Geographical coverage........................................................................................................151.1.3 Connection with the ESA 95, NACE Rev. 1, CPA, COICOP and COFOG.......................161.1.4 Organisation of national accounts work in Danmarks Statistik ..........................................171.2 Revisions policy and timetable for final and provisional accounts.............................................191.2.1 Revisions policy..................................................................................................................191.2.2 Production cycle for provisional and final national accounts .............................................201.3 Outline of the production approach ............................................................................................221.3.1 Reference framework - business register ............................................................................221.3.2 Most important sources.......................................................................................................23

1.3.2.1 Five main types of accounting statistics..........................................................................231.3.2.2 Valuation in accounting statistics, product statistics and the national accounts .............291.3.2.3 Periodisation ...................................................................................................................30

1.3.3 Reasons for the choice of source.........................................................................................311.3.4 Accounting statistics database - the intermediate system ...................................................33

1.3.4.1 Central database for business accounts ...........................................................................331.3.4.2 Systematic double coding of producer units ...................................................................351.3.4.3 Common accounting plan and estimate by kind-of-activity unit ....................................351.3.4.4 Method of ensuring consistency......................................................................................401.3.4.5 Uniform principles for the transition from business accounting concepts to national

accounts concepts ............................................................................................................411.3.5 Independence of other methods of estimating GDP ...........................................................421.3.6 Direct versus indirect methods of estimation......................................................................431.3.7 Direct estimates of levels as opposed to extrapolations.....................................................431.3.8 Most important initiatives to provide exhaustive coverage ................................................451.3.9 From the intermediate system to the target total module....................................................46

1.3.9.1 Functional target total module ........................................................................................461.3.9.1.1 Functional target totals............................................................................................461.3.9.1.2 Output .....................................................................................................................491.3.9.1.3 Calculation of intermediate consumption ...............................................................571.3.9.1.4 Changes in inventories divided by type of inventory and product..........................59

1.3.9.2 Institutional target total module ......................................................................................601.3.9.2.1 Transactions in products .........................................................................................601.3.9.2.2 Distributive transactions .........................................................................................611.3.9.2.3 Financial transactions..............................................................................................62

1.3.9.3 Stocks and flows .............................................................................................................621.4 Outline of the income approach ..................................................................................................641.4.1 Reference framework – the business register, the central population register and the

salary information register (COR) ......................................................................................641.4.2 Most important sources.......................................................................................................651.4.3 Reasons for the choice of source.........................................................................................661.4.4 Periodisation .......................................................................................................................661.4.5 Transition from tax-based total wages and salaries in establishment-related employment

statistics (ERE) to the compensation of employees in the national accounts .....................671.4.6 Independence of the other methods of calculating GDP.....................................................701.4.7 Direct versus indirect methods of estimation......................................................................71

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1.4.8 Direct estimates of levels as opposed to projections...........................................................711.4.9 Most important exhaustiveness initiatives ..........................................................................711.5 Outline of the expenditure approach...........................................................................................711.5.1 Reference framework – business register, population register ...........................................721.5.2 Most important sources.......................................................................................................731.5.3 Reasons for the choice of source.........................................................................................741.5.4 Estimates of acquisitions less disposals versus the commodity flow method ....................761.5.5 Independence of the other methods of calculating GDP.....................................................761.5.6 Direct versus indirect methods of estimation......................................................................771.5.7 Direct calculations of levels as opposed to projections ......................................................771.5.8 Most important exhaustiveness initiatives ..........................................................................771.6 The balancing process and the main approaches to validation ...................................................771.6.1 Supply and use tables ..........................................................................................................771.6.2 Validation with the help of labour market accounts ...........................................................781.6.3 Financial sectoral accounts .................................................................................................791.7 Overview of the allowances for exhaustiveness .........................................................................801.7.1 Explicit allowances .............................................................................................................80

1.7.1.1 Output side ......................................................................................................................801.7.1.2 Income side .....................................................................................................................811.7.1.3 Expenditure side..............................................................................................................81

1.7.2 Implicit allowances .............................................................................................................811.7.2.1 Implicit coverage via price times volume calculations ...................................................811.7.2.2 Implicit coverage via estimates from the expenditure side.............................................821.7.2.3 Implicit coverage via grossing up procedures.................................................................82

1.8 Transition from GDP to GNI ......................................................................................................831.8.1 Reference framework ..........................................................................................................831.8.2 Most important sources.......................................................................................................841.8.3 Reasons for the choice of source.........................................................................................841.8.4 Direct versus indirect methods of estimation......................................................................841.8.5 Direct estimates of levels as opposed to projections...........................................................841.9 Transition from GDP (ESA95) to GNP (ESA79 definition) ......................................................841.9.1 Reference framework ..........................................................................................................861.9.2 Most important sources.......................................................................................................861.9.3 Reasons for the choice of source.........................................................................................861.9.4 Direct versus indirect methods of estimation......................................................................871.9.5 Direct estimates of levels as opposed to projections...........................................................87

Chapter 2. The revisions policy and timetable for provisional and final national accounts.........882.1 Values in annual prices ...............................................................................................................882.2 Values in fixed prices..................................................................................................................882.3 Employment, compensation of employees and gross operating surplus.....................................882.4 Timetable for provisional and final national accounts................................................................88

Chapter 3. GDP by the production approach ...................................................................................903.1 Reference framework ..................................................................................................................903.1.1 Business register .................................................................................................................903.1.2 Main types of source and method .......................................................................................96

3.1.2.1 Breakdown of the economy into sectors, subsectors and industries ...............................963.1.2.2 Sectors with complete accounts and full coverage .........................................................97

3.1.2.2.1 General government ................................................................................................983.1.2.2.1.1 Delimitation of the sector..................................................................................983.1.2.2.1.2 Subsectors .........................................................................................................99

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3.1.2.2.1.3 Statistical sources..............................................................................................993.1.2.2.1.4 Links with the business register ........................................................................993.1.2.2.1.5 From the accounting plan in public accounts to the national accounts estimate1003.1.2.2.1.6 Output of government non-market producer units..........................................1003.1.2.2.1.7 Breakdown of output by industry and product................................................1003.1.2.2.1.8 Intermediate consumption...............................................................................1013.1.2.2.1.9 Breakdown of inputs by product .....................................................................1013.1.2.2.1.10 Other taxes on production less other subsidies on production......................101

3.1.2.2.2 Credit institutions..................................................................................................1013.1.2.2.3 Insurance corporations and pension funds ............................................................1023.1.2.2.4 Publicly controlled non-financial corporations.....................................................102

3.1.2.2.4.1 Delimitation of the (sub)sector .......................................................................1023.1.2.2.4.2 Statistical sources............................................................................................1033.1.2.2.4.3 Estimate of the production account by industry..............................................103

3.1.2.3 Sectors calculated mainly from grossed up accounting statistics .................................1053.1.2.3.1 Delimitation ..........................................................................................................1053.1.2.3.2 Statistical sources..................................................................................................1053.1.2.3.3 Accounting plan ....................................................................................................1053.1.2.3.4 Degree of detail .....................................................................................................1073.1.2.3.5 Degree of coverage and method of grossing up....................................................1073.1.2.3.6 Periodisation .........................................................................................................1123.1.2.3.7 National accounts processing of the grossed up general accounting statistics,consistency check and transition from firm branches to national accounts industries..........115

3.1.2.3.7.1 Questionnaire-based accounting statistics received from primary statistics ...1153.1.2.3.7.2 Processing of the questionnaire-based accounting statistics...........................1203.1.2.3.7.3 Dividing lines between the accounting statistics system, the tax accountingsystem and other calculation systems................................................................................1323.1.2.3.7.4 Transition from firm branches to national accounts industries in the taxaccounting system .............................................................................................................135

3.1.2.3.8 Sector-industry tables............................................................................................1363.1.2.4 Industries with output value calculated as price times volume.....................................136

3.1.2.4.1 Agriculture, horticulture and the raising of fur animals........................................1363.1.2.4.1.1 Delimitation and consistency vis-à-vis other industries..................................1363.1.2.4.1.2 Statistical sources............................................................................................1363.1.2.4.1.3 Method of calculation ....................................................................................1373.1.2.4.1.4 Estimate of intermediate consumption............................................................1373.1.2.4.1.5 Breakdown of output by product.....................................................................1373.1.2.4.1.6 Breakdown of intermediate consumption by product .....................................138

3.1.2.4.2 Dwellings ..............................................................................................................1383.1.2.4.2.1 Delimitation and consistency vis-à-vis other industries..................................1383.1.2.4.2.2 Statistical sources............................................................................................1383.1.2.4.2.3 Method of calculating output ..........................................................................1393.1.2.4.2.4 Estimate of intermediate consumption............................................................1393.1.2.4.2.5 Breakdown of inputs by product .....................................................................140

3.1.2.4.3 Non-profit institutions serving households ...........................................................1403.1.2.4.3.1 Delimitation and consistency vis-à-vis other industries..................................1403.1.2.4.3.2 Statistical sources............................................................................................1403.1.2.4.3.3 Method of calculation .....................................................................................1413.1.2.4.3.4 Production in private, non-market producer units ..........................................1413.1.2.4.3.5 Breakdown of output by industry and product................................................1413.1.2.4.3.6 Breakdown of intermediate consumption by product .....................................142

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3.1.2.4.4 Private households with employed persons ..........................................................1423.1.2.4.4.1 Delimitation ....................................................................................................1423.1.2.4.4.2 Choice of sources ............................................................................................1433.1.2.4.4.3 Benchmark years versus current years ............................................................143

3.1.2.5 Industries where output is estimated from the expenditure side ...................................1433.1.2.5.1 Letting of non-residential buildings etc. - consistency .........................................1433.1.2.5.2 Statistical sources..................................................................................................1443.1.2.5.3 Breakdown of inputs by product ...........................................................................144

3.2 Valuation...................................................................................................................................1453.3 Transition from private accounting and administrative concepts to ESA 95 national accounts

concepts.....................................................................................................................................1453.3.1 Uniform principles for the transition from business accounting concepts to national

accounts concepts..............................................................................................................1453.3.1.1 Corrections which do not depend on the industry concerned .......................................1473.3.1.2 Corrections which vary from industry to industry ........................................................150

3.3.2 Correlation of accounting data and transition to national accounts estimate in kind-of-activity units .......................................................................................................................156

3.3.2.1 Transition to common accounting plan.........................................................................1563.3.2.2 Transition from institutional units ("firm branches") to producer units .......................157

3.4 Direct versus indirect methods of estimation............................................................................1583.5 Direct estimates of levels as opposed to projections.................................................................1593.6 Most important initiatives to provide exhaustive coverage ......................................................1603.7 Agriculture, hunting and forestry (NACE A)............................................................................1613.7.1 Introduction.......................................................................................................................1613.7.2 Statistical sources..............................................................................................................1613.7.3 Method of calculation .......................................................................................................1633.7.4 Breakdown of output by product.......................................................................................1673.7.5 Breakdown of intermediate consumption by product .......................................................1673.8 Fishing (NACE B) ....................................................................................................................1683.8.1 Introduction.......................................................................................................................1683.8.2 Statistical sources..............................................................................................................1683.8.3 Method of calculation .......................................................................................................1683.8.4 Breakdown of output by product.......................................................................................1683.8.5 Breakdown of intermediate consumption by product .......................................................1693.9 Mining and quarrying (NACE C) .............................................................................................1693.9.1 Introduction.......................................................................................................................1693.9.2 Statistical sources..............................................................................................................1693.9.3 Method of calculation .......................................................................................................1703.9.4 Breakdown of output by product.......................................................................................1703.9.5 Breakdown of intermediate consumption by product .......................................................1713.10 Manufacturing (NACE D) ....................................................................................................1713.10.1 Introduction.......................................................................................................................1713.10.2 Statistical sources..............................................................................................................1733.10.3 Method of calculation .......................................................................................................1733.10.4 Breakdown of output by product.......................................................................................1743.10.5 Breakdown of intermediate consumption by product .......................................................1773.11 Electricity, gas and water supply (NACE E).........................................................................1793.11.1 Introduction.......................................................................................................................1793.11.2 Statistical sources..............................................................................................................1803.11.3 Method of calculation .......................................................................................................1803.11.4 Breakdown of output by product.......................................................................................182

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3.11.5 Breakdown of intermediate consumption by product .......................................................1823.12 Construction (NACE F) ........................................................................................................1833.12.1 Introduction.......................................................................................................................1833.12.2 Statistical sources..............................................................................................................1843.12.3 Method of calculation .......................................................................................................1873.12.4 Breakdown of output by product.......................................................................................1903.12.5 Breakdown of intermediate consumption by product .......................................................1923.13 Trade and repair (NACE G)..................................................................................................1933.13.1 Introduction.......................................................................................................................1933.13.2 Statistical sources..............................................................................................................1933.13.3 Method of calculation .......................................................................................................1943.13.4 Breakdown of output by product.......................................................................................1943.13.5 Breakdown of intermediate consumption by product .......................................................1953.14 Hotels and restaurants (NACE H).........................................................................................1953.14.1 Introduction.......................................................................................................................1953.14.2 Statistical sources..............................................................................................................1963.14.3 Method of calculation .......................................................................................................1963.14.4 Breakdown of output by product.......................................................................................1963.14.5 Breakdown of intermediate consumption by product .......................................................1973.15 Transport etc. (NACE I)........................................................................................................1973.15.1 Introduction.......................................................................................................................1973.15.2 Statistical sources..............................................................................................................1973.15.3 Method of calculation .......................................................................................................1993.15.4 Breakdown of output by product.......................................................................................2013.15.5 Breakdown of intermediate consumption by product .......................................................2013.16 Financial intermediation (NACE J) ......................................................................................2013.16.1 Introduction.......................................................................................................................2013.16.2 Statistical sources..............................................................................................................2023.16.3 Method of calculation .......................................................................................................2033.16.4 Breakdown of output by product.......................................................................................2093.16.5 Breakdown of intermediate consumption by product .......................................................2093.17 Real estate, renting and business activities (NACE K).........................................................2093.17.1 Introduction.......................................................................................................................2093.17.2 Statistical sources..............................................................................................................2103.17.3 Method of calculation .......................................................................................................2113.17.4 Breakdown of output by product.......................................................................................2203.17.5 Breakdown of intermediate consumption by product .......................................................2213.18 Public administration, defence and social security (NACE L) .............................................2213.18.1 Introduction.......................................................................................................................2213.18.2 Statistical sources..............................................................................................................2233.18.3 Method of calculation .......................................................................................................2233.18.4 Breakdown of output by product.......................................................................................2243.18.5 Breakdown of intermediate consumption by product .......................................................2243.19 Education (NACE M) ...........................................................................................................2243.19.1 Introduction.......................................................................................................................2243.19.2 Statistical sources..............................................................................................................2253.19.3 Method of calculation .......................................................................................................2253.19.4 Breakdown of output by product.......................................................................................2253.19.5 Breakdown of intermediate consumption by product .......................................................2253.20 Health and welfare institutions (NACE N) ...........................................................................2263.20.1 Introduction.......................................................................................................................226

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3.20.2 Statistical sources..............................................................................................................2263.20.3 Method of calculation .......................................................................................................2273.20.4 Breakdown of output by product.......................................................................................2273.20.5 Breakdown of intermediate consumption by product .......................................................2273.21 Organisations, recreational and cultural activities etc. (NACE O) .......................................2273.21.1 Introduction.......................................................................................................................2273.21.2 Statistical sources..............................................................................................................2283.21.3 Method of calculation .......................................................................................................2303.21.4 Breakdown of output by product.......................................................................................2303.21.5 Breakdown of intermediate consumption by product .......................................................2303.22 Private households with employed persons (NACE P).........................................................2313.22.1 Introduction.......................................................................................................................2313.22.2 Statistical sources..............................................................................................................2313.22.3 Method of calculation .......................................................................................................2323.22.4 Breakdown of output by product.......................................................................................2323.22.5 Intermediate consumption by product...............................................................................2323.23 Treatment of international organisations ..............................................................................2323.24 Taxes on products excluding VAT .......................................................................................2323.24.1 Introduction.......................................................................................................................2323.24.2 Principles underlying the estimation and periodisation ....................................................2333.25 VAT ......................................................................................................................................2333.25.1 Introduction.......................................................................................................................2333.25.2 Principles underlying the estimation and periodisation ....................................................2343.25.3 Comparison and analysis, theoretical versus actual VAT resources.................................2353.26 Subsidies on products ...........................................................................................................2393.26.1 Introduction.......................................................................................................................2393.26.2 Recording principles and periodisation.............................................................................240

Chapter 4. GDP by the income approach ........................................................................................2414.1 Reference framework ................................................................................................................2414.1.1 Reference framework – the business register, the central population register and the

salary information register (COR) ....................................................................................2414.1.2 Structure of statistics on persons.......................................................................................243

4.1.2.1 Basic information, statistical registers and classification modules...............................2434.1.2.2 Classification modules ..................................................................................................2454.1.2.3 Statistical registers ........................................................................................................2474.1.2.4 Structure of the combined statistical system.................................................................249

4.1.3 Linkage of registers...........................................................................................................2504.1.4 Content analysis ................................................................................................................2514.1.5 Creation of statistical registers..........................................................................................2534.1.6 Administrative data as a source of statistics .....................................................................2544.1.7 Content..............................................................................................................................2554.1.8 Identifiers ..........................................................................................................................2564.1.9 Time references.................................................................................................................2574.1.10 The register as a statistical model .....................................................................................2574.1.11 Stability .............................................................................................................................2584.1.12 Quality...............................................................................................................................2584.1.13 Use of multiple sources.....................................................................................................2594.1.14 Integrated data collection ..................................................................................................2624.1.15 Legal basis.........................................................................................................................2624.1.16 Examples of integrated data collection - the Workplace Project, the ERE statistics........2634.2 Valuation...................................................................................................................................265

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4.3 Transition from accounting and administrative concepts to ESA 95 national accounts concepts2654.4 Direct versus indirect methods of estimation............................................................................2664.5 Direct estimates of levels as opposed to projections.................................................................2664.6 Most important allowances for exhaustiveness ........................................................................2664.7 Compensation of employees .....................................................................................................2674.7.1 Statistical sources..............................................................................................................2674.7.2 Methods of calculation......................................................................................................2754.8 Other taxes on production.........................................................................................................2794.9 Other subsidies on production ..................................................................................................2814.10 Gross operating surplus and mixed income ..........................................................................2824.10.1 Statistical sources..............................................................................................................2824.10.2 Methods of calculation......................................................................................................2824.11 Mixed income .......................................................................................................................2844.12 Consumption of fixed capital................................................................................................284

Chapter 5. GDP by the expenditure approach................................................................................2875.1 Reference framework - business register, population register ..................................................2875.2 Principles underlying the estimate ............................................................................................2885.2.1 Valuation...........................................................................................................................2885.2.2 Most important sources.....................................................................................................289

5.2.2.1 Statistical sources for the individual final expenditure components.............................2895.2.2.2 Reasons for the choice of source: competing information............................................290

5.2.2.2.1 Information on the same variable from different points of view ..........................2905.2.2.2.2 Choice between the household budget survey (FU) and information from othersources 2905.2.2.2.3 Choice between external trade statistics and settlements statistics from theNationalbank .........................................................................................................................2915.2.2.2.4 Estimates of acquisitions less disposals versus the commodity flow method ......2925.2.2.2.5 Independence of the other methods of calculating GDP.......................................292

5.3 Transition from business accounts and administrative concepts to the ESA 95national accounts concepts........................................................................................................293

5.4 Direct versus indirect methods of estimation............................................................................2935.5 Direct estimates of levels as opposed to projections.................................................................2935.6 Most important exhaustiveness initiatives ................................................................................2935.7 Household final consumption expenditure ...............................................................................2945.7.1 Calculation of independent initial estimates, expenditure approach.................................2945.7.2 Statistical sources..............................................................................................................2945.7.3 Methods of calculation......................................................................................................2985.7.4 Balancing in the framework of the national accounts product balance system.................3025.8 NPISH final consumption expenditure .....................................................................................3055.9 Government final consumption expenditure.............................................................................3055.10 Acquisitions less disposals of tangible fixed assets ..............................................................3075.10.1 Introduction.......................................................................................................................3075.10.2 Expenditure-based estimates.............................................................................................3085.10.3 Estimates using the commodity flow method ...................................................................3135.10.4 Breakdown by industry of total capital formation in the economy, divided by type ........314

5.10.4.1 Capital formation divided by industry ......................................................................3145.10.4.2 Government non-commercial capital formation .......................................................3145.10.4.3 Public corporations' capital formation ......................................................................3145.10.4.4 Industries covered by the questionnaire-based accounting statistics ........................3155.10.4.5 Other sources of information on industries...............................................................3185.10.4.6 Capital formation in construction, broken down by industry....................................318

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5.10.4.7 Capital formation in transport equipment, broken down by industry .......................3195.10.4.8 Capital formation in machinery and equipment, broken down by industry..............320

5.11 Acquisitions less disposals of intangible fixed assets...........................................................3205.11.1 Introduction.......................................................................................................................3205.11.2 Exploratory drilling...........................................................................................................3215.11.3 Software and large databases ............................................................................................321

5.11.3.1 Purchased software and large databases ...................................................................3215.11.3.2 Own-produced software............................................................................................323

5.11.4 Entertainment, literary or artistic originals .......................................................................3235.12 Additions to the value of non-produced non-financial assets ...............................................3245.13 Changes in inventories ..........................................................................................................3255.13.1 National accounts principles versus the principles in business accounts..........................3255.13.2 Opening and closing stocks...............................................................................................3255.13.3 Accounting figures underlying the calculation of inventories broken down by industry .3255.13.4 Intermediate system: breakdown of inventories by good..................................................3275.13.5 Calculation of national accounts changes in inventories ..................................................3305.13.6 Inventories calculated from information on products - 2063 inventories and energy

inventories.........................................................................................................................3335.13.7 Special changes in inventories - other 2064 inventories...................................................3355.13.8 Correlation between changes in inventories calculated on the basis of either inventory

totals broken down by industry or information on individual products............................3355.14 Valuables...............................................................................................................................3375.15 Exports of goods ...................................................................................................................3375.16 Exports of services ................................................................................................................3385.17 Imports of goods ...................................................................................................................3405.18 Imports of services ................................................................................................................340

Chapter 6. The balancing procedure and main approaches to validation ...................................3416.1 Supply and use tables as a framework for balancing the functional national accounts ............3416.1.1 Definitions.........................................................................................................................3416.1.2 The place of supply and use tables in the system of national accounts.............................3456.1.3 Supply and use tables and the compilation of national accounts ......................................345

6.1.3.1 A powerful tool for integrating GDP(O) and GDP(E) plus to some extent GDP(I).....3456.1.3.2 The supply and use table framework: rationale and limitations ...................................348

6.1.4.......................................................................................................................................................3516.1.4 Construction of supply and use tables...............................................................................351

6.1.4.1 Architecture of a system of national accounts based on supply and use tables ............3516.1.4.2 Basic statistics required.................................................................................................3516.1.4.3 Filling the gaps if some of the basic statistics are missing ...........................................3526.1.4.4 Benchmark versus current years ...................................................................................352

6.1.5 The balancing process .......................................................................................................3536.1.5.1 Drawing up the initial estimates to be balanced ...........................................................3536.1.5.2 Keeping track of uses at different price levels ..............................................................354

6.1.6 From supply and use tables to symmetric input-output tables ..........................................3556.1.6.1 Technology assumptions...............................................................................................3556.1.6.2 The treatment of imports...............................................................................................356

6.2 Other methods of validating the GDP estimate ........................................................................357

Chapter 7. Overview of allowances and adjustments for exhaustiveness.....................................3597.1 Explicit allowances ...................................................................................................................3597.1.1 Allowances for farmers' output for own consumption etc. ...............................................3597.1.2 Own output of software and large databases.....................................................................360

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7.1.3 Output of entertainment, literary or artistic originals........................................................3607.1.4 Fringe benefits for employees ...........................................................................................3607.1.5 Work in the black economy, underreporting and the associated VAT fraud ....................3657.2 Implicit allowances ...................................................................................................................3687.3 Validation: comparisons with employment data from demographic sources ...........................369

Chapter 8. Transition from GDP to GNI.........................................................................................3728.1 Compensation of employees to and from the ROW .................................................................3728.2 Taxes on production and imports..............................................................................................3738.3 Subsidies ...................................................................................................................................3738.4 Interest.......................................................................................................................................3738.5 Distributed income of corporations...........................................................................................3748.6 Reinvested earnings on foreign direct investments...................................................................374

Chapter 9. Transition from GDP to GNP (ESA 79 definition) ......................................................377

Chapter 10. Main classifications used...............................................................................................38910.1 Classifications by industry ....................................................................................................38910.2 Classifications of consumption .............................................................................................394

Chapter 11. Main data sources used .................................................................................................40111.1 Sources for the output-based estimate of GDP .....................................................................40111.2 Sources for the income-based estimate of GDP....................................................................43011.3 Sources for the expenditure-based estimate of GDP ............................................................436

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15

1. Overview of the system of accounts

1.1 Introduction

1.1.1 Main approaches used for the Danish national accounts

The Danish national accounts are built up around an integrated set of supply and use tables andaccounts for the institutional sectors. The initial GDP estimates are to a large extent calculatedindependently from the output, expenditure and income points of view and balanced for the final,annual calculations in a detailed product balance system covering around 2 750 products, some 2 300of which are goods and 450 or so services. The result is a balanced set of supply and use tables andthe integrated production and generation of income accounts that go with them for industries andinstitutional sectors. The sector-industry tables are thus an integral part of the final annual nationalaccounts. With the balanced supply and use tables as a starting point, symmetrical, industry xindustry-type input-output tables are constructed annually on the basis of the "industry technologyassumption".

As from reference year 1995, the Danish national accounts have included financial (transaction)accounts and balance sheets for financial assets plus the associated accounts for other changes in thevolume of assets and revaluation accounts. All that remains is to add non-financial balance sheets togive a full set of ESA 95 accounts. Like various other countries, Denmark has already started workon this latest expansion, which will result in an estimate of national wealth and of the wealth of theindividual sectors. So far, official estimates are available of fixed assets (fixed capital stock) in linewith the ESA 95 for the whole of the period 1966-2000.

The Danish national accounts consist of both annual and quarterly accounts. The official balance ofpayments estimate tallies in full with the national accounts rest-of-the-world account. The differencebetween the two sets of figures is due solely to geographical coverage.

1.1.2 Geographical coverage

The Danish national accounts cover the economic territory of the Kingdom of Denmark with theexception of the Faeroes and Greenland. The geographical coverage in the nationally publishedaccounts thus tallies with the delimitation of Denmark's economic territory as regards application ofthe GNP Directive, as laid down in Commission Decision 91/450/EEC, Euratom. No correction hasto be made for geographical coverage when switching from the national estimate of GNI to theaccounts as submitted to the EU in accordance with the GNP Directive.

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1.1.3 Connection with the ESA 95, NACE Rev. 1, CPA, COICOP andCOFOG

As from the 1997 publication, the Danish national accounts have been compiled in accordance withthe guidelines in the European System of Accounts (ESA 95). Before that date, they were based onthe UN manual "System of National Accounts 1968" (1968 SNA). Changes are still being made tobring the figures reported under the GNP Directive into line with the definitions in the previousedition of the European system of national accounts, the ESA 79. The time series of nationalaccounts figures according to the ESA 95 are extrapolated back to 1966. For all years with finalnational accounts from 1966 inclusive there are input-output tables in current prices and fixed 1995prices and corresponding series of Laspeyres chain indices for volume changes at the most detailedlevel of publication. For years from 1988 inclusive, there are supply and use tables based on the ESA95 and covering around 2 750 product balances in both current and fixed 1995 prices.

The only case where definitions depart from the ESA 95 is the recording of payments on theharmonised VAT basis which accrue to the EU in connection with the third own resource. Accordingto the ESA 95 paragraph 4.14, this resource should count as taxes on products paid by residents to theEU (D.211). When implementing the ESA 95, Denmark found this rule unrealistic from theeconomic point of view - a view which was subsequently and independently expressed by theEuropean Court of Auditors in a special report on VAT and GNP receipts. Instead, these paymentsare counted as a current transfer from Denmark to the EU institutions under international cooperation.The whole of the revenue from VAT is counted as income for the resident general government sector.With this one exception, the Danish national accounts comply in full with the ESA 95 definitions.

As regards the classifications of industries, both the primary statistics and the national accounts arebased on the NACE Rev. 1. The Danish branch classification Dansk Branchekode, DB 93, secondedition, is a national, more detailed version of the NACE Rev. 1. This Danish version of the NACERev.1 will be referred to in this description of sources and methods as "DK-NACE".

As regards commodity classifications, both product statistics covering manufacturing and externaltrade statistics use the EU's CN (Combined Nomenclature). The national accounts' productclassification (around 2 750 products) likewise complies with the CN classification for practicalreasons, but at a higher level of aggregation. The national accounts' product balances can, however,be converted to the EU's CPA product classification at the 4-digit level without any problems. This isa much more detailed level than is required by the ESA 95 Regulation, which merely stipulates supplyand use tables at the 2-digit CPA level corresponding to 60 product groups. The Danish nationalaccounts are consequently fully harmonised with the CPA on the products side.

As regards the classification of household final consumption, the Danish national accounts are basedon the international classification of individual consumption by purpose, COICOP, and there are noexceptions of any kind. The most detailed consumption grouping comprises 72 groups. Thebreakdown is substantially more detailed than is required by the ESA 95 Regulation.

All units and transactions in the general government sector are classified according to the COFOG,again at a much more detailed level than is required by the ESA 95 Regulation. Product transactionsinvolving general government are cross-classified by transaction type (ESA 95), by industry for theproducer unit concerned (NACE Rev. 1), by sector for the institutional unit concerned (ESA 95) andby function for the relevant transaction (COFOG).

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1.1.4 Organisation of national accounts work in Danmarks Statistik

Danmarks Statistik's organisation chart as at 1 November 2001 is attached in Annex 1 and theorganisation chart for national accounts in Annex 2. Danmarks Statistik is divided into fourdirectorates, three for statistics on particular fields and a horizontal one for user services. Under theAct on Danmarks Statistik [Lov om Danmarks Statistik], the institution is independent of governmentas regards all technical aspects of statistics. It is headed by a Board of Governors whose members areappointed by the Minister for Economic Affairs. Since the Act was passed in 1966, the members ofthe Board have been experienced representatives of the business world, the world of research andlocal government. No ministries are represented. Under the legislation, the National Statistician, whois appointed as a permanent official, is responsible for the technical and administrative managementof the institution and is also Chairman of the Board. He reports directly to the Minister for EconomicAffairs on all administrative and economic issues, and refers to the Ministry matters relating to EUlegislation on statistics. It is Danish parliamentary practice for all draft EU legislation which is to benegotiated in the Council to be put before the Folketing's Europe Committee, which gives theMinister a negotiating brief. This ensures that Parliament retains control over the extremelyimportant share of statistical output which arises from EU legislation and which therefore actuallycomes within the scope of the Board.

From the organisational point of view, responsibility for national accounts falls to the Directorate forEconomic Statistics. The work is divided among three divisions known as "National Accounts", "National Wealth" and "Public Finances and Prices". The National Accounts division is responsiblefor the estimates of national accounts, including the capital account, and for balancing them, againincluding the capital account. The official balance of payments calculation and symmetrical input-output tables, along with regional and environmental accounts, are also produced by this division.Note that balance of payments statistics are worked out in the National Accounts unit in DanmarksStatistik, although the primary statistics work on settlements statistics, and thus the most importantresource input, is done by Danmarks Nationalbank. Thus a single unit in a single institution isresponsible for compiling the balance of payments and the rest-of-the-world account for the nationalaccounts, which means that the two sets of statistics are fully coordinated even in the most provisionalquarterly estimates.

The National Wealth division is responsible for all administrative uses of the national accounts in theEU apart from the Stability and Growth Pact (the GNP Directive, the harmonised basis of VAT, plansfor the definitive VAT system). The division is also responsible for managing arrangements Denmarkmakes to comply with the GNP Directive. The division oversees the returns on the GNPquestionnaire and calculates any corrections to the nationally published figures which may be neededfor compliance with the guidelines approved by the GNP Committee. In particular, the divisionoversees the switch from ESA 95 to ESA 79 definitions. It is responsible for the development andproduction of the accounts from the financial account to the final balance sheet, inter alia calculationsof the financial sector accounts, the stock of fixed capital goods and national wealth. The NationalWealth division also compiles all the national accounts estimates from production account to finalbalance sheet for financial sectors S.121 to S.125. Finally, it carries out various research anddevelopment activities connected with national accounts, such as productivity calculations andanalyses.

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The Public Finances and Prices division calculates the general government sector for nationalaccounts purposes, including the sector's financial transactions and balance sheet accounts. ForSector S.13, general government, the division does not therefore produce primary statistics butsupplies a full set of national accounts figures in accordance with the ESA 95. Since the figureswhich the Public Finances and Prices division supplies to the National Accounts division and theNational Wealth division are included in the balancing of the overall national accounts, any changesas compared with the figures initially supplied are extrapolated back in the statistical systems inPublic Finances and Prices, so that the detailed figures published for general government and thenational accounts standard tables are an exact match. The Public Finances and Prices division isresponsible for statistical returns under the protocol on excessive deficits, but administrativeresponsibility for these returns lies with the Departement [= Secretariat] of the Ministry of EconomicAffairs. In addition to certain areas of national accounts, the Division covers accounting statistics forindustries which have traditionally been dominated by publicly controlled corporations, price statistics(consumer price indices, wholesale price indices, purchasing power parities, real estate salesstatistics), financial primary statistics and statistics on bankruptcies and forced sales.

The national accounts figures for agriculture and horticulture are calculated in the Agriculturedivision of the Business Statistics Directorate. These are input directly - with a few changes - into thenational accounts. The Agricultural Statistics division comes under the Business StatisticsDirectorate.

Danmarks Statistik is the Danish administrative authority for the GNP Directive and the fourth ownresource. The head of the National Wealth division is Denmark's representative on the ManagementCommittee (GNP Committee) set up under Article 6 of the GNP Directive. As the administrativeauthority in this field, Danmarks Statistik has an obligation to brief the government on matters ofprinciple or fiscal issues which are of importance for Denmark. As regards fiscal aspects, DanmarksStatistik, as an administrative authority, is on a par with a Departement. Similarly, administration ofthe institution is audited by Rigsrevisionen [the National Audit Office of Denmark].

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1.2 Revisions policy and timetable for final and provisional accounts

1.2.1 Revisions policy

Since the Danish national accounts are constructed around a detailed product balance system, revisingthe levels of the individual variables in a long time series of national accounts is inevitably a veryheavy task. It involves a further adjustment of the product balances, and substantial changes here canoften affect a very large number of cells in the supply and use matrices.

Since the main purpose of national accounts is to produce a basis for an overall assessment ofstructural and short-term developments in the economy, great importance has to be attached tocontinuity in time series, and any errors in levels which have emerged will therefore normally not becorrected until there are major revisions, which take place at intervals of 10 to 15 years. In addition, ithas generally been our experience that there are fewer errors in levels than might otherwise have beenthe case because ultimately the figures have to be fitted into a consistent system which tacklesproblems of levels at the primary statistics stage. The resources available do not allow majorrevisions, in which all sources and methods underlying the national accounts and all levels of theindividual variables are reassessed, to be undertaken at more frequent intervals than stated above.Annex 10 documents our experience over the years with corrections of levels and growth rates in themain national accounts aggregates during major revisions. In general, figures for the level ofGDP/GNI have been shown to be veryrobust throughout the history of national accounts, i.e. since theSecond World War.

That is not to say that new statistical sources cannot be incorporated on an ongoing basis, as and whenthey come into being. The point is, however, that if new and improved statistical sources reveal thatthe previous figures have been at the wrong level, but a switch to a more accurate level would give amisleading picture of year-on-year growth, the level correction is not incorporated into the currentcalculations. Instead, the break is noted with a view to including the correction in the next majorrevision, whilst the new and better statistical source can be used immediately in the calculation ofgrowth rates for the relevant variables. In other words, in such cases the new statistical source isused to project the previous levels for the variables in question. But to some extent more minoradjustments in level are made all the time.

Since the statistical or methodological reasons for errors in levels in the individual national accountsseries may be assumed to have roughly the same effect period after period, it is possible to obtainreasonably correct growth rates despite the errors. Against this background, we can choose toconsider the growth rates in the final national accounts figures as genuine and then to assess thequality of the provisional versions of the annual and quarterly figures in the light of their ability to hitthe target which is the growth rate in the final national accounts.

These final national accounts, along with their symmetrical input-output tables, are available for agiven year just under three years after the end of that year. The first national accounts for a givencalendar year are at present published around 23 March of the following year. The annual figures inthis first publication appear as a simple sum of the year's four quarters based on the quarterly nationalaccounts as available at that point. Development work began in 2000 to speed up publication of thequarterly national accounts. As from 2002 inclusive, the publication date is expected to be brought

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forward to around 1 March, as an offshoot of the EMU statistics action plan. In the following 2 ¾years or so to the final national accounts, successive versions of provisional annual accounts areproduced, incorporating the primary statistics on an annual basis as and when they become available.

There is no balancing in the form of adjusted supply and use tables until the final national accounts.For the quarterly and provisional accounts, there is only a partial product balance-based adjustment ofresources and uses. More specifically, the technical coefficients from the SUTs of the latest final yearare used, in combination with the product statistics for manufacturing and external trade statistics, tovalidate the initial supply and use calculations and produce a first automatic balance which is thenadjusted manually. Thus the first two stages of the RAS procedure known from input-output analysisare carried out in connection with the provisional national accounts. The first stage is to divide all usecategories by product in accordance with the structure of the latest final national accounts. Thesecond stage is to work out the difference between resources and uses of each product and to dividethe difference first of all pro rata with the initially estimated uses, with resources remainingunchanged. By summing over products, adjusted national accounts are obtained after this secondstage, i.e. resources and uses balance. However, the differences between these figures and the initialestimates will be substantial with this automatic adjustment. The marginal totals after the horizontaldistribution are now considered as a set of alternative initial estimates arrived at on the basis of the"product figures", i.e. from the supply of the individual products. After that, a weighted average ofthe original initial estimates and the alternative initial estimates is worked out to give a set ofmodified initial estimates which result in non-balanced national accounts. The balancing is thencarried out manually, not at product level but at industry/use category level. During this phase of theadjustment, the product dimension is thus eliminated. The fact that the adjustments in the course ofthe balancing process are not broken down by product means that there is no fully adjusted productbalance system underlying the quarterly and provisional accounts.

The purpose of the procedure described above is - bearing in mind the short time available, of course,for the production of provisional and quarterly accounts - to make full use of the product informationin the SUTs and in the current production statistics and external trade statistics. The comparison ofsupplies and uses made here must be considered as one of the key factors reducing uncertainty in thecalculation.

1.2.2 Production cycle for provisional and final national accounts

The production cycle for final, provisional and quarterly national accounts can be see in Table 1."Nyt" means "Nyt fra Danmarks Statistik", which is a rapid publication aimed primarily at informingthe press that statistics are now being published. "Statistiske Efterretninger" reports the nationalaccounts figures in greater detail. The most detailed figures appear in annual publications and in thedatabanks. During 2001, as a result of the action plan for EMU statistics, which aims to speed up thepublication of short-term economic statistics, the quarterly national accounts are being produced morequickly. With publication planned for the end of November 2001, the production time for thequarterly accounts will be shortened from just under three months to just under two months.

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Table 1 Planned publication deadlines for 2001 national accounts

Quarterly/annualfigures1

Coverage ofcalculation

Publication2

Nyt and/ordatabanks

StatistiskeEfterretn.

Annualpublication

Quarterly figures3rd qu. 2000

4th qu. 19993rd qu. 2000

EndDecember 2000

BeginningJanuary 2001

Annual figures 1999,non-financial NA(December version)

Final figures 1997Provisional figuresfor 1998-1999

BeginningJanuary 2001

Mid-January 2001

March 2001

Symmetricalinput-outputtable

Final figures for1997Projected figures for1998-1999

BeginningJanuary 2001

April2001

Financialtransaction accounts

Final figures for1995-1997Provisional figuresfor 1998-1999

EndJanuary 20013

BeginningJune 2001

Financial balancesheets(closing)

Final figures for1995-1997Provisional figuresfor 1998-1999

EndJanuary 20013

BeginningJune 2001

Fixed capital stockby kind and industry(opening)

Final figures for1992Provisional figuresfor 1993-2000

BeginningFebruary 2001

BeginningJune 2001

Quarterly figures4th qu. 2000

1st qu. 2000-4th qu. 2000

EndMarch 2001

BeginningApril 2001

Annual figures 2000(June version)

Provisional figuresfor 2000

BeginningJuly 2001

Mid-July 2001

Quarterly figures1st qu. 2001

2nd qu. 2000-1st qu. 2001

EndJune 2001

BeginningJuly 2001

Quarterly figures2nd qu. 2001

3rd qu. 2000-2nd qu. 2001

EndSeptember 2001

BeginningOctober 2001

Quarterly figures3rd qu. 2001

4th qu. 2000-3rd qu. 2001

EndNovember 2001

EndNovember 2001

Fixed capital stockby kind and industry(opening)

Final figures for1997Provisional figuresfor 1998-2001

Mid-December 2001

BeginningJanuary 2002

Annual figures 2000,non-financial NA(December version)

Final figures 1998Provisional figuresfor 1999-2000

BeginningJanuary 2002

Mid-January 2002

March2002

1 Annual figures are different from quarterly figures in that they give information at a more detailed level andinclude a breakdown of the economy into institutional sectors.

2 In addition, certain figures will be included in the "Konjunkturstatistik" publication.3 Data supplied to Eurostat plus data access.

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The table shows that the first figures for the year 2000, obtained as the sum of the quarterly accounts,were available in March 2001. With the planned acceleration of the quarterly national accounts, thefirst figures for the year 2001 will be available at the end of February 2002. In the April annualestimate (April version), the annual figures are still estimated as the sum of the quarterly figures, butthey are now expanded to include a breakdown of the economy into institutional sectors. The firstgenuine annual figures (June version) are different from the annual figures which are the sum of fourquarters in that they include primary statistics which appear later and are available only on an annualbasis. These are mainly statistics on general government, for which the first annual statisticalestimates are available in May of year t+1. The published annual figures and quarterly figures areconsistent with one another throughout. The quarterly figures are calibrated to annual figures using amethod which minimises the deviations from the quarterly figures as originally calculated, with theproviso that the given annual totals are retained. With each new quarterly estimate, the figures for theprevious three quarters are revised. After that, the quarterly sequence remains fixed, subject to theeffect of the calibration to new annual levels. It is the annual estimate, the "June version" figures forGNI in year t, which forms the basis for the GNI report in the September of year t+1. The nationalaccounts figures become final just under three years after the reference year for publication in theDecember of year t+3.

1.3 Outline of the production approach

1.3.0 Introduction

For 1995, the calculation of output-based GDP may be summarised as in the table below:

Table 2 GDP, production approach, 1995

Value, % ofDKK million GDP

Output at basic prices 1 663 164 165- Intermediate consumption 791 822 78+ Taxes on products 157 254 16- Subsidies on products 18 840 2

GDP 1 009 756 100

1.3.1 Reference framework - business register

A high-quality business register is crucial for a reliable and exhaustive calculation of GDP using theproduction approach. If it is not possible to calculate the population of producer units in theeconomy, or if the register information on the units' activity, size, etc. is not reliable, a considerablemeasure of uncertainty is introduced into the national accounts themselves. Full coverage of thepopulation and correct information on the registered units are essential, both to enable representativesamples to be selected for statistical surveys and to enable the figures to be grossed up correctly tocover the total population. A properly functioning business register is therefore one of thecornerstones of the national accounts.

Denmark has a long-standing tradition of central business registers. The first such administrativeregister was set up under legislation in 1975, but Danmarks Statistik's own central business register

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dates back to 1967, the year in which VAT was introduced in Denmark. Danmarks Statistik wasquick to take advantage of the enormous statistical possibilities opened up by the compulsoryregistration of virtually all business units in the VAT system. The content and technical aspects of theregister were thoroughly revised in years 1989-1995 and the quality was improved. In 1997-1999, theEDP technology was substantially upgraded, and this has made it possible for Danmarks Statistik'sbusiness register to replace all decentralised registers in other departementer and otheradministrations as from 1999. Since that year, all public authorities have been using the CVR(Centrale Virksomhedsregister, the Central Business Register), which is the administrativecounterpart to Danmarks Statistik's statistiske erhvervsregister [statistical business register].

It is vitally important for the coverage of the Danish business register, which compares extremelyfavourably with coverage in other countries, that there should be a very low threshold for mandatoryregistration in the Danish VAT system (turnover limit of DKK 20 000), that virtually all non-financialmarket activity other than passenger transport is subject to VAT, and that all employers and the self-employed who have no employees have to be registered in connection with the payment of pay-as-you-earn and the labour market contribution. Taken together, these registration rules mean that anycommercial/industrial activity of any significance (other than work in the black economy) is recordedin the business register.

1.3.2 Most important sources

1.3.2.1Five main types of accounting statistics

The most important statistical sources underlying output-based GDP are, of course, variousaccounting statistics which can be used to estimate the output value, intermediate consumption andvalue added of the various industries. The five types are:

a) detailed accounting statistics based on questionnaires and tax accountsb) less detailed accounting statistics based on standardised tax accountsc) accounting statistics for industries where public corporations predominated) industry-specific accounting statistics and individual accounts for large entitiese) accounting statistics for general government.

Ad a) Detailed accounting statistics based on questionnaires and tax accounts

The first point relates to the detailed accounting statistics which have traditionally covered some butby no means all industries. Below, they are referred to as "questionnaire-based accounting statistics".They are sufficiently detailed to comply with the requirements of the Structural Regulation(97/58/EC, Euratom). They are being radically reorganised so that as from reference year 2000 theywill, broadly speaking, cover all non-financial producer units other than general government andindustries where public corporations traditionally predominate, which are covered by other accountingstatistics. The exception is certain personal service industries. For 1995, which is used as anillustration in this description of sources and methods, these statistics cover manufacturing (NACED), construction (NACE F) and retail trade (NACE G).

From the national accounts point of view, questionnaire-based accounting statistics must beconsidered as an extremely robust source in that they:

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• include all units with over 50 employees in the sample• use tax accounts for units not in the sample• have relatively low sampling uncertainty• have a detailed accounting plan which makes the switch to national accounts concepts easier• contain figures for both firms and kind-of-activity units.

A description of this statistical source can be found in Section 11.1. The questionnaire is in Annex 3.

Ad b) Less detailed accounting statistics based on standardised tax accounts

These are accounting statistics based on standardised accounts (SLS-E statistics: SLS-E = StatensLigningssystem for Erhvervsdrivende, the government tax assessment system for businesses), whichall firms, with certain exceptions, have to send in to the tax authorities together with their tax returns.These statistics are referred to in the present documentation as "tax accounting statistics". It isimportant to understand that these are not actual tax returns, the accounting plan for which isnormally not particularly suitable for national accounts purposes. They are standardised accountswhich clearly relate to items on the actual tax returns. The accounting plan for these standardisedaccounts is much more detailed than in the tax returns themselves and therefore suitable for nationalaccounts estimates.

Since 1991, the accounting plan in the standardised tax accounts has been much less detailed than inDanmarks Statistik's questionnaire-based accounting statistics as described under point a) above. Theaccounting plan for years 1988-1990 was much more detailed than is now the case. The plans forbefore and after 1991 are reproduced in Annexes 5 and 6. For the national accounts processing of thisaccounting information, the costs structure in the more detailed plan for 1990 is used to subdivide themore aggregated cost items from 1991 onwards. Similarly, the questionnaire-based accountingstatistics discussed under a) above use the standardised tax accounts for those units not covered by thesample. The method in this case is exactly the same, using the detailed accounting information fromthe questionnaires from firms in the same branch and size group to divide up the accounting items onthe SLS-E forms.

The accounting statistics based on standardised tax accounts cover firms (legal units). The firm-basedinformation is not broken down into the kind-of-activity units which make up a firm: this kind ofbreakdown is made in connection with the national accounts processing of the figures. For thetransition from firm level to kind-of-activity unit level, all available information on the connectionbetween firms and kind-of-activity units is used, along with statistical methods known from input-output analysis. Section 3.3.10.2 gives further details of the method used.

A description of the accounting statistics based on standard tax accounts can be found in Section 11.1.In Section 3.1.2.3, there is a detailed report on the national accounts processing of the basicaccounting statistics figures.

It is important to stress that the national accounts use of SLS-E statistics is based not on the publishedresults of these accounting statistics but on the accounts of the individual firms. The primarystatistics division supplies error-checked accounting figures to the national accounts division, whichprocesses the figures itself, and the final result of this processing is not the same as the result in theprimary statistics. For the national accounts calculations, the 90 000 or so accounts covered by theSLS-E system are completely reprocessed and grouped by sector in the "tax accounting statisticssystem". This procedure was introduced partly to improve the grossing up, to make it better than in

25

the primary statistics, and partly because a sectoral grouping of firms was needed in line with the ESA95.

As regards the grossing up to the total population, a rather cumbersome procedure is used in theprimary statistics, whereby the firms in the figures for each individual industry, in a breakdown intofour forms of ownership, are grossed up using the ratio of 98% of VAT sales in the stratum inquestion to accounting turnover (the accounting item "net sales", or "net turnover"), as covered by theSLS-E figures. In the national accounts processing of the SLS-E figures, a better (and more common)grossing procedure is used, with stratified grossing using VAT sales as the grossing variable. Thedifference between the two methods is that, whilst the former assumes a fixed ratio between nationalaccounts sales (output excluding changes in inventories and output for own final use) and VAT sales,the latter is not based on this assumption but uses VAT sales alone as the basis for grossing up, i.e. toform raising factors for each individual stratum. Section 3.1.2.3.5. describes in detail how the figuresare grossed up.

As regards the sector grouping, the legal form of ownership "ordinary partnership" ["interessentskab",I/S] in the primary statistics is combined with sole proprietorships for the stratification. Ordinarypartnerships are a type for which complete accounts are available, and where the owners' withdrawalscan in every case be identified. In the national accounts, these ordinary partnerships have to beincluded in the corporate sector, whilst sole proprietorships have to be classified in the householdssector. For this reason alone, the national accounts had to incorporate the SLS-E statistics at unitlevel instead of starting from the published primary statistics.

Despite the much-reduced accounting plan used as from 1991 and the fact that certain firms areexempt from the obligation to submit the SLS-E form whilst some which, by law, should send inSLS-E accounts apparently get away with not doing so (one reason being the decentralised taxassessment), the SLS-E statistics must be considered as a relatively robust statistical source fordemonstrating the value added of the industries, primarily because

• the degree of coverage is high and the statistics are representative of all forms of ownership andsize groups;

• the information is used in tax assessments and is therefore checked very thoroughly;• the accounting information relates directly and clearly to the enterprises' tax returns (tax accounts).

Experience has also shown that, as regards estimates of the industries' value added, the questionnaire-based general accounting statistics and national accounts estimates based on the SLS-E-basedaccounting statistics produce virtually the same result.

Ad c) Accounting statistics for industries where public corporations predominate

The statistics for industries dominated by publicly owned and controlled corporations are not anintegral part of the questionnaire-based accounting statistics described under a) above for reasonswhich are largely historical. Since 1999, the questionnaires for the two sets of accounting statisticshave been closely aligned, since it has to be possible for both of them to form the basis for DanmarksStatistik's business statistics returns to the EU under the Structural Regulation. But it has still beenfound useful to have various specific questions in the accounting statistics for industries where publiccorporations predominate. For these industries, accounting statistics are produced at firm level by thePublic Finances and Prices division. The accounting concepts in these statistics comply with the ESA95 and not with the usual business accounting concepts. As with general government estimates,which are also computed by Public Finances and Prices, the only extra processing needed for national

26

accounts purposes is a conversion to kind-of-activity units (with construction and trade shownseparately).

Right from the early days, the above industries were treated differently, the idea being to show theextent of all publicly controlled capital formation in the economy, i.e. the total in the generalgovernment sector and in public corporations. Information on this capital formation, which is notsensitive to short-term economic changes, is, of course, required for economic analyses. Previously,therefore, special investment surveys were carried out for these industries. As from 1992 inclusive,these have been replaced by actual accounting statistics for industries where public corporationspredominate. The statistical unit is the firm, but the questionnaire collects the information needed toenable construction and trading activity to be shown separately, so that these activities can be shownunder their respective NACE industries. This is important, since mixing up the supply industries withconstruction, for example, would make any attempt to establish the input structure of the supplyindustries so complex and uncertain that the work of balancing supply and use matrices would be verymuch more difficult.

The term used in this publication, "accounting statistics for industries where public corporationspredominate", refers to the ownership structure before the numerous cases of privatisation which overthe past few years have reduced government equity in a whole range of corporations. For example,following the privatisation of TeleDanmark, the telecommunications industry is no longer dominatedby publicly controlled corporations. However, those industries which have traditionally beendominated by public ownership will for the time being continue to be covered by accounting statisticsunder point c) instead of being transferred straight away to those areas of industry which are coveredby the accounting statistics described under a) above.

This statistical source is described in Section 11.1.

Ad d) Industry-specific accounting statistics and accounts for large entities

For a number of (market) industries, there exist, for historic, institutional or other reasons, accountingstatistics whose accounting plan, sources and methods are different from those of the generalaccounting statistics described under a) and b). These are in the main agriculture etc, the oil and gasindustries, financial activities and sea water transport.

For agriculture, horticulture, etc, Danmarks Statistik itself produces extremely comprehensiveagricultural statistics. Although these do not cover the collection of accounts from agricultural andhorticultural holdings, Statens Jordbrugs- og Fiskeriøkonomiske Institut produces annual accountingstatistics for agriculture etc, and these are used by Danmarks Statistik's Agricultural Division toestimate the value added of agriculture and other national accounts components. The input fornational accounts calculations is thus a ready-made national accounts estimate for agriculture etc.based on Danmarks Statistik's calculations of agricultural output, sales, capital formation etc. incombination with accounting statistics from Statens Jordbrugs- og Fiskeriøkonomiske Institut.

The national accounts estimate for agriculture etc. is described in Sections 3.7.

The oil and gas industries are very strictly regulated by government. A concession has to be obtainedfrom the central government before there can be any exploration for or extraction of oil and gas in theDanish part of the North Sea. Energistyrelsen, the Danish Energy Agency, which comes under theMinistry of the Environment and Energy, monitors all operators and collects extremelycomprehensive accounting figures.

27

The industry includes Dansk Undergrunds Consortium (DUC) and other licence holders in this field,plus the activity of the DOPAS company which does not consist of oil or gas exploration. In 1995,DUC was by far the most important operator, the only one which had production plant. The whole ofthe industry is covered by these companies. Danmarks Statistik collects extremely detailedaccounting information from DUC and any other companies which may start to extract oil and gas,and also uses the accounting information collected by Energistyrelsen [the Energy Agency] for thosecompanies which have concessions for parts of the North Sea and which are carrying out oil and gasexploration but do not yet have any production.

Section 3.9 describes the accounting figures for the extraction of oil and natural gas.

Similarly, units in the financial sectors, with the exception of S.124, Financial auxiliaries, are alsosubject to rigorous public control and regulation. Special legislation, the "accounting orders", detailsthe accounts which these sectors have to submit. This legislation is much more demanding andrestrictive than are the provisions of the Annual Accounts Act, which governs the submission ofaccounts for non-financial corporations. From these accounts, the supervisory authority for financialinstitutions, Finanstilsynet, which is an institution under the Ministry of Economic Affairs, producesaccounting statistics which are a particularly good starting point for national accounts, since thecoverage is almost 100% and the accounting plan is sufficiently detailed.

Accounting statistics for the financial sectors are described in Section 3.16.

Finally, there are special accounting statistics for transport by sea. Although the accounting plan isvery much less detailed than the questionnaire used in the general, questionnaire-based accountingstatistics, the focus is on income from both Denmark and the rest of the world and on expenditure inforeign ports. Transport by sea is an important export industry in Denmark, and its export earningshave been the subject of great interest. For the same reason, information on exports and imports ofservices relating to transport by sea has had to be collected for the balance of payments, and it hasbeen collected via accounting statistics. As from reference year 1999, the accounting plan forstatistics on sea water transport will be at least as detailed as the plan for the other industries, to meetthe Structural Regulation requirements.

Section 11.1 describes the accounting statistics for sea transport.

Ad e) Accounting statistics for general government

As already mentioned, the Public Finances and Prices division produces the full sequence of nationalaccounts for Sector S.13, general government, including a breakdown of activity by industry based onthe DK-NACE.

In the Danish national accounts, there are no market producer units (local kind-of-activity units) inSector S.13, general government. In all cases where a market local kind-of-activity unit can beidentified which is owned/controlled by an institutional unit in general government, it is shown as aquasi-corporation separate from the institutional unit in general government which controls it, andthis market unit is transferred to the corporate sector. In cases where a local KAU which is a marketproducer and which is owned/controlled by public authorities can be identified in Denmark, it willnormally also be possible to identify the unit's distributive transactions and financial transactions inthe government accounts, where relevant. This, together with the practical advantages of a "pure"sectoral delimitation, was the main reason why Denmark's national accounts always set up quasi-

28

corporations corresponding to government market producer units, whose output value is calculatedfrom their income from sales.

The above convention relating to quasi-corporations in no way rules out, of course, the possibility thatthere may be market output in producer units belonging to S.13 general government. Manygovernment institutions whose main activity is to supply non-market services and whose total outputvalue (non-market plus market) is compiled using the costs approach have some market output, i.e.output for sale where the income from sales covers at least 50% of production costs. The marketactivity is in these cases such an integral part of the institution's overall activity that it is impossible topick out the related costs with any degree of certainty, as is necessary if a local kind-of-activity unit(producer unit) producing for the market is to be shown separately. One example of this kind ofmarket activity in non-market producer units in Denmark is the comprehensive services provided byDanmarks Statistik, which enable customers to order special runs of the statistics published or toreceive printouts from the business register or other statistical registers against payment of theestimated total unit costs. Another example is sales of cards, posters, etc. by museums, which areclassified as non-market producers.

On the other hand, by no means all public sales income comes from sales of goods and servicesproduced for the market. A large share of government sales income comes from education, healthand social services, where in most cases the user payments cover much less than 50% of productioncosts. Examples would be amounts paid by parents to schools or to kindergartens which arenominally private , by residents to care homes which are nominally public or private, or by patients topublic hospitals. Such income from sales of non-market products is considered to be user paymentswhich help to cover costs in non-market producer units whose output value is calculated from thecosts side, since the total sales income from both market and non-market products covers under 50%of the producer unit's costs.

The breakdown of government sales income into a market share and a non-market has no effect on thenational accounts, of course, other than providing information on whether income from sales can beconsidered to have covered more or less than 50% of the costs of producing the product in question assupplied by a producer unit which, in terms of its total activity, is classified as non-market and whoseoutput value is calculated as the sum of its costs. Neither household nor general government finalconsumption depends on the breakdown of sales income into market and non-market shares, since thetransactions recorded are identical in the supply and use tables.

The sources for general government statistics are central government accounts, local governmentaccounts for all the 275 municipalities and 14 counties, accounts for social security funds andaccounts for institutions which come under Sector S.13 but whose accounts are not incorporated intothe above.

There are two factors which are crucial for the degree of coverage of the general government estimateand the reliability and consistency of the total estimate of GDP/GNI: firstly, that an exhaustive list canbe compiled of all (other) government non-market producer units, and secondly that one can becertain that these units do not appear, either in whole or in part, in the value added figures for themarket share of the economy. In other words, it is crucial to ensure that the same production activityis included once and once only. This is quite a challenge, since each individual industry in the NACERev. 1 can include both market and (other) non-market activity.

The only way in which one can be sure that the estimates for market and for government (other) non-market producers are consistent is to use a systematic coding of all enterprises (firms) and local kind-of-activity units in the business register. In the Danish business register, all units which are classified

29

as government (other) non-market producers are tagged and included in the population of statistics forS.13 general government and nowhere else. In particular, where VAT sales (in terms of legal units)or, alternatively, employment are used for the grossing up of market activity, the sales in question areVAT sales excluding turnover in government non-market producer units.

Section 11.1 includes documentation on general government statistics.

The table below shows the breakdown of the calculation of the gross value added (GVA) of industriesin 1995 divided by the main types of accounting statistics.

Table 3 Gross value added based on various accounting statistics

Accounting statistics Gross value addedbased on the source

% of the gross valueadded of the economy

Questionnaire-based accounting statistics 234 874 27Tax accounting statistics 208 323 24Accounting statistics for industries wherepublic corporations predominate

69 582 8

Industry-specific accounting statistics 157 204 18General government 201 359 23Total 871 342 100

The table has been compiled on the basis of the national accounts' 130 industries, showing the mainsource for the calculations for each industry, together with the final adjusted figure for value added.Since the calculations for the initial estimates prior to adjustment are in fact carried out at a muchmore detailed level, and the calculations for some of the national accounts' 130 industries are basedon different sources for the individual underlying DK-NACE industries, the breakdown by source isnot totally accurate. It is nevertheless a particularly good approximation of how the intermediatesystem's value added figures are distributed over the accounting statistics.

The table classifies the primary statistics underlying the calculations for dwellings, the letting of non-residential property and non-profit institutions serving households as specific industry statistics. Thisis one reason why the specific industry statistics in the table account for a comparatively large shareof the economy's total value added.

1.3.2.2Valuation in accounting statistics, product statistics and the nationalaccounts

According to the ESA 95, output has to be valued at basic prices. This has been the value used in theDanish national accounts since the 1940s, so in this respect nothing has changed for Denmark, whichhas always thought that the "producer prices" concept in the ESA 79 was inappropriate in the nationalaccounts from the point of view of both producing and analysing statistics.

Danish accounting and product statistics have always asked for turnover in basic prices, partly fornational accounts purposes but also simply because Denmark has always considered that this was theprice concept which firms could relate to best, since it corresponded to the income which goes intothe firm's own till rather than to government coffers. The concept of "net sales" in the Danish

30

legislation on the submission of annual accounts (the Annual Accounts Act) corresponds to the basicprice concept, meaning the sales value after deduction of discounts and VAT and other excise duties(and, conversely, the addition of subsidies on products).

In Denmark's case, therefore, there is generally no need for any procedure to switch from observedprices such as producer prices to the ESA 95 concept of basic prices. The sales observed in thesources are generally already at basic prices. In certain cases, government grants are included. Theseare treated as product subsidies in the national accounts but are not included in the sales of theenterprises concerned, and so have to be added to sales in the accounts to give sales at basic prices.This happens, for example, with injections of capital to make up deficits in public corporations, whichin the national accounts are counted as subsidies on products.

1.3.2.3Periodisation

a) Detailed accounting statistics based on statistical questionnaires

For reference year t, the questionnaire-based part of these statistics covers enterprises whoseaccounting period closes between 1 May in year t and 30 April in year t+1. When this source is usedin the national accounts, the accounting statistics are not periodised, since it may be assumed that theaverage difference between the accounting period in accounting statistics and the calendar year isinsignificant, considering that the statistics include newly established firms which have not beenoperating for the whole year.

One reason why it is difficult in practice to periodise totally accurately is that, for the estimate of thefinal national accounts for year t, accounting statistics would need to be available for both year t andthe following year t+1. Accurate periodisation can therefore delay compilation of the final nationalaccounts.

b) Less detailed accounting statistics based on standardised tax accounts

Since SLS-E statistics are linked to the tax returns used for income tax payments by individuals andcorporations, the periodisation in these accounting statistics complies with the rules in the taxlegislation. Income year t thus covers those firms which close their accounts in the period 1 April ofyear t to 31 March in year t+1. SLS-E statistics for year t will thus include annual accounts whichclose in a month falling within that time scale.

The average shift away from the calendar year is therefore greater for tax accounting statistics than forthe questionnaire-based statistics. On the other hand, calendar year accounts are most often used bysmall and medium-sized firms, which predominate in those industries where tax accounting statisticsare used, and this exerts a pull in the opposite direction. New firms which choose to send in the SLS-E form also counteract the shift in the period delimited as compared with the calendar year.Restructuring within the business world, with its consequent discontinuities, and the fact that theSLS-E figures do not include every firm every year, make it difficult to reperiodise on the basis ofsuccessive accounts for identical units. It was therefore decided to use the SLS-E figures withoutperiodisation adjustment, as the best practical approximation to the calendar year. A further practicalconsideration is the production time for final national accounts, which was discussed in the previoussection on questionnaire-based accounting statistics.

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c) Accounting statistics for industries where public corporations predominate

The period used for the annual accounts included in the accounting statistics for these industries is inprinciple delimited in the same way as for the questionnaire-based accounting statistics under a). Thevast majority - in terms of both numbers and sales - of those units which are included in thesestatistics have calendar year accounts.

d) Industry-specific accounting statistics and accounts for large entities

The output value of agricultural statistics is calculated directly on a calendar year basis. The profitand loss accounts underlying the accounting statistics from Statens Jordbrugs- og FiskeriøkonomiskeInstitut are to a certain extent based on holdings which have a different accounting year, but since it isthe accounting ratios and not the absolute cost items from those accounting statistics which are usedin Danmarks Statistik's agricultural statistics, for practical purposes production costs are stillperiodised correctly according to the calendar year.

e) Accounting statistics for general government

The statistical system for general government has the calendar year as the accounting period. Theunderlying accounts for central and local government and social security funds are all calendar yearaccounts.

1.3.3 Reasons for the choice of source

In only one area is there any question of a choice of accounting statistics, i.e. between the primaryquestionnaire-based accounting statistics and accounting statistics based on standardised tax accounts(SLS-E statistics). For 1995, there are three main industry groups which are covered by both sets:

manufacturing, NACE Dconstruction, NACE Fretail trade, NACE G.

The preferred source in these cases is the (mainly) questionnaire-based accounting statistics, firstlybecause they operate with a much more detailed accounting plan than the tax accounting statistics andsecondly because they include both legal units (firms) and workplaces (local kind-of-activity units)whereas the SLS-E statistics are solely firm-based. As already stated, however, experience shows thatestimates of the industries' gross value added based on one source tally very largely with estimatesbased on the other source, as would be expected.

In reference years from 1995 to 2000, the general questionnaire-based accounting statistics aregradually being extended to cover - in combination with accounting statistics for industries wherepublic corporations predominate - all non-financial industries where market producers predominate,apart from certain personal services. At the same time, the national accounts systems for calculatingthe industries' value added will gradually replace the basic figures (after error searches) from the SLS-E statistics with basic figures from the general questionnaire-based accounting statistics. In the latter,the SLS-E accounts are used wherever available to cover firms not included in the sample. Ifmanufacturing, construction and retail trade are taken together, firms covered by the SLS-E account

32

for around 22% of turnover in the general questionnaire-based accounting statistics. The SLS-E shareof firms is, of course, higher, since all firms with 50 or more employees have questionnaires sent tothem and the sampling fraction becomes smaller as turnover becomes smaller. For the serviceindustries, which were added to the statistics in years 1995-2000, the degree of coverage forquestionnaire firms will, of course, be less, and the SLS-E share correspondingly greater, since it ischaracteristic of these industries that a larger share of total turnover comes from small and medium-sized firms.

Moving on to another topic, namely the basis for grossing up, there is generally a choice between atleast three possible grossing variables, namely VAT sales, employment and total wages and salaries.

In the general, (mainly) questionnaire-based accounting statistics, the figures are grossed up on thebasis of employment. In the national accounts' own calculation systems based on SLS-E accounts(tax accounting statistics), VAT sales are used as the grossing variable for all industries in which allor most activities are liable for VAT. For VAT-exempt industries and those where activity liable toVAT accounts for only a minor share of output, employment is used instead as the basis for grossingup the figures.

The reason for this choice is that in general there must be expected to be a closer correlation betweenfirms' VAT sales and their output value/value added than between their employment and outputvalue/value added. For the new general accounting statistics (questionnaire-based), VAT sales werenot chosen as the basis for grossing up, primarily because it was desirable to be able to calculate firmsnot covered in the sample using the same calculation method where the grossing variable is concernedas is used for the transition from firms to workplaces. At workplace level, there is generally noinformation available on turnover, whereas there is in all cases information on employment and totalwages and salaries. Of these two, employment is preferred as the grossing variable, since it isassumed to have the stronger link with output value/value added.

It must be emphasised, however, that grossing up on the basis of employment is a recognisedstatistical method in widespread use in various other EU countries. The fact that the accountingstatistics underlying the Danish national accounts will to a significant extent in future be grossed upon the basis of employment cannot therefore be considered a weak point compared with standardpractice in this field.

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1.3.4 Accounting statistics database - the intermediate system

1.3.4.1Central database for business accounts

A slightly simplified description of the overall design of the Danish national accounting system basedon the ESA 95, which came into use in October 1997, would read as follows: all accountinginformation on producer units is collected together in a single database with a common accountingplan and with systematic double coding by institutional sector for the institutional unit to which theproducer unit belongs and by industry of the producer unit. The industry code is the most detailedsix-digit code in Danmarks Statistik's NACE Rev. 1 classification of activities (DK-NACE). Thisaccounting statistics database is referred to as the "intermediate system", since it represents a stepbetween the basic accounting statistics and other primary sources and national accounts estimatesconforming to the ESA 95 system of accounts. The intermediate system is the common starting blockfor the compilation of supply and use tables and industry tables (in Denmark, traditionally known as"the functional national accounts") and the compilation of the production and generation of incomeaccounts for the institutional sectors ("the institutional national accounts"). In the Danish calculationsystem, these two parts of national accounts form a combined, integrated accounting system whichalso includes symmetrical industry x industry input-output tables.

Figure 1 shows how the intermediate system fits into the estimate of GDP/GNI. It is a flow chart forthe calculation of flows of goods and services in the national accounts, illustrating how informationfrom the intermediate system leads on to the calculation of initial estimates (known as "target totals")for the value added of the industries, i.e. for GDP as calculated using the production approach, which,together with the initial estimates for the final components of demand, and thus GDP from theexpenditure side, go into the compilation of the unbalanced functional national accounts. Thebalancing processgives a balanced set of supply and use tables. For the sake of clarity, the figure doesnot show the role of the intermediate system [IS, abbreviated to MLS in Danish] in the compilation ofthe initial estimate for GDP using the income approach. This is described in Section 1.4.5. "SUTs"["TA" in Danish] are the supply and use tables and "SUTs for manual balancing" are the unadjustedsupply and use tables. ET [UH in Danish] stands for external trade statistics divided by product. DP[Danish VF] is the calculation process used for the distribution by product of the output of thoseindustries for which product statistics are available, primarily manufacturing. [OIMA = governmentnon-market activity].

34

Figure 1 Flow chart for the functional national accounts

DP

SUTs (-1) SUTs (-1)

Other accountingstatistics (including

OIMA)

IS

SupplyPredetermined

valuesInput target totals

Final consumptionand capital formation

target totals

SUTs for manualbalancing

Tax accounting system

New accountingstatistics for

manufacturing, retailtrade and construction

S-files + ET

35

1.3.4.2Systematic double coding of producer units

In all cases where the national accounts accounting systems are based on accounts for individual firmsand/or individual kind-of-activity units, they are correlated with the business register, from which thefollowing are taken:

• form of ownership and function code for the legal unit (firm)• branch code for the firm's main activity• branch code for the kind-of-activity unit.

Where the national accounts are based on published accounting statistics rather than accounts forindividual units, these are in most cases already cross-classified by sector and industry. The sectoralbreakdown is usually obvious - for financial institutions, for example, which by definition areincluded in a subsector of the financial corporations sector. In a few cases, it is based on adistribution key which is then applied to the published statistics. Agriculture is a case in point. Thevast majority comes into the households sector, whilst the modest share which has to be attributed tothe non-financial corporations sector is estimated from the distribution of agricultural VAT sales byform of ownership, taken from VAT statistics.

1.3.4.3Common accounting plan and estimate by kind-of-activity unit

In practice, the switch from primary statistics (accounting statistics for the various industries) to theintermediate system is not completed in one go but in two stages, and the intermediate systemtherefore exists in two versions, one after the first step (intermediate system 1) and the completedversion after the second step (intermediate system 2). For the transition from primary accountingstatistics to intermediate system 1, there are two important data processing stages:

• the transition to a common accounting plan compiled in line with the concepts of businessstatistics

• the double coding of all accounting information by industry for the producer units in question(main industry in the case of firms) and institutional sector for firms (with the producer unitswhich belong to them).

The common accounting plan still complies with the concepts of business accounts and not nationalaccounts as in the ESA 95. Thus opening and closing stocks, for example, are compiled according tothe principles which apply in business accounts, i.e. typically at historical cost and not, as required bythe ESA, at market price (replacement cost) at the time of recording. Similarly, the operating costitems under the category "other external expenditure" include other taxes on production which shouldnot be included in the ESA 95 concept of intermediate consumption, and net insurance premiums(insurance premiums actually paid minus the insurance corporations' payment for insurance services).Conversely, financial intermediation services which are paid for directly∗ are not included under"other external expenditure" but come under financing costs along with interest expenditure.

With the switch from intermediate system 1 to intermediate system 2, there is also a change frombusiness accounting concepts to national accounts concepts in the database. The principles are the

∗ The Danish text almost invariably has the word "betalte" ("paid for") instead of "målte" ("measured"), the wordused in the Danish ESA, and the English translation reflects this difference.

36

same for all industries, namely that the entries needed to adjust the accounting items in the businessaccounts are input into the intermediate system under special headings in the accounting plan, so thatthe national accounts concepts are obtained by adding/subtracting these correction entries to/from theaccounting items compiled in accordance with business accounting principles. There is also a changefrom firms - or producer units - to producer units/units of homogeneous production. For thoseindustries where accounting statistics are available only in terms of "firm branches", there is thereforea transition to industries defined as an aggregation of local kind-of-activity units (producer units). Incertain important cases, there is a further step, a transfer of certain forms of economic activity such astrade, construction and vehicle repairs to homogeneous branches, combining all activity of the kind inquestion in the economy and not including any other form of activity as secondary output. Theaccounting plan in the intermediate system is shown in the table below.

37

Table 4 Accounting plan in intermediate system 2Text ANVID Accounting statistics

for manufacturing,construction and retail

tradeResources :

Output of originalsOutput of the hidden economyFringe benefits, output

0.1 FISIM, imputed financial services

1003100510071008

------------////

1.3 Manuf. of plant and machinery for own final use 1012 AUER1.9 Other net sales of own products 1013 OMS-HOMS ( part of)2. Output for own final consumption

Own-produced software10141015

--------

3.1 Sales of goods for resale 1016 HOMS3.2 Income from licences and royalties 1017 OMS-HOMS (part of)3.9 Other and unspecified net sales 1018 ----4.1 Other, secondary operating income

Other (services) sales (excl. 1017)10191059

ADROMS-HOMS (part of)

4.2 Extraordinary income 1060 EOI4.3 Miscellaneous capital income 1061 ----Uses (inputs) :

Intermediate consumption, government non-marketactivity

5.1 Purchases (consumption) of fuel and power

20102013

----KENE

5.2 Purchases of processing-to-order work andsubcontracts

2014 KLOE

5.9 Other consumption (purchases) of raw materials 2015 KRH – (URHB –PRHB ) –HKOB

6. Consumption of goods for resale 7019 HKOB – (HLUL –HLPR )

7. Expenditure on rentals, excluding heating 7020 UDHL8.1 Expenditure on the rental and leasing of machinery 7021 OEEU (part of)8.2 Expenditure on the rental and leasing of motor

vehicles7022 OEEU (part of)

8.3 Expenditure on the rental and leasing of computerequipment

7023 OEEU (part of)

8.9 Expenditure on other rental and leasing 7024 OEEU (part of)9. Expenditure on consumables 7025 UASI10. Ordinary losses, irrecoverable debts 7026 OTDE11.1 Repair and maintenance of buildings 7027 OEEU (part of)11.2 Repair and maintenance of structures 7028 OEEU (part of)11.3 Repair and maintenance of transport equipment 7029 OEEU (part of)11.4 Repair and maintenance of machinery

Repair and maintenance of buildings and structuresRepair and maintenance of machinery and transportequipment

703070317032

OEEU (part of)--------

11.9 Repair and maintenance n.e.c. 7035 ----12.1 Contributions to professional organisations

allocated to inputs7040 OEEU (part of)

12.2 Expenditure on licences and royalties 7041 OEEU (part of)12.3 Other external expenditure included in inputs 7042 OEEU (part of)12.9 Other external expenditure

Government fees as purchases of services70437044

---OEEU (part of)

13 Financial intermediation services paid for directlyInsurance premiums (negative) correctionCorrection for gross taxes on leasingFringe benefits, IPC correction

7050705570577059

RUDG (part of)----RSUF----

14.1 Other operating expenditure 7060 SEUD14.2 Extraordinary expenditure 7061 EOU14.2 Miscellaneous capital expenditure 7062 ----Indirect taxes:17.1 Property taxes 3112 OEEU (part of)17.2. Motor vehicle taxes 3113 OEEU (part of)17.3. Other taxes on production not linked to products 3114 OEEU (part of)17.4 Subsidies not linked to products 3115 ---

38

Table 4 Accounting plan in intermediate system 2, continued...Text ANVID Accounting

statistics formanufacturing,construction andretail trade

Inventories:20.1 Raw materials, opening stocks 5060 PRHB20.2 Raw materials, closing stocks 6060 URHB21.1 Goods for resale, wholesale, opening stocks 5061 ////21.2 Goods for resale, wholesale, closing stocks 6061 ////22.1 Goods for resale, retail, opening stocks 5062 HLPR22.2 Goods for resale, retail, closing stocks 6062 HLUL23.1 Other goods, opening stocks 5063 ////23.2 Other goods, closing stocks 6063 ////24.1 Finished goods, opening stocks 5065 PVUF + PFFH

+ PIAF24.2 Finished goods, closing stocks 6065 UVUF + UFFH

+ UIAF25.1 Goods for resale, opening stocks 5066 HLPR25.2 Goods for resale, closing stocks 6066 HLULChanges in inventories (price-adjusted):20.3 Stocks of raw materials 2060 DEFL21.3 Goods for resale, wholesale 2061 DEFL22.3 Goods for resale, retail 2062 DEFL23.3 Other goods 2063 DEFL24.3 Stocks of finished goods 2065 DEFL25.3 Goods for resale (manufacturing) 2066 DEFL26.1 Total price adjustment, stocks of raw materials 2098 From MLS 1 to

MLS 226.2 Total price adjustment, goods for resale 2099 From MLS 1 to

MLS 2Distributive transactions (and tax figures):

Compensation of employees, government non-marketactivityFringe benefits as wages/salaries

30.1 Wages and employer contributions

401040134015

////----LGAG

31.2 Pensions expenditure 4016 PUDG31.9 Other staffing costs 4017 AUDG33.1 Income from holdings 4030 INKI33.2 Interest etc. on current assets 4031 RIOM33.9 Other income in the form of interest or

dividends4032 RIFA + UDFA

34. Interest expenditure 4040 RUDG35.1 Corporation tax (for corporations only,

of course)4041 SSAR

35.1 Corporation tax SLS-E 4042 ----36. Profit/loss for tax purposes 4043 AARE37. Distributed income (dividends) 4044 UDBY38. Tax adjustments 4045 ----39.1 Net insurance premiums 4046 OEEU (part of)39.2 Contributions to fighting funds 4047 OEEU (part of)Writing off and writing down:

Consumption of fixed capital, government non-marketactivity

5000 ////

40. Writing off and writing down of non-financial fixed assets 5100 ANMI41. Writing down of non-financial current assets 5200 NOAK42. Writing down of financial assets 5300 NFAO

39

Table 4 Accounting plan in intermediate system 2, continued...

Text ANVID Accounting statisticsfor manufacturing,construction andretail trade

Capital formation, RESOURCES, purchases of:Own-produced software (= output: 1015)Purchased softwareExploratory drilling

50. Intangible assets

6101610261046110

----TIAA (part of)----TIAA (part of)

51.1 Real estate, existing buildings (including land value) 6121 KEB51.2 Real estate, unbuilt land 6122 KUBG51.3 Real estate, expenditure on construction, new buildings

(excluding land value)6123 OPNY

51.4 Real estate, rebuilding, improvement of buildings andinstallations

6124 OFBB

51.5 Real estate, new layout and rebuilding of roads, harbours, etc. 6125 VHPK51.6 Breeding stock 6127 ////51.9 Other real estate 6126 ////52.1 Operating resources, plant and machinery 6131 ----53.1 Operating resources, transport equipment, vehicles 6132 ----53.2 Operating resources, other transport equipment 6133 ----54.1 Other operating resources 6134 DTAM + TAAD55. Net acquisitions of valuables 2055 ----

Capital formation, USES, sales of:Disposals of software

60. Intangible assets62026210

AIAA (part of)AIAA (part of)

61.1 Real estate, existing buildings (including land value) 6221 SABY61.2 Real estate, unbuilt land 6222 SUBG61.3 Real estate, roads, harbours, squares, etc. 6223 SVHP61.4 Breeding stock 6227 ////61.9 Other real estate 6226 ----62.1 Operating resources, plant and machinery 6231 ----63.1 Operating resources, transport equipment, vehicles 6232 ----63.2 Operating resources, other transport equipment 6233 ----64.1 Other operating resources 6234 STAM + SADI

Balancing items (including inventories) ASSETS:70. Intangible fixed assets 8110 IAAT71.1 Land and buildings 8120 GRBY71.2 Technical plant and machinery 8121 ATAM71.3 Other structures, working plant and equipment 8122 AADI71.9 Other tangible fixed assets (e.g. advance payments) 8129 FMAA72. Financial fixed assets 8130 ABAE + ABOA +

FAAT + TILG73.1 Opening stocks 8141 POAT73.2 Closing stocks 8142 UOAT

Balancing items, LIABILITIES:81. Own funds 8210 EGUL82. Provisions 8220 HENS83. Long-term debt 8230 AGL + LGL84. Short-term liabilities 8240 AKG + KGL

73.9 Other current assets 8149 ANTI + LIBE + OBAE+ OBAV + OMAT +TGT + TSVT + UFKV+ VKT

Key://// indicates that the item is not relevant for manufacturing, construction and retail trade - or, for "other groups", that it is

fully covered in the other items included in the main group.---- indicates that no breakdown is possible in the statistics for manufacturing.Sources:• AUER, OMS, HOMS etc. are the variable names in the questionnaire-based accounting statistics, which for the year

1995 cover manufacturing, construction and retail trade.• OEEU = other external expenditure divided by ANVID [identity code for use] on the basis of the survey of costs.• DEFL = Deflation division.

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The items in italics are residual or aggregate items, to which accounting items from business accountsare transferred if the information for a breakdown in line with the detailed accounting plan is notavailable. If, for example, a particular set of business accounts gives information on total expenditureon repair and maintenance only, with no breakdown into buildings, structures, machinery or transportequipment, the accounting item is transferred to the italicised aggregate item in the intermediatesystem Repair and maintenance n.e.c. The far right-hand column shows the connection between theaccounting plan in the questionnaire for the questionnaire-based accounting statistics and theintermediate system. In these statistics, there is an accounting item referred to as "other externalexpenditure". This is divided up with the help of the results from the "costs survey", which is a costsstructure survey relating to the composition of this item, last carried out for the year 1992.

A corresponding connection between the intermediate system accounting plan and the accountingplan in the primary accounting statistics is defined for all other accounting statistics. In particular,there is a corresponding key for the transition from the SLS-E tax accounting form to the accountingplan in the intermediate system. Since the SLS-E accounting plan as from 1990 is at a relatively highlevel of aggregation, the item "other fixed costs in cash" is here split on the basis of the more detailedaccounting plan in force until 1990.

1.3.4.4Method of ensuring consistency

Firms (institutional units) are converted to kind-of-activity units as follows: firstly, for thoseaccounting statistics which include figures in terms of kind-of-activity units, a list is made of theKAUs which belong to firms not included in the industries covered by the statistics in question. Theaccounting items in these kind-of-activity units are then subtracted from the accounts for those firmsin another group of industries to which they belong, to ensure that the production activity in theseKAUs is included once and once only, i.e. it is neither excluded nor double-counted. Thisconsistency is vital in a statistical system for producer units where the statistical unit is not theinstitutional unit (firm), but a unit which is more uniform from the point of view of productiontechnology, the "producer unit" (local kind-of-activity unit) required by paragraph 2.108 of the ESA95. The national accounts processing of accounting statistics ignores the geographical aspect: alllocal kind-of-activity units in a given industry belonging to one and the same firm are aggregated to asingle KAU. With the switch to these KAUs, there is a systematic guarantee of compliance with therestrictions on totals which necessarily apply to firms and KAUs, i.e. the turnover in a given firm, forexample, is identical with the total turnover in the individual KAUs which belong to the firm, andditto for production costs. The subsequent compilation of regional accounts uses the information onthe geographical location of the producer units included in the relevant accounting statistics, VATstatistics and establishment-related employment statistics (ERE)∗. But the compilation of regionalaccounts is not discussed in greater detail below, since it is not relevant to GNI.

An example may be given to illustrate the above. Let us assume that a wholesale firm hasmanufacturing activity. The local kind-of-activity unit in which the production activity takes place iscovered by the questionnaire-based accounting statistics for manufacturing, the statistical unit forwhich is the local kind-of-activity unit. However, accounting statistics for wholesale trade have thefirm as the statistical unit, so the output and production costs linked to the manufacturing activity arealso included in the accounting items for the wholesale firm.

∗ EBS in Danish. Please see Section 1.4.2.

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If there is no "clearing" of the two sets of accounting statistics, the activity in the industrialdepartment of the wholesale firm will be included twice over. "Clearing" is carried out as follows:item by item, the values in the manufacturing unit's accounts are subtracted from the firm's accountsfor wholesale trade.

If the manufacturing activity in question is the only secondary activity in the wholesale firm, thefirm's account is then also an account for a unit of homogeneous production, namely a KAU inwholesale trade.

The above example assumes that information is available on all accounting items for the KAU whichconstitutes the secondary activity in a firm. In practice, this is by no means always the case, and forthis reason in many cases either production costs or both turnover and production costs have to beestimated from information on total wages and salaries divided by firm and KAU, for example. Therelatively extensive calculation for the transition from accounts in terms of firms to accounts for kind-of-activity units is described in Section 3.3.2.2.

1.3.4.5Uniform principles for the transition from business accounting concepts tonational accounts concepts

There are various items which are dealt with very differently in the business accounts from the way inwhich they are treated in national accounts. In most cases, there are good reasons for the difference,depending on the purposes which the two accounting systems are intended to serve. Businessaccounts are intended first and foremost to give an accurate picture of an enterprise's operating profit,i.e. the maximum amount which the owners could draw on for consumption in a given situation,without affecting the value of the enterprise's assets and liabilities (and thus its equity), and withoutbreaking into that equity, whereas the national accounts estimate of GDP aims to measure the totalvolume of goods and services produced on the economic territory and available for final uses eitheron that territory or in other countries.

Take, for example, the treatment of provisions for bad debt. Whereas in business accounts it isnatural to consider such provisions as part of the ordinary operations of the enterprise, since they arededucted from the amount the owners could withdraw from the enterprise without breaking into itsequity, and consequently to count them as being on a par with other production costs, this is not thecase in the national accounts. After all, those goods and services for the supply of which there is anunpaid debt which may never be collected have not disappeared from the economy. They have beenadded to the products circulating in the economy in the same way as all those products for whichpayment has been made as agreed, and they are counted as such by the purchasers.

Similarly, insurance premiums and claims are viewed differently by the owner of a business and bymacroeconomists. From the point of view of the individual owner, insurance premiums are current orordinary expenditure which has to be deducted from the maximum amount which it is possible todraw from the business, and they therefore have to be treated in the same way as all the other currentoperating/production costs. Any damage which may occur is, on the other hand, extraordinary, andtherefore any expenditure or loss incurred as a result of this damage has to be counted asextraordinary expenditure and the associated claims as extraordinary income. But from themacroeconomic point of view, damage covered by insurance and claims under that insurance are notsomething which affects the volume of goods and services available for final uses as a result of theproduction process. Only that share of the insurance premium which constitutes payment for theinsurance corporation's administration services can lay claim to part of the output of goods andservices during the period in question and should thus be counted as intermediate consumption.

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In at least one important point there is no satisfactory explanation for the difference between theprinciples of business accounts and national accounts, and that is the estimate of inventories andchanges in inventories. In this case, applying the national accounts principles to business accountswould clearly result in a more accurate picture of the enterprises' actual earnings compared with theamounts which the owners could possibly "take home" as a surplus than the normal treatment inbusiness accounts, where inventories are typically compiled at historic cost. There seems to be norational economic reason for business accounting practice here: rather, it reflects the practicaldifficulties of making what is, from the owners' point of view, the most meaningful estimate ineconomic terms.

The points where the accounting items in the Danish business accounts have to be corrected fordefinitional differences between those accounts and the ESA 95 are the following:

1) "small purchases" (consumables)2) the running of canteens3) the fighting funds of trade organisations4) losses on irrecoverable debts5) price adjustment for changes in inventories, output and intermediate consumption6) net insurance premiums and supplementary premiums7) financial intermediation services paid for directly8) other taxes (subsidies) on production9) purchased software10) own-produced software11) financial leasing12) fees to public authorities13) licences and royalties14) entertainment, literary and artistic originals.

Section 3.3 gives further details of the individual adjustments for the changeover from businessaccounting to national accounts concepts.

1.3.5 Independence of other methods of estimating GDP

Since the estimate of GDP from the output side was the first in Denmark to be complete, it is naturalto discuss how independent the estimates from the income and expenditure sides are in the relevantsections of this paper.

One general point can be made here, namely that there are certain areas of national accounts where,by definition, the estimates based on the three different approaches have to use exactly the samesources and methods, viz. all those values which do not have a counterpart in observed markettransactions but are imputed on the basis of certain conventions laid down in the ESA 95. These are,primarily, (other) non-market output, which in Denmark's case accounts for around 25% of GDP, andoutput of goods and services for own use. The latter include in practice the imputed rental value ofowner-occupied dwellings, which is a major item, accounting for around 6% of Denmark's GDP.

The issue of the independence of the GDP calculations by the three different approaches thereforeapplies in Denmark's case by definition to just under 70% of GDP.

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1.3.6 Direct versus indirect methods of estimation

A direct estimate of value added in a given industry is understood to mean that, on the basis ofexhaustive accounting statistics for the industry in question, output value and intermediateconsumption, and thus value added, can be obtained via the statistical processing of the underlyingbusiness accounts.

The national accounts use indirect estimates of the value added of industries if accounting statisticsare not available. The critical factor is usually the estimate of intermediate consumption, since areasonably reliable estimate of sales in the various industries is usually available from the VATsystem, for example. An indirect estimate of the value added of a given industry may, for example,consist in calculating the industry's output value as x % of its sales (using firms as the statistical unit),where x is based on hypotheses or historical information about the ratio of sales values in the kind-of-activity units in the industry to firm-based VAT sales. Note that VAT sales include, inter alia, salesof used capital goods which should not be included in the estimate of output value.

In the previous Danish national accounts system, which was replaced by the present one in 1997,these indirect calculations were used fairly widely, since up to the reference year 1987 there were noaccounting statistics in Denmark which covered all the industries in the economy. Coverage ofmarket services was particularly poor.

In the Danish national accounts published after 1997, the situation is very much better. With a singleexception, the value added of all industries is calculated from a direct estimate of output value andintermediate consumption in business accounts.

There is an indirect estimate of value added only for NR [national accounts] industry 702040, theletting of non-residential buildings etc, where output value is calculated from the expenditure side asthe sum of the rental expenditure of all other industries and where intermediate consumption iscalculated using the input percentage (intermediate consumption/output value) for the letting ofdwellings (i.e. actual letting) in industry 702009, dwellings, for want of satisfactory accountinginformation on the letting of non-residential buildings. Since the two activities are closely related, theuncertainty arising from the calculation of value added is assumed to be minor.

The share of gross value added estimated by direct as opposed to indirect methods can be seen in thefollowing table.

Table 5 Share of gross value added, direct versus indirect methods of estimation

Method of estimation Gross value added, DKK mill. %Direct estimation 853 239 98Indirect estimation 18 103 2Total 871 342 100

1.3.7 Direct estimates of levels as opposed to extrapolations

"Direct estimates of levels" is understood to mean estimates of the value added of industries wherethe level of both output value and intermediate consumption is calculated each year as a level on thebasis of accounting statistics or via an indirect calculation, cf. Section 1.3.6. "Extrapolations" aretaken to be estimates where output value and intermediate consumption are calculated directly as

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levels for a benchmark year, whilst estimates for the current years are obtained by extrapolatingoutput and intermediate consumption from the benchmark year using appropriate indicators. A moreuncertain method of extrapolation consists in assuming a constant ratio (input percentage) ofintermediate consumption to output value in either current or (better) fixed prices and projectingoutput value, intermediate consumption and implicit value added using a single indicator.

In the final Danish national accounts, virtually all value added is based on current-year estimatesproduced directly as levels. In the final calculations, extrapolationsare used in only three areas:

1) housing (dwellings)2) a minor share of value added in NPISHs3) the allowance for underreporting etc. and for hidden activity ["work in the black economy"].

Housing is an extremely important industry for the whole of the economy. In this area, very detailedbenchmark calculations are carried out every fourth year in connection with the large-scale rentalsurveys - cf. description of the benchmark calculations in Section 3.17. The figures are projected onlywithin the four-year intervals. The practice in other countries is similar, though in many cases therewill be ten years between the calculations of levels, depending on the periodicity of population andhousing censuses.

As regards the second point, i.e. non-profit institutions serving households, by far the largest share ofvalue added, namely total wages and salaries, is calculated as a level every year, whilst extrapolationsare used only for the minor components, i.e. capital consumption and other taxes less subsidies onproduction.

Moving on to the third point, Denmark, like other countries, has neither the statistical sources norresources to produce a new estimate of the hidden economy every year. In most cases, it has beendecided to use a benchmark which is then projected. In Denmark's case, the benchmark for theestimate of underreporting is based on observations in years 1992-1994, whilst the level for work inthe hidden economy is based on observations connected with the 1992 harmonised labour forcesurveys. The method then consists of extrapolating output value and value added linked to the blackeconomy by assuming for each "product" in that economy that the changes run in parallel withdomestic output in the corresponding "legitimate" product balance. For example, the major item"work in the black economy connected with building repairs" is assumed to move in parallel with"legitimate" building repairs, i.e. building repairs complying with current legislation on taxes andcontributions to social security schemes. The same assumption is made in the case of underreportingin the restaurant industry, which is assumed to move in parallel with legitimate turnover in theindustry. This method of projection is equivalent to using constant correction percentages at the mostdetailed level in the calculations. The levels for the hidden economy are determined at 5- to 10-yearintervals, but adjustments for fringe benefits are estimated directly in terms of levels each year, sincein most cases the underlying sources are available on an annual basis. The levels for the hiddeneconomy were thus last revised in the final national accounts for 1997 and 1998 in the light of newinterview surveys of the extent of hidden activity.

Value added in the non-market activity of non-profit institutions serving households (NPISHs) iscalculated using extrapolations for the (minor) part which consists of other taxes on production andconsumption of fixed capital. These value added components are calculated as constant percentagesof the compensation of employees. This latter, which accounts for the major share of value added, iscalculated directly in terms of levels each year on the basis of a particularly reliable statistical source,namely the estimate of total wages and salaries divided by legal units and workplaces.

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In conclusion, GDP as calculated using the production approach in the Danish national accounts forthe final years is extrapolated from a benchmark only to a very limited extent. The situation is, ofcourse, very different with the provisional years and quarterly national accounts, which to a largeextent are based on projections from the latest final year.

Table 6 Share of gross value added estimated in terms of levels as opposed to being projected

Method of estimation Gross value added, DKK mill. %Annual estimates, levels 784 982 90.1Projected from benchmark 86 360 9.9Total 871 342 100

1.3.8 Most important initiatives to provide exhaustive coverage

The main initiative aimed at ensuring that coverage is exhaustive consists primarily of the extremelyimportant work being carried out to ensure that the business register is updated to include newproducer units. This work is made easier by the fact that the threshold values in the VAT and taxsystems are extremely low, so that all regular economic activity, apart from that which counts as ahobby and is insignificant, currently has to be registered in a public administrative register which isthe feedstock for the business register. It is difficult to overstate the importance of this rapid registerupdating for the quality and degree of coverage of the national accounts . It is estimated that allregular economic activity, apart from that which is in the form of a hobby and is insignificant, iscaptured via use of the business register. As regards employees in private households, who, by theirvery nature, are very seldom included in the business register, by far the largest share of this activity isin the hidden economy, and all such activity is estimated via a special calculation not based on thebusiness register.

Fringe benefits and irregular economic activity such as underreporting and hidden activity are coveredby corrections which are explicit wherever possible. These are based on the principles ofCommission Decision 94/168/EC, Euratom, the "exhaustiveness decision", in compliance with whichthe Danish national accounts do not include production activity which in itself is illegal.

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1.3.9 From the intermediate system to the target total module

1.3.9.1Functional target total module

1.3.9.1.1Functional target totals

The plan of accounts in the intermediate system, to which all accounting information on producerunits is transferred after the national accounts calculation, can be seen in Table 4, which has alreadybeen discussed.

The statistical units are normally kind-of-activity units, but in a few cases they are units ofhomogeneous production, i.e. artificial units which do not have any secondary output but where thewhole of the output value consists of the product which is characteristic of the industry. Theaccounting items for institutional units are recorded at firm level only (sectors) and not at industrylevel.

The accounting items in the intermediate system which correspond to the transactions in the reducedESA 95 accounting plan for producer units are traditionally known in Denmark as the "functionalpart" of national accounts, i.e. that part which is concerned with production and imports plus uses ofgoods and services. By combining all accounting items in those transaction categories whichcorrespond to classifications of transactions etc. in the ESA 95 - in other words, the ESA 95 coding ofthe accounting items in the intermediate system - we obtain initial estimates for the output value,intermediate consumption and thus value added of the industries. This data set is the final result priorto the balancing of the estimate of GDP by the production approach. It is known as the "target totalmodule", target totals being the values for output, intermediate consumption, other taxes lesssubsidies on production and the compensation of employees divided by industry which we aim to"hit", with the proviso that supplies and uses of products have to balance both overall and atindividual product level and that the balanced result has to take account of the corresponding initialexpenditure-based estimates for the individual categories of final uses and income-based estimates forthe individual income categories.

Table 7 below shows the transition from the intermediate system to the functional target total module.

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Table 7 National accounts target totals - functional system...ANVID National accounts concept/ANVID Definition/comment1010 Domestic turnover

= 1003+1005+1007+{1008}+ 1012+1013+1014+1015+ 1016-7019+1017+1018+ 1019 (part of) +1059 +2099

Output of originals+ Hidden economy output+ Fringe benefits, output+ {0.1 FISIM (financial industries only)}+ 1.3 Manufacture of plant and machinery for

own use+ 1.9 Other net sales, own products+ 2. Output for own consumption+ Own output of software+ Sales of goods for resale- Consumption of goods for resale+ 3.2 Licence income+ 4.1 Other secondary operating income (part

of) 1)

+ 26.2 Total price correction, goods for resaleOutput value 2)

= 1010 + 20651010

+ 24.3 Increases in inventories, finished goods

1020 * Imports of goods and services1021 * Customs1022 * Temporary import duty (Oct. 1971 - March 1973)1023 * Agricultural import duties EAGGF2010 Intermediate consumption 2011+2012+2020+2021+2022+2023+20242011 Input, ex. R+M and IPC

+ 2013+2014+2015+ 7025 (part of)- 2098

+ 5.1 Purchases (consumption) of fuel andpower

+ 5.2 Purchases of processing to order+ 5.9 Other consumption of raw materials+ 9. Expenditure on consumables (part

of) 3)

- 26.1 Total price correction, stocks ofraw materials

2012 Indirect production costs =+ 7040 + 7041 + 7042 + 7044+ 7050 + 7055 + 7059

12.1 Contributions to professionalorganisations included in inputs

+ Expenditure on licences and royalties+ 12.3 Other external expenditure included in

inputs+ Public fees as purchases of services+ 13. Financial intermediation services paid

for directly+ Insurance premiums, (negative)

correction+ Fringe benefits, IPC correction

2020 Rentals excluding heating= 7020

7. Expenditure on rentals, excl. heating

2021 Renting and leasing of machineryand transport equipment etc.= 7021 + 7022 + 7023+ 7024 + 7057

8.1 Renting and leasing of machinery+ 8.2 Renting and leasing of transport equip.+ 8.3 Renting and leasing of computer equip.+ 8.9 Other expenditure on renting and

leasing+ Adjustment for gross leasing taxes

2023 R+M of buildings and structures= 7027 + 7028 + 7031

11.1 Rep. and maintenance of buildings+ 11.2 Rep. and maintenance of structures+ Rep. and maintenance of buildings and

structures2024 R+M of transport equip. and

machinery= 7029 + 7030 + 7032 + 7035

11.3 Rep. and main. of transport equip.+ 11.4 Rep. and maintenance of machinery+ Rep. and maintenance of machinery of

transport equipment+ 11.9 R+M n.e.c.

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Table 7 National accounts target totals - functional system, cont. ...ANVID National accounts concept/ANVID Definition/comment

2025 FISIM Relevant only if it is agreed that FISIM is tobe broken down by branch

2030 * Private consumption2031 * Consumption, PNPIs2041 * Public individual consumption,

market output2042 * Public individual consumption,

non-market output2043 * Public collective consumption2050 Capital formation, machinery and

equipment= 6131 - 6231 + 7025 (partof)

52.1 Purchases of machinery and equipment- 62.1 Sales of machinery and equipment+ 9. Expenditure on consumables (part of) 3)

2052 Capital formation, transport equip.= 6132 + 6133 -

6232 – 6233

52.2 Purchases of transport equip., excl.cars

+ 52.3 Purchases of cars- 62.2 Sale of transport equip, excl. cars- 62.3 Sale of cars

2053 Capital formation, buildings andstructures:- Capital formation, housing

(BRCH=01000)- Other buildings (BRCH = 02000)= 6123 + 6124 - 6221

+ 6126 – 6226

51.3 Construction expenditure, newbuildings+ 51.4 Rebuilding, building improvements, etc.- 61.1 Sales of buildings+ 51.9 Purchases of other real estate- 61.9 Sales of other real estate

- Structures (BRCH = 03000) = 125 51.5 Construction of new roads, harbours,etc.

2054 Capital formation, breeding stock= 6127 – 6227

51.6 Purchases of breeding stock- 61.4 Sales of breeding stock

(relevant for agriculture only)2055 Net purchases of valuables 55. Net purchases of valuables2056 Purchases and software developed

in-house= 6101 + 6102 – 6202

Own-produced software+ Purchased software- Disposals of software

2057 Entertainment, cultural and artisticoriginals= 6110 (part) - 6210 (part)

Original works produced for ownaccount and acquired

- Disposals of intangible assets, n.e.c. andunspecified

2058 Exploratory drilling= 6104

Exploratory drilling

2060 Increases in inventories, rawmaterials= 2060

20.3 Inventories of raw materials

2061 Increases in inventories,wholesaling= 2061 + 2066

2066+ 21.3 Goods for resale, wholesale

2062 Increases in inventories, retailing= 2062

22.3 Goods for resale, retail

2063 Increases in inventories, othergoods= 2063

23.3 Other goods

2064 * Increases in inventories, specialgoods= 2064

2065 Increases in inventories, finishedgoods= 2065

24.4 Finished goods (manufacturing only)

2066 Increases in inventories, goods forresale= 2066

25.3 Goods for resale, manufacturing(transferred to wholesale trade)

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Table 7 National accounts target totals - functional system, cont. ...ANVID National accounts concept/ANVID Definition/comment

2080 * Exports of goods and services 2081 + 20822081 * Danish-produced exports2082 * Re-exports30xx * VAT34xx * Taxes linked to goods (xx = last 2 digits in ANVID 20xx, but not 2040)35xx * Subsidies linked to goods (xx = last 2 digits in ANVID 20xx, but not 2040)36xx * Taxes linked to goods, net 34xx - 35xxThe ANVID below are not included at national accounts number level:3110 * Taxes not linked to goods3210 * Subsidies not linked to goods3310 * Taxes not linked to goods, net 3110 – 32104010 * Wages/salaries and employer

contributions, etc.= 4013 + 4015 + 4016 + 4017

Fringe benefits as wages/salaries30. Wages/salaries and employer

contributions+ 31. Expenditure on pensions+ 32. Expenditure on social security

4110 * Employees4210 * Self-employed, etc. Self-employed and assisting spouses4310 * Total employment 4110 + 42105000 * Fixed capital consumption

Notes :* Indicates that data are not derived from the intermediate system.1) Represents the running of canteens, which for purely practical reasons is calculated as a percentage of wages (4010),

which is then deducted from 1019.2) For branches other than manufacturing, output value =10103) This item is split into input and capital formation shares, as documented in note HREV/94041: Udskillelse af forbrug

i produktionen fra regnskabsposten småanskaffelser [Separating intermediate consumption from the "consumables"accounting item].

1.3.9.1.2Output

As Table 7 shows, output is calculated in the target total module [Danish abbreviation MTM] for eachof the most detailed six-digit industries in Danmarks Statistik's classification of activities (which isbased on the NACE Rev. 1) by summing the following items from the intermediate system or theMTM itself, where the figures in parentheses show the supply/use codes (ANVID) given in Tables 4and 7:

Output (1015) = domestic turnover (1010) + increases in inventories of finished goods (2065)

Domestic turnover (1010) = output of originals (1003) + hidden economy output (1005) + fringebenefits, output (1007) + FISIM (1008) + manufacture of plant and machinery for own use (1012) +other net sales of own products (1013) + output for own consumption (1014) + own output ofsoftware (1015) + sales of goods for resale (1016) – consumption of goods for resale (7019) + incomefrom licences and royalties (1017) + other and unspecified net sales (1018) + (part of) other,secondary operating income (1019) + other (services) sales (1059) + total price correction, goods forresale (2099) .

"Domestic turnover" means total turnover from resident producer units, including exports. The term"domestic" denotes that sales from foreign branches of the institutional units (firms) underlying thecalculation are not included. These foreign branches, i.e. departments in the rest of the world whichdo not have the status of independent legal units (companies/corporations), are considered in thenational accounts to be producer units based in the rest of the world whose output and value added arerecorded in the rest of the world. They are considered as notional institutional units (notional resident

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units), resident in other countries, i.e. as quasi-corporations, which in principle have autonomy ofdecision-making and complete accounts down to the closing balance.

The item "increases in inventories, finished goods" (2065) also includes products currently beingprocessed.

For each of the 130 industries in the national accounts classification of industries, output value isascertained as the sum of the detailed six-digit industries in DB93 which are included in theindividual national accounts industries.

Output value is distributed over the individual product balances (some 2 750 of them) as follows:

A. Industries covered by product statisticsThese are agriculture, hunting and forestry (NACE A), fishing (NACE B), part of mining andquarrying (NACE C), namely CA, the mining and quarrying of energy-producing materials,manufacturing (D), electricity, gas and water supply (E), the motor vehicle branches (NACE 50)within NACE G, wholesale and retail trade and repairs, individual branches within business activities(NACE K), namely 721009 "data processing activity other than supply of software etc." and 722000"software consultancy and supply" plus the COFOG breakdown of the output value of government non-

market activity.

For agriculture and hunting, the national accounts estimate of output value is available directly in abreakdown into 18 products. Forestry is also covered by the Agriculture division's estimate of valueadded in agriculture etc., but since coverage in the form of profit and loss accounts is considerablyless comprehensive than for agriculture proper, and since forestry is covered by the generalaccounting statistics based on standardised tax accounts, it was decided to let tax accounts be the keysource for value added in the industry. In addition, NACE 02.02, forestry-related services, is coverednot by the Agriculture division's estimate but by the general accounting statistics based on taxaccounts.

The agricultural statistics estimates of the output value of forestry divided into various kinds of woodare used is used solely to divide by product the output value which is calculated from the taxaccounting statistics system.

For fishing, there is a very detailed calculation of the landings of Danish fishermen in Danish andforeign ports, divided by kind of fish. The output value calculated from general accounting statisticsbased on standardised tax accounts is divided by product on the basis of statistics on catches landed.The output value calculated from accounting statistics is generally much higher than the value ofcatches landed, which is obtained by multiplying quantities landed by the average prices according tothe fish market price lists. One possible explanation of this is the failure to record some of thequantities landed, as one way of getting round fish quotas.

For the extraction of energy-producing materials, output value is calculated directly for two products,crude oil and natural gas. There are no coal mines or uranium mining in Denmark.

For manufacturing, there are enormously detailed product statistics ("industrial commodity statistics",Danish abbreviation VS) covering around 10 000 goods. Compiled on a quarterly basis, they coverall kind-of-activity units within manufacturing which have 10 or more employees, i.e. the greatmajority of manufacturing enterprises. For each industry at the most detailed branch level (332branches in manufacturing), output value is initially divided by product in proportion to the

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distribution of goods in the same branches in the industrial commodity statistics. In certain cases,special distribution keys characteristic of small enterprises in the industries in question are used.

The product classification in the industrial commodity statistics is the Combined Nomenclature (CN),which is also used in external trade statistics. It is vitally important to have the same classification ofgoods for domestic industrial output statistics and for external trade statistics if the national accountsare to be constructed around supply and use tables, because this what makes it possible to comparesupplies and uses consistently at a reasonably detailed level. Historically, the Danish nationalaccounts have been particularly fortunate in this respect in that since the 1950s the same classificationof goods has been used in industrial output statistics and in external trade statistics.

For supplies of electricity, gas, district heating and water, the accounts (or accounting statistics for thesupply enterprises) break down sales covering more than one product, but this applies solely to powerstations with combined electricity and district heating production. In other cases, there is a one-to-onelink between industries and products.

For NACE 50, trade in motor vehicles etc., repair and maintenance of motor vehicles and servicestations, there is a breakdown by product which, inter alia, is the key factor enabling the value ofmotor repairs, which occur in various of these NACE industries, to be calculated correctly.

Finally, for the IT branches, NACE 72 (six detailed six-digit branches) there are annual productstatistics which are used for the distribution of the branches' sales.

The manufacturing industry NACE 320000, "Manufacture of radio, television and communicationequipment and apparatus" may be used as an example of how output value and its distribution byproduct are calculated for an industry covered by product statistics. In the national accountsintermediate system and in the target total module, there are calculations for the industry at thedetailed DK-NACE industry level. The national accounts industry "Manufacture of radio, televisionand communication equipment and apparatus" covers seven of the detailed DK-NACE industries.For each of these industries, the intermediate system calculates a) turnover and output for own useand b) changes in inventories of finished goods and products currently under processing. These twosets of figures together constitute output.

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Table 8 Estimate of output in 320000, manufacture of radio, television and communicationequipment and apparatus, DKK million

DK-NACE

Text Sales, etc. Changes ininventories,

finishedgoods

Output

321010 Manufacture of printed circuits etc. 1 067 6 1 073321090 Manufacture of semi-conductor

devices, etc.676 48 724

322010 Manufacture of apparatus for radio-telephony etc.

1 201 12 1 213

322020 Manufacture of telephone sets etc. 1 548 16 1 564323010 Manufacture of radio and television

receivers etc.2 278 54 2 332

323020 Manufacture of loudspeakers etc. 1 013 7 1 020323030 Manufacture of aerials etc. 970 4320000 8 752 147 8 899

Table 9 Distribution by product of output from the manufacture of radio, television andcommunication equipment and apparatus

Nationalaccounts productnumber

Text Output (DKK million)

F711000 Fringe benefits, free car 8.8K320000 Own plant and machinery, telecommunications

equipment etc.39.2

K722000 Own-produced software 17.7L320000 Processing to order, telecommunications equip. etc. 204.7M320000 Repair and maintenance of telecommunications

equipment etc.347.3

T150037 Output of services, manufacturing 286.9V392301 Cases, articles for the packaging of goods of plastic 1.4V392403 Household and toilet articles of plastic 0.8V392601 Office, school supplies of plastic 0.1V392605 Mountings, decorative objects of plastic 0.1V490105 Books, including booklets 1.0V491101 Printed matter, advertisements, sensitised paper 0.2V720401 Waste and scrap of iron and steel 0.5V730807 Iron and steel structures n.e.c. 3.3V732601 Goods of iron and steel n.e.c. 5.1V740400 Waste and scrap of copper 0.0V741200 Pipe fittings of copper 60.8V760200 Waste and scrap of aluminium 0.3V830201 Mountings, fittings and the like 7.1V831000 Sign-plates, name-plates and the like 0.7V842205 Machines for the washing, closing etc. of bottles 1.0V842803 Elevators and conveyers 76.8V843815 Parts for machinery for the handling of food and drink 2.0V847303 Parts for automatic data processing machinery 0.1V848003 Moulds for rubber and plastic 0.3V848503 Parts for machinery with no electric parts 3.5

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Table 9 Distribution of output from ..... continued

V850401 Ballasts for discharge lamps or tubes 9.3V850403 Liquid dielectric transformers 0.0V850407 Parts for static converters 3.6V850705 Accumulators, but not lead-acid accumulators 2.4V851501 Soldering irons and guns, plasma arc machinery, etc. 4.1V851619 Parts for electrical household appliances 1.7V851701 Telephone sets 539.9V851705 Telephonic or telegraphic switching apparatus 51.2V851707 Apparatus for carrier-current line systems 67.0V851709 Electrical apparatus for telegraphy 36.2V851711 Parts for line telephony, line telegraphy 487.0V851803 Loudspeakers 1 172.0V851807 Electric sound amplifiers 30.0V851809 Parts for microphones, loudspeakers, etc. 102.0V851903 Record-players 4.0V851907 CD players and the like 11.2V852000 Tape recorders, telephone answering machines, etc. 37.2V852200 Pick-ups, parts for items 85.19-85.21 79.1V852413 Other recorded media 5.0V852501 Transmission apparatus and transmission-reception

apparatus923.2

V852503 Television cameras 5.1V852600 Radar apparatus, radio remote control apparatus, etc. 0.3V852705 Receivers with external sources of power 474.7V852707 Receivers n.e.c. 60.9V852801 TV receivers, including with video and the like 744.2V852900 Aerials, parts for items 85.25-85.28 1 126.4V853003 Parts for traffic control equipment 0.1V853101 Signalling apparatus n.e.c. 34.0V853201 Electrical capacitors 97.0V853301 Fixed resistors 21.3V853303 Variable resistors 16.1V853400 Printed circuits 782.8V853600 Apparatus for switching or protecting electrical

circuits etc. under 1000 v0.7

V853701 Apparatus for electrical control, maximum 1000 v 30.0V853800 Parts for items 8535-8537, n.e.c. 9.7V854001 Tubes, including for video recorders 0.0V854101 Semiconductor devices, but not photosensitive 0.0V854103 Photosensitive semiconductor devices 352.7V854105 Parts for semiconductor devices 12.0V854201 Electronic integrated circuits 47.9V854301 Electronic apparatus having individual functions 0.1V854403 Co-axial cables etc. 5.8V854407 Insulated electric conductors 1.0V854703 Insulating fittings, electrical equipment of plastic 0.0V854800 Electrical parts for machinery and apparatus n.e.c. 3.0V900103 Spectacle lenses, contact lenses, etc. 150.2V900201 Objective lenses for projectors, cameras etc. 0.3V900203 Articles which are optically worked 7.2V901301 Telescopic sights, lasers but not laser diodes 0.4V901405 Parts for navigational instruments/appliances 0.0V901805 Cannulae, catheters, needles and the like 70.2V902401 Machines etc. for testing metals, paperboard etc. 14.4V902903 Speed indicators, tachometers, etc. 0.1V902905 Parts for 902901, 902903 0.3

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Table 9 Distribution of output from ..... continued

V903001 Apparatus for measuring ionising radiation 0.2V903009 Apparatus for measuring electrical quantities 33.1V903011 Parts for the measurement of electrical quantities 4.3V903103 Parts for measurement/control etc. n.e.c. 2.9V903105 Parts and accessories for 903103 0.1V903300 Parts for machinery/apparatus/instruments n.e.c. 6.7V940513 Parts for electrical light fittings of plastic 0.3

Total 8 752.5

It can be seen that the output of the industry is divided over 87 products, some of which are small.Even though the greater part of this output consists of products which are characteristic of NACEgroup 32, in practice there is still a not insignificant amount of secondary output of products whichare characteristic of other industry groups.

Ignoring products not covered by the commodity statistics division into individual goods, totalturnover was DKK 8 400 million, of which DKK 7 752 million or 92% are sales actually observed,divided over products in the industrial commodity statistics. This illustrates the high percentage ofcoverage of industrial product statistics in Denmark and the consequent low level of uncertaintysurrounding the distribution by product of manufactured goods in the national accounts supply anduse tables.

B. Industry partly covered by product statisticsFor construction, there are no genuine product statistics although there is a good deal of informationavailable from various sources (type of new building per square metre of construction, capitalexpenditure on new building divided by type of building).

The national accounts need a breakdown by product of the output value of the construction industry.In the absence of genuine product statistics, for national accounts purposes we have put together allthe available information for a breakdown of this value by product. The methods are described indetail in Section 5.10. The resulting estimate of deliveries of construction output does not tally withthe estimate of the output value of construction obtained from accounting statistics followingcorrections for subcontracting. One reason may be the difference in the breakdown of capitalformation into machinery and construction and the uncertainty in the estimate of subcontracting.

It is important to note that, in contrast to output value, the value added of construction is robust inthese respects. The national accounts method therefore starts with the value added calculated fromaccounting statistics, for which the figures are considered to be extremely reliable. The output valueobtained as the sum of the calculated resources of products from construction activity (new buildingdivided by kind, repair and maintenance divided into ordinary repairs and maintenance and majorrepairs plus civil engineering) is then substituted for the accounting statistics output value, and,finally, intermediate consumption in construction is calculated as a residual on the basis of valueadded according to accounting statistics and output value estimated as the sum of products.

In this way, we obtain a consistent estimate of the value added of capital formation in constructionand the repair and maintenance of buildings in the absence of product statistics coordinated withaccounting statistics.

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C. Industries not covered by product statisticsFor the remaining industries, output is divided by product on the basis of the main activity of theindustry. For NACE division 50 (trade in motor vehicles, repair and maintenance of motor vehiclesand service stations) there is a breakdown of profit margins from the sale of goods for resale intowholesale and retail. This breakdown is needed because trade margins are divided into wholesale andretail in the supply and use tables.

In general, the national accounts product classification for services is constructed so that for eachindustry a product is defined at the most detailed level with the same designation and code as theindustry. The total output value of industries not covered by product statistics is assumed to comefrom the product whose name is the same as the name of the industry. Note that the one-to-one link isnot made at the most detailed in the national accounts classification of industries (130 industries), butgenerally at the most detailed level of the DK-NACE classification of industries (813 of them). Insuch cases, output is collected from some of the most detailed industries in product terms, and thenthe level of aggregation in the product balance system is somewhere between the 813 level and thenational accounts 130 level. Note, however, that the calculations based on the accounting statisticsare without exception at the most detailed level, i.e. corresponding to the 813 grouping.

The national accounts industry 851209 "Medical, dental, veterinary activities, etc." covers, forexample, 12 detailed industries in the health sector other than hospitals. Output value, intermediateconsumption and value added are calculated separately in the system for each of the 12 detailedindustries. The market output of these 12 industries produced legitimately (as opposed to in the blackeconomy), excluding fringe benefits and own-produced software, is then aggregated into fourproducts which are shown in the supply and use tables. The four products are obtained byaggregating at the level of the first four digits in the NACE, i.e. 8512, 8513, 8514 and 8520. Thefollowing table shows the distribution of output in the national accounts branch. All activity inindustry codes other than 851202 is market. The artificial code 851202 has been introduced so thatthe calculations can distinguish between market and non-market producers. There is no marketactivity in DK-NACE industries 851410, Home nursing activities and general health care, 851420,Midwives and midwives' centres or 851460, Employees' health services. In Denmark, all activity inthese three areas counts as non-market output of general government.

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Table 10 12 DK-NACE industries included in the national accounts industry "Medical,dental, veterinary activities, etc."

DK-NACE Text Outputindustry DKK million851202 Government non-market activity in 851209 4 142851210 General practitioners 4 182851220 General medical specialists and out-patients' clinics 1 400851310 Dentists 4 583851320 Dental clinical technicians851430 Physiotherapists' clinics and practitioners in the field of

physiotherapy460

851440 Psychological guidance 169851450 Pathological laboratories 83851470 Chiropractors 268851480 Chiropodists 84851490 Sanitoriums and activities performed in the field of

herbal and flower medicine, etc.1 132

852000 Veterinary activities 1 312851209 Medical, dental, veterinary activities, etc. 17 953

The output of the national accounts branch is divided into 14 product balances as shown in Table 11.

Table 11 Distribution of output, medical, dental, veterinary activities, etc. by product

Product number Text OutputDKK million

F711000 Fringe benefits, free car 36H851400 Hidden economy output, health sector 34K722000 Own-produced software 1Q851200 Medical practitioners, government non-market 728Q851300 Dentists, government non-market 1 263Q851400 Other health sector, government non-market 2 121S851200 Medical practitioners, public sales income 3S851300 Dentists, public sales income 6S851400 Other health sector, public sales income 4S980990 Internal deliveries between public institutions 9T851200 Medical practitioners 5 557T851300 Dentists 4 099T851400 Other health sector (market) 2 786T852000 Veterinary surgeons 1 306Total 17 953

The breakdown into the seven main products takes into account the size and use of the products anduniformity of prices for the fixed price calculations. In the vast majority of cases, medicalpractitioners are considered as general government consumption expenditure. Dentists are in manycases both government and private consumption expenditure. Other market health care ispredominately private consumption expenditure whereas veterinary surgeons are different from thefirst three products in that they are in most cases considered to be intermediate consumption,primarily in agriculture.

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1.3.9.1.3Calculation of intermediate consumption

Table 7 showed the functional target total module (MTM) and the connection between this and theaccounting plan in the intermediate system, which is the common accounting plan to which allaccounting statistics are converted for the national accounts processing of primary statistics. Thetarget totals are produced from version 2 of the intermediate system, i.e. after the switch to industriesdefined on the basis of producer units. The calculation of the ESA 95 product transactionintermediate consumption (P. 2) is based on the functional target total module using the formula:

Intermediate consumption (2010) = 2011 + 2012 + 2020 + 2021 + 2022 + 2023 + 2024 (A)

where2011 = Intermediate consumption excluding expenditure on repairs and maintenance and indirect

production costs

2012 = Indirect production costs

2020 = Rentals excluding heating

2021 = Rental and leasing of machinery and transport equipment etc.

2022 = Repair and maintenance of buildings

2023 = Repair and maintenance of structures

2024 = Repair and maintenance of transport equipment and machinery, non-specified repair andmaintenance.

Indirect production costs are defined as those which cannot be observed for local kind-of-activityunits (producer units), but are observed at firm level only. These overheads are distributed over thefirms’ kind-of-activity units on the basis of information on sales and/or employment.

The connection between the above-mentioned items in the MTM and the items in the intermediatesystem can be seen in Table 7. For example, “intermediate consumption excluding expenditure onrepairs and maintenance and indirect production costs” (2011) is defined as:

2011 = Consumption of fuel and power (2013) + purchases of processing to order (2014) +other consumption of raw materials (2015) + expenditure on consumables (part) (7025)– total price correction, inventories of raw materials (2098).

For the calculation, there is a price adjustment for inventories of raw materials, the counterpart ofwhich is a correction to the consumption of raw materials etc. which comes from the accountingstatistics processing of business accounts.

One example may be given to illustrate the method of estimating intermediate consumption for theindividual national accounts industries. Let us look again at national accounts industry 851209“Medical, dental, veterinary activities etc.”, for which the underlying calculations are carried out at amuch more detailed level, namely separately for each of the 12 “sub-industries”. For these 12 sub-industries, that part of the MTM which is relevant to the calculation of output value and intermediateconsumption is as shown in the following table. Field 2022 does not occur, since for want of a

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detailed breakdown the value of repairs and maintenance to buildings is allocated to aggregate item2024, which includes non-specified expenditure on repair and maintenance.

Table 12 Calculation of initial estimates for intermediate consumption, medical, dental,veterinary activities, etc.

DK-NACE

1010 2010 2011 2012 2020 2021 2023 2024 2065 2010

industries DKK million851202 4 142 524 0 7 0 0 0 0 0 531851210 4 182 0 173 460 169 11 6 13 0 833851220 1 400 0 84 144 53 4 2 4 0 291851310 4 583 0 773 397 148 10 9 31 0 1368851320 138 0 22 16 6 0 0 1 0 45851430 460 0 30 48 30 1 1 2 0 113851440 169 0 9 19 9 0 0 1 0 38851450 83 0 16 13 6 0 0 1 0 36851470 268 0 11 32 15 1 0 2 0 62851480 84 0 24 8 5 0 0 0 0 38851490 1 132 0 251 125 58 3 1 8 0 446852000 1 312 0 561 120 15 3 4 5 0 707851209 17 953 524 1 955 1 390 512 34 24 68 0 4 508

The initial estimate prior to the balancing for intermediate consumption in national accounts industry851209 “Medical, dental, veterinary activities, etc.” is obtained using the formula (A) and aggregatingover the 12 “sub-industries”. This initial estimate was DKK 4 508 million for 1995. As is apparentfrom the description of the industry in Section 3.20, the initial estimate was virtually the same as thefinal balanced value for intermediate consumption in 1995. When supplies and uses were balancedin the final national accounts for that year, there was found to be no basis for counting the calculationof the intermediate consumption of this industry as one of those components where the initial estimatehas to be adjusted for the balancing.

The above table shows that the input percentage, i.e. the ratio of intermediate consumption (code2010) to output (codes 1010 + 2065), varies quite considerably from one sub-industry to another,namely from 12.8% in non-market activity in 851202 to 53.9% for veterinary activities in 852000.This shows the importance of the extremely detailed calculation system used to ensure the accuracy ofthe final national accounts calculations. Aggregation errors are minimised by calculating all figuresright up to the initial estimates prior to the balancing of supply and use for output (P.1), intermediateconsumption (P.2) and thus value added (B.1g) at the most detailed level of industry grouping in theprimary statistics rather than at the level of the national accounts grouping of industries. Attempts aremade to minimise the uncertainty in the national accounts arising from grossing up to the totalpopulation by carrying out the calculations at the most detailed level and not aggregating to thenational accounts grouping of industries until after that stage.

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1.3.9.1.4Changes in inventories divided by type of inventory and product

As Tables 4 and 7 show, the intermediate system and the target total module make a distinctionbetween the following types of inventory and changes in inventories:

Raw materials (2060)Wholesale goods for resale (2061)Retail goods for resale (2062)Other (special) goods (2063)Special goods (2064)Finished goods (2065)Goods for resale, manufacturing (2066)(Transferred to wholesale trade with code 2061).

The figures in parentheses are the supply/use codes for the types of inventory in the supply and usetables and hence the goods and services account. There is no distinction between finished goods andwork in progress.

To enable output, intermediate consumption and changes in inventories to be calculated correctly inthe national accounts in accordance with the ESA 95 definitions, a price correction has to be made tothe corresponding items in the business accounts, since businesses tend to register the value of their(final) stocks at historic cost or at the last recorded acquisition price of the individual goods. Whenthe prices of the enterprises’ products are rising, and the change in the inventories of finished goods inthe business accounts is calculated as the difference between the stocks at the end and at the start ofthe accounting period, the result will include a holding gain which does not reflect any physicalchange in the inventories or in the output of goods during the accounting period. Even if, forexample, the physical inventories have remained the same throughout the whole of the accountingperiod, and therefore by definition there has not been any change in the inventories of finished goodsas a result of production during the period, there will still be an increase in the inventories in thebusiness accounts as a result of price rises during the period. If the output value in the period iscalculated on the basis of uncorrected business accounts as output = sales + changes in inventories offinished goods, output and value added will be overvalued. Conversely, if prices fall the enterprises’output will be undervalued.

During periods of inflation, holding gains likewise have an effect on inventories of raw materials,with intermediate consumption being undervalued and value-added overvalued. On both the outputand the input sides, the use of business accounting principles overvalues value-added in times ofgeneral inflation. When there is general deflation, the opposite occurs. When inflation or deflationrates are high, errors in measuring value added and hence GDP can be substantial if there is no pricecorrection. Even if price levels are generally more or less stable, major fluctuations in relative pricescan lead to substantial holding gains or losses on inventories in the economy.

In the national accounts processing of primary statistics, a price correction is made to the businessaccounts figures for changes in inventories and the consumption of raw materials etc, to get as closeas possible to the theoretically correct estimate of changes in inventories according to the ESA 95.The theoretically correct estimate involves monitoring movements into and out of inventoriescontinually, throughout the accounting period, and recording each transaction at the actualtransaction price at the time of the movement. Changes in inventories during the accounting periodare then simply the sum of the transactions into and out of inventories during the period in question.The theoretically correct national accounts method of estimation is known as the perpetual inventory

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method (PIM) to indicate that inventories on a given date may be considered as the sum of additionsand withdrawals, in principle going way back into the past.

In practice, there is hardly ever sufficient information to enable the PIM to be used for the nationalaccounts estimates of changes in inventories. Instead, as a general rule an approximation of thetheoretically correct method is worked out on the basis of information on the value of the enterprises’inventories at the beginning and the end of the accounting period as calculated in accordance with theenterprises’ own accounting principles.

On the assumption that the enterprises’ final inventories are valued at the last recorded acquisitionprices - on average, at least - and that these prices refer to the December of the same year, a pricecorrection is made to the enterprises’ accounts as follows. First of all, the inventories are brokendown into individual products on the basis of certain assumptions. The opening stocks, i.e. theprevious year’s closing stocks of the given product, are converted first of all from the price level inthe December of year t-1 to the mean annual price level for year t. Similarly, the closing stocks foryear t are converted from the price level in the December of year t to the average for the year. Thechange in the inventories during the accounting period is then calculated by deducting the price-converted opening stocks from the closing stocks. The price correction to the business accountscalculation of the change in inventories, and its counterpart correction to output or intermediateconsumption, is finally obtained as the difference between the changes in inventories as calculated fornational accounts purposes and the changes according to the business accounts.

In addition to a conversion of the change in inventories to the average prices for the year, there is aconversion to the prices in a base year, currently 1995, for use in the estimates of real growth rates.

It is apparent that the above formula gives a good approximation of the theoretically correct measure,provided that price changes are evenly distributed throughout the year or inventories are more or lessstable.

If there are estimates of the physical quantities of individual goods in stock, a closer approximation tothe PIM estimate of changes in inventories can be made than in the usual case where the onlyinformation available is the value of the inventories. In Denmark, one case in point would beagricultural products and energy goods, where major price movements occur most noticeably, alongwith major changes in stocks, and where the approximation formula works less well. Since it ispossible in the national accounts to process problematic goods such as petroleum products separately,and all inventories are compiled on the basis of accounting statistics, the calculation of changes ininventories in the Danish national accounts must be considered to be based on firm foundationsoverall. Calculating changes in inventories as residuals would lead to a considerable amount ofuncertainty about GDP and GNI. In Denmark’s case, changes in inventories are never worked out asresiduals in the final calculations. Even in the provisional, quarterly national accounts, there is anaccounting statistics basis for the calculation, though this does not, of course, cover all inventories asin the final calculations.

1.3.9.2Institutional target total module

1.3.9.2.1Transactions in products

As previously stated, all accounting items from the national accounts-processed accounting statisticsfor industries are recorded in the intermediate system in a double coding by industry for the producerunit and by sector for the institutional unit to which the producer unit belongs. As a result, the initial

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estimates already referred to for output, intermediate consumption, value added, the compensation ofemployees and hence gross operating surplus are available in a breakdown by both industry andinstitutional sector.

With a view to keeping this systematic double coding of transactions in products plus the distributivetransactions compensation of employees and other taxes less subsidies on production all the waythrough to the published national accounts, the changes made to the initial estimates for the balancingof the functional national accounts in the supply and use matrices also have to be recorded with thedual industry/sector coding. This is the only way in which we can be sure that the industry and sectortables will be consistent and that the cross-classification of the production account by industry andsector, as required for Table 21 of the ESA 95 transmission programme, can be worked out directly asone stage in the production of national accounts as opposed to indirectly as a subsequent breakdownwith no clear-cut link back to the primary statistics.

The industry dimension comes directly from the balanced supply and use matrices, in that whensupplies and uses are balanced there are never undistributed aggregate items, and there is thereforenever a balancing correction to intermediate consumption in general, i.e. with no indication of theindustry concerned. All balancing corrections are necessarily made to the individual cells in thesupply and use tables. As regards the sectoral dimension before and after the balancing process, theconsistency adjustments are made in the sector accounts to those changes (compared with the initialestimates) which result from the balancing, as follows. For each of the 130 national accountsindustries, the difference between the value of the initial estimate and the adjusted value is brokendown pro rata with the breakdown by sector of the variable in question in the initial estimate. If, forexample, intermediate consumption for one of the 130 industries in the initial estimate is divided 80%to the non-financial corporations sector S11 and 20% to the households sector S14, the balancingadjustment for this industry is divided over the two sectors using the same percentages.

The adjusted values are then recorded in the “total module”, which is a databank for all information inthe non-financial national accounts, for the time being up to and including the capital account.

1.3.9.2.2Distributive transactions

This section is directly relevant to GNI only as regards the distributive transactions compensation ofemployees and taxes less subsidies on production and imports. Where property income transactionsare concerned, it is GNI-relevant only if the rest of the world is involved. This section is includedprimarily for the sake of a full description of how the complete Danish national accounts system isconstructed.

The distributive transactions from the accounting statistics are included in the target total module afterprocessing for national accounts purposes. Distributive transactions in general and property income(interest, dividends, etc.) in particular are balanced in a balancing system for institutional sectoraccounts. Data from the intermediate system and the target total module are input into this balancingprocess, but in contrast to the functional target totals, which are taken solely from the target totalmodule, data for the compilation of the institutional target totals are taken from a number of othersources. In particular, tax statistics are crucial for the compilation of the target total for the propertyincome of the households sector.

It is only to be expected that there should not be the same direct, unambiguous connection betweenthe intermediate system and the target total module on the one hand and the institutional target totalsfor distributive transactions on the other that we find with the functional target totals (output, valueadded, etc.). Whereas the intermediate system, which is based on business accounts, in principle

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includes all relevant information for the calculation of target totals for the value added of theindustries (output-base GDP), distributive transactions involve the calculation of initial estimates forhouseholds as consumers and for the sectors general government and NPISHs as redistributive ratherthan producer units.

1.3.9.2.3Financial transactions

This section is not directly GNI-relevant, but has been included for the sake of a full description of theway in which the Danish national accounts are compiled. It is indirectly relevant, largely because thefinancial account for the rest of the world, S.2, constitutes a check on transactions with the rest of theworld.

To an even higher degree than is the case for the distributive transactions the information on financialtransactions from business accounts which is contained in the intermediate system and the target totalmodule is not a sole source for these units. Instead, it is used as input into a compilation system forthe institutional sector accounts which, in addition, is based on a long list of sources other thanbusiness accounts.The financial accounts are balanced as from calculation year 2000 inclusive forreference years from 1995 inclusive. Since the system of financial accounts was not fully developeduntil 2000, it had no effect on the compilation of GNI for 1995, other than on the rest of the worldaccount.

One particular point is that the business accounts contain information on stocks of financial assets andliabilities but not on financial transactions in the period in question, which therefore have to becalculated from balance sheet items combined with other sources. For the financial transactions targettotals, the information on the financial balance sheet items in the intermediate system and the targettotal module will in most cases be replaced by financial statistics, which are considered to be a morereliable source in this field, one reason being that the primary financial statistics have close to 100%coverage (of observations) in many cases, and there is therefore very little of the grossing up whichmay lead to uncertainty.

Whilst there is a lot of empirical evidencesupporting the view that the input percentage in constantprices, i.e. the ratio of intermediate consumption in constant prices to output in constant prices, isrelatively constant in the short term, there are many examples of volatility when it comes to variablesthat are not directly connected with the actual production process. There is nothing surprising aboutthis. Whereas the ratio of output to input in a production process is determined largely bytechnological factors which do not change drastically in the short term, the situation is very differentwhen it comes to financial variables and the related flows of property income. Here, changes in theownership structure of the institutional units and decisions about financing can lead to large changesin distributive transactions, financial transactions and balance sheet items from one day to the next.

1.3.9.3Stocks and flows

The intermediate system records all accounting items from the profit and loss account and the balancein the underlying accounting statistics. When there are institutional units which are market producers,the system in principle includes the accounting information needed to enable current accounts as wellas accumulation accounts and balance sheets to be calculated in the national accounts.

In practice, however, limited use is made of the information on gross fixed capital formationaccumulation items, since in the tax accounting-based statistics there is no information on capitalformation for the year in question. In practice, it has emerged that a calculation of capital formation

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based on balance sheet items alone is too uncertain, primarily owing to revaluations of the balancesheet items. Danmarks Statistik’s questionnaire-based accounting statistics, which for 1995 covermanufacturing, construction and retail trade, include special additional questions on acquisitions anddisposals of fixed assets, from which the year's capital formation can be calculated directly. Whenthese detailed, questionnaire-based accounting statistics for reference year 2000 are extended to coveralmost all industries, it will be possible to compile exhaustive figures for capital formation directlyfrom the point of view of the purchaser. Until then, the initial estimate of the gross fixed capitalformation for some components will be drawn up using indirect methods.

A direct expenditure-based calculation of gross fixed capital formation is not, however, necessarilypreferable to a solidly founded indirect calculation. There is good reason to believe that a businessaccounts-based estimate will undervalue gross fixed capital formation. The most important source ofundervaluation is start-up investment in newly started or restructured businesses, which is notobserved but is covered by grossing up. In the nature of things, such businesses invest more (onaverage) in relation to sales than the average for enterprises in the same stratum. Stratified grossingup, which does not explicitly correct for this, and which is in any case difficult, will thereforeprobably result in undervaluation. Although indirect methods of calculating gross fixed capitalformation have, of course, a greater degree of non-systematic uncertainty, the risk of bias is lower.

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1.4 Outline of the income approach

1.4.0 Introduction

For 1995, the calculation of income-based GDP may be summarised as in the table below:

Table 13 GDP, income approach, 1995

Value, % ofDKK million GDP

Compensation of employees 534 094 53+ Gross operating surplus and mixed income 338 010 33+ Taxes on production and imports 173 270 17- Subsidies 35 618 4

GDP 1 009 756 100

1.4.1 Reference framework – the business register, the central populationregister and the salary information register (COR)

Since the compensation of employees as a component of income-based GDP equals total wages andsalaries in domestic (resident) producer units, it is in principle the population of domestic producerunits as listed in the business register which is the directly relevant reference framework for both thecompensation of employees and gross operating surplus and mixed income when GDP is calculatedusing the income approach. Danmarks Statistik’s business register was discussed in Section 1.3.1.

The other two components, taxes and subsidies on production and imports, have an additionalreference framework, namely general government and the EU institutions as recipients/payers.Central government authorities and the EU are, of course, covered by the statistics, and this sectionwill therefore not dwell on the statistical units for the administration of taxes and subsidies onproduction and imports.

In theory, individuals need not come into the picture when GDP is calculated using the incomeapproach, but in practice the main advantage of having an estimate based on the income whichindividuals have received alongside the output- and expenditure-based estimates lies in the very factthat that estimate is based on individuals rather than enterprises. It is thus a robust and independentcheck on the estimates which use the other two approaches. The major difference between income-and output-based estimates is that for the latter the compensation of employees is worked out asexpenditure for businesses and is based on business accounts, whereas using the income approach it isworked out from the point of view of the income recipients, namely as the wages or salaries whichemployees have received according to tax statistics and other sources. Since personal information hasbeen used as a starting point, it is appropriate to look at the reference framework constituted by thosepersons who, during a given period, have earned the income created during the same period in theresident producer units, i.e. on the economic territory.

Individuals may be either resident or non-resident. The problems arising with non-residents are dealtwith in the discussion on the rest-of-the-world account in Section 1.8. For residents in Denmark, the

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reference framework is Det Centrale Personregister [the Central Population Register], compiledunder legislation dating from 1967. All persons with a residence permit in Denmark are entered inthis register and have a personal identification number ("person number") used by the publicauthorities for all administrative purposes. Asylum-seekers who have not received a residence permitare not allowed to be economically active and are not relevant in this connection. It is theoreticallypossible for persons living illegally in the country without a personal identification number to beearning substantial incomes from trade or industry, but in practice the widespread use of theidentification number system means that we can rule out the possibility that anyone could earnincome for any length of time from anything other than hidden economy or criminal activitieswithout being registered in the CPR. If it does happen, the incomes thus acquired are considered tohave been covered by the allowances for the hidden economy – cf. Section 1.7 – or to be criminalactivity which for the time being is not supposed to be included in the estimates of GNI.

The wages and salaries etc. which employers in Denmark pay to their employees must, according totax legislation, be reported annually on an “information form”. There are no exceptions to this rule,and there is no lower limit for the amounts involved. Income below the threshold for general incometax has to be reported on the information forms and a special, proportional “state participation tax” iscollected on all earned income as from the first krone of earnings. In 1995, it was 6%. Told&Skat[the Central Customs and Tax Administration] records the information forms centrally in the salaryinformation register (COR) on the basis of personal identification numbers. Along with the CPR, thisregister is the reference framework for the estimate of the compensation of employees in Denmarkapart, of course, for the allowances for the hidden economy.

In an integrated system of accounts by sector and industry, the estimate of gross operating surplus isby definition the same whether the output or the income approach is used, and Chapter 1.4 thereforediscusses primarily the GDP component “compensation of employees”. The calculation of grossoperating surplus and mixed income was discussed in the description in Section 1.3 of the calculationof GDP by the production approach.

1.4.2 Most important sources

By far the most important statistical source for the estimate of the compensation of employees isErhvervsbeskæftigelsesstatistikken [EBS in Danish, ERE in English], i.e. establishment-relatedemployment statistics based on various administrative and statistical registers. Chapter 11 describesthis key source. The ERE statistics give detailed information on the number of workplaces(establishments), the number of jobs and total annual wages and salaries divided by geographical areaand industry. The statistical unit is the workplace, i.e. the local kind-of-activity unit. The mostimportant basis for the statistics is the information form which all employers have to submit everyyear to Told&Skat for each wage- or salary-earner employed. The information form for 1995 isreproduced in Annex 7. These forms cover all employees without any lower limit whatsoever foramounts or length of employment, and both Danish and foreign residents. This makes them avirtually ideal source for the calculation of income in the form of wages or salaries other than thatwhich comes from the hidden economy, which is, of course, withheld from the tax authorities.

However, the ERE statistics do not cover all components of the compensation of employees asdefined in the ESA. Firstly, imputed employer contributions to social security schemes are notincluded, and therefore have to be added in. Secondly, not all types of income in kind have to bereported on the information forms. Consequently, the information on the forms is in this casereplaced by the national accounts value of fringe benefits etc. Thirdly, employer premiums forindustrial accident insurance are not included in the income in the form of wages and salaries which is

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reported to the tax authorities but has to be calculated and added in from other sources. Finally, forobvious reasons, the information forms do not include wages and salaries from hidden activity,which therefore have to be calculated separately and added in.

For government non-market activity, the ERE-based calculations are replaced by the compensation ofemployees as calculated from government accounts, as part of the calculation of the output value ofgeneral government. This is to ensure that non-market activity remains consistent within the system.The same applies to industries where public corporations traditionally predominate and to agriculture,construction and a few other industries.

For the GDP component "gross operating surplus and mixed income", the statistical sources are thesame as for the production approach and the initial estimate for this income component comes fromthe functional target total module in combination with figures for other taxes and subsidies onproduction taken from statistics for public finances, computed as follows:

output (1015) – intermediate consumption (2010) – other taxes on production + other subsidies onproduction – compensation of employees.

The final adjusted value of gross operating surplus and mixed income is obtained when the initialestimates for output and intermediate consumption are replaced by the corresponding figures in thebalanced supply and use tables and corresponding initial estimates for other taxes and subsidies onproduction and the compensation of employees are replaced by the final, balanced values in thenational accounts tables by industry.

1.4.3 Reasons for the choice of source

As already mentioned, where government non-market activity is concerned public accounts are thepreferred source. For the calculation of the compensation of employees, the source is the ERE andnot tax statistics based on income tax returns (self-assessment), simply because, although both arefiscal sources connected with the income tax system, the ERE statistics based on the informationforms are very much more detailed than the published tax statistics. Although it is in principleconceivable that households would report income from hidden activity which, in contravention of thelaw, is not reported by employers, this is considered an unrealistic possibility. The ERE statisticsmust therefore be considered to be much the best source for the calculation of the compensation ofemployees from the point of view of employees.

As regards gross operating surplus and mixed income, one alternative source might be the returnswhich corporations and the self-employed submit for corporation tax and personal income taxation.Since the accounting information on income tax returns is much briefer and much further away fromnational accounts concepts than the accounts on which the intermediate system and the target totalmodule are based, it is obviously a much less valuable statistical source than the accounting statisticsdescribed in Section 1.3.2.1.

1.4.4 Periodisation

There are no periodisation problems with use of the ERE statistics. Income is reported on a calendaryear basis, since the income tax system is based on the calendar year. The periodisation of accountingstatistics for the functional target total module was described in Section 1.3.2.3.

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1.4.5 Transition from tax-based total wages and salaries in establishment-related employment statistics (ERE) to the compensation of employeesin the national accounts

Total annual wages and salaries are defined at workplace (local kind-of-activity unit) level as the sumof employees’ A-income, from which labour market contributions have to be paid, and any overallcontributions to capital pension schemes administered by employers.

A-income comes from heading 13 of the salary information form. This field covers:

- wages and salaries, fees and the like. It includes: holiday bonuses, wages or salaries paid duringsickness or maternity leave, grants of any kind on which A-tax is payable, fees paid to members ofboards, committees, etc. and payments which are equivalent to pensions to former employees. (A-taxis PAYE (pay-as-you-earn) tax, i.e. a tax which the employer is obliged to withhold).

All the amounts under this heading are gross, i.e. they include the labour market contributiondeducted at source. Contributions to social security schemes (ATP, the labour market supplementarypension scheme), long-service gratuities and severance pay plus contributions to pension schemes arenot included. With one exception, these are recorded in other fields on the information form. Theexception is total contributions to capital pension schemes administered by employers, which aredifferent from other pension contributions in that they are not normally a feature of a contractualrelationship and no information is given on the form. It is instead obtained separately fromTold&Skat’s Central Pensions System, which is based on mandatory returns from financialinstitutions. As already stated, contributions to employer-administered capital pension schemes areadded to the values in field 13 when ERE total wages and salaries are calculated, whereascontributions to other pension schemes and to social security schemes (ATP) are not included in totalwages and salaries as reported in the ERE statistics.

The ERE statistics do not include income in field 36 “B-income, from which labour marketcontributions have to be paid” in their calculation of total wages and salaries. We cannot rule out thepossibility that certain income in the form of fees, which should be treated in the national accounts ascompensation of employees, is posted under this heading and is therefore not included in thecalculation of total wages and salaries in the register statistics. The national accounts implicitlycorrect for this in all cases which are GNI-relevant by basing the estimate of total wages and salariesdirectly on exhaustive accounting information (non-market output).

In the national accounts, the compensation of employees is divided up over 130 industries. Thesource for the vast majority of these industries is the ERE statistics, but for some of them, inparticular agriculture etc. and all government non-market activity, accounting information is usedinstead of the register information. For agriculture etc. and general government, the compensation ofemployees was already calculated in national accounts terms for the production of primary statistics.

The connection between total wages and salaries in the ERE statistics and the compensation ofemployees in the national accounts is illustrated in the table below. The item “employer contributionsto pension schemes etc.” includes both actual and imputed pension contributions. In Denmark, theimputed contributions refer only to civil service pensions.

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Table 14 Connection between the ERE and the national accounts

Wage/salary component DKK millionCompensation of employees in the national accounts 534 094

Total wages and salaries in the ERE 490 966of which employer-administered capital pensions 7 209

- Tax value of fringe benefits 2 862+ Long-service gratuities and severance pay 1 905+ Gifts in kind 12+ Wages from hidden activity (1 660 + 1 235) 2 895+ National accounts calculation of fringe benefits 6 788+ Employer contributions to the ATP 4 906+ Employer contributions to pension schemes etc. 26 284+ Industrial accident insurance 1 631= Corrected total wages and salaries for ERE 532 525

Percentage discrepancy 0.29%

The national accounts figures for the compensation of employees are higher than the ERE figuresafter the latter have been corrected for conceptual differences because the ERE figures for a few - butimportant - industries are replaced by accounting information. The main such case is generalgovernment, which accounts for almost one-third of total wages and salaries in the economy. Itappears likely that the higher values in the general government accounts than in the conceptuallycorrected ERE statistics are due primarily to the treatment of certain fees etc. in the ERE.Presumably, in the case general government entities, these fees are not in all cases included on theinformation forms under point 13 because legally speaking there is not an employment relationship.Instead, they come under taxable B-income. Broadly speaking, this problem is assumed to apply onlyto general government, where the remuneration for certain assignments involving only a few hours'work, such as lecturing, consists of non-invoiced fees which are considered to be wages/salaries.

When equivalent services are supplied to market producers, there will in most cases be an invoicedsale of services, and so the same problem does not arise.

For GNI purposes, the crucial point is that the general government accounts should include allcompensation of employees. In the national accounts, it is the public accounts values for thecompensation of employees, which are higher than the ERE values, which are included in thecalculation of output and value added for general government.

The initial income-based GDP estimate for 1995 is as follows, where MTM is the target total modulederived from the intermediate system based on business accounts, as illustrated previously in Tables 4and 7:

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Table 15 Initial estimates of income-based GDP

DKK millionInitial estimate of gross value added from the MTM 868 298

- Compensation of employees according to the MTM 527 678- Wages in the hidden economy other than for private

households with paid employees1 660

- Long-service gratuities and severance pay 1 905- Other taxes less subsidies on production= Initial estimates for gross operating surplus from the

MTM337 816

+ Compensation of employees calculated from theemployees' point of view

534 094

+ Taxes on production and imports 173 270- Subsidies 35 618= Initial estimates of income-based GDP 1 009 562

The initial estimate of GDP via the income approach is corrected for “Wages in the hidden economyother than for private households with paid employees” and “Long-service gratuities and severancepay” because these amounts are not coded as the compensation of employees in business accounts orin the target total module MTM. In the MTM, wages in the hidden economy are implicitly coded asgross operating surplus, with the wages share of hidden activity calculated afterwards in connectionwith the calculations of employment based on the ERE statistics. The exception is industry 950000,Private households with paid employees, where there is a national accounts calculation and where theoutput value in the MTM is, of course, coded as compensation of employees. Long-service gratuitieswill normally be counted by the businesses concerned as wages/salaries whilst severance pay isassumed to count as extraordinary expenditure. Since by far the largest share of the total amount forlong-service gratuities and severance pay as posted in the salary information register must be assumedto relate to severance pay connected with redundancies, it was decided to make a correction to all theamounts which come from tax figures.

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1.4.6 Independence of the other methods of calculating GDP

The income-based GDP calculation of the compensation of employees must be considered to be asindependent of the other two methods of estimation as it is possible to make it. When compared withthe output-based estimate, it is an extremely robust check, since total wages and salaries in theintermediate system and the MTM which are the counterpart to output-based GDP are calculated fromprocessed and grossed-up business accounts, whereas the income-based estimate is calculated from atotal census of the individual employees’ income in the form of wages and salaries as reported to thetax authorities. One could hardly wish for a statistically more robust comparison of data on wagesand salaries.

The calculation of the other two components of income-based GDP, namely gross operating surplusand mixed income and taxes on production and imports less subsidies, cannot, of course, beindependent of the output-based calculation, since the figures rely on the same businessaccounts/public accounts.

It is only with a more primitive statistical system, where there are no calculations of integratedaccounts by industry and sector based on exhaustive primary accounting statistics, that it mightconceivably be possible to produce independent output- and income-based estimates of that share ofGDP which corresponds to these primary income components. Obviously, if the output-basedestimate is constructed to any noticeable extent on a foundation other than business accounts - usingindirect methods of estimation and projections from a base year, for example - there might be groundsfor claiming that the output- or income-based calculations of GDP may be more or less independentas regards the gross operating surplus and mixed income share. In a more highly-developed statisticalsystem, this independence goes by the board.

With the compensation of employees accounting for some 53% of GDP in 1995, the output andincome approaches may be said to be independent only as regards this percentage at most. Since theconsistency required of the costs-based estimate of the value of government non-market output, non-market output in NPISHs and non-market output relating to employees in private households bydefinition rules out any independent estimates in this field, and non-market wages and salariesaccount for a good third of the total, only around 35% of GDP can genuinely be said to be estimatedindependently.

The income- and expenditure-based calculations may be considered to be totally independent of oneanother apart from non-market activity and imputed transactions or transactions calculated byconvention (the rental value of owner-occupied housing, fringe benefits, etc.), where by definitionthey give the same result. Since these components together account for around 27% of GDP, the twocalculations (income and expenditure) of the other 73% or so can be said to be truly independent.

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1.4.7 Direct versus indirect methods of estimation

All components of the income created by the production process other than gross operating surplus,for which figures are imputed (the surplus on the imputed rental value of owner-occupied housing,consumption of fixed capital relating to non-market output, etc.) are in principle estimated directly.

1.4.8 Direct estimates of levels as opposed to projections

With the exception of allowances for the hidden economy, income-based GDP is in no case projectedbut is estimated directly as a level on the basis of total coverage of wages and salaries in the primarystatistics.

1.4.9 Most important exhaustiveness initiatives

As can be seen from Table 19 in Section 1.7, there are explicit allowances for fringe benefits and thehidden economy.

1.5 Outline of the expenditure approach

1.5.0 Introduction

For 1995, the calculation of expenditure-based GDP may be summarised as in the table below:

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Table 16 GDP, expenditure approach, 1995

Value, % ofDKK million GDP

Total final consumption expenditure 769 850 76Household final consumption expenditure 501 364 50NPISH final consumption expenditure 8 187 1General government final consumption

expenditure260 299 26

Gross capital formation 198 596 20Gross fixed capital formation 187 858 19Changes in inventories 9 298 1Acquisitions less disposals of valuables 1 440 1

Exports of goods and services 357 454 35Imports of goods and services 316 144 31

GDP 1 009 756 100

The table shows that private final consumption expenditure in Denmark accounted for roughly half ofGDP in 1995, general government final consumption expenditure a good quarter, gross capitalformation around one-fifth and net exports the final 4%. Exports of goods and services accounted for35% and imports 31%.

1.5.1 Reference framework – business register, population register

The reference framework for that share of the GDP expenditure-based estimate where the statisticalunit is enterprises is the business register, which was discussed in Section 1.3.1. For that share of thecalculations where the statistical unit is households, the relevant reference framework is the totalpopulation divided by household. This framework is found in the Forbrugsundersøgelse,[abbreviated to FU, the survey on income and expenditure = household budget survey], which is animportant source for the calculation of private consumption. The Central Population Register (CPR)was discussed in Section 1.4.1 above. Here, therefore, we need only to discuss households as areference framework.

The CPR lists all persons resident in Denmark. The question is how the population of householdsresident on the economic territory can be derived from a register whose statistical unit is individuals.The basis is the address information in the CPR. A household in the population statistics is allpersons at the same address (in the same dwelling) regardless of family ties. All persons in the CPRbelong to a household, those who have no address being allocated by convention to an administrativeaddress. 5.119 million out of a total population of 5.251 million at the beginning of 1995 lived inhouseholds complying with the international guidelines for the delimitation of a household as aneconomic entity, i.e. a group of persons living together and pooling a large share of their income andexpenditure. The remaining persons (those living in residential homes, long-term patients inhospitals, prisoners, etc.) lived in various kinds of collective household . When figures from the FUare used, they have to be corrected for persons in collective households, since the population ofhouseholds included in the survey covers only the economic entities mentioned.

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The CPR does not, of course, include persons who have illegally taken up residence in Denmark andwere not previously registered whilst legally in the country. Lenient treatment where immigration isconcerned means that few people are refused a residence permit and that high social benefits are paidto legal immigrants, so it may be assumed that the population of illegal foreigners without a CPRnumber is for the time being so vanishingly low that it is not a problem from the point of view ofstatistics.

1.5.2 Most important sources

The most important sources for the estimate of the components of expenditure-based GDP are asfollows:

Household final consumption expenditure:

Retail trade statistics (level of retailable consumption)The FU [household budget survey] (structure of retailable consumption, services)VAT statisticsSurveys of housing rentalsHousing surveys (housing stock, stratified)Energy statistics (electricity, gas, district heating)Statistics on financial institutions (financial services)Statistics on public finances (user payments to public institutions)Tax statistics (amounts corrected for taxes and duties)Output-based estimate (hotels and restaurants)Motor vehicle statistics (households’ acquisitions of new cars)Balance of payments statistics (tourist revenue and expenditure)

Final consumption expenditure in NPISHs:

ERE estimates of total wages and salariesAccounts of the largest trade union in the country

Gross fixed capital formation:

Agricultural statisticsPublic finance statisticsAccounting statistics for industries where public corporations predominateRegister of buildings and dwellings∗ (BBR)Index of construction costsIndustrial commodity statisticsProduct statistics for the IT industriesExternal trade statisticsQuestionnaire-based accounting statisticsSpecific industry statisticsMedia statisticsRegister of motor vehiclesRegister of vesselsRegister of aircraft

∗ In some translations, referred to as the Register of buildings and housing.

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Acquisitions less disposals of valuables:

Industrial commodity statisticsExternal trade statisticsHousehold budget survey (FU)

Changes in inventories:

Questionnaire-based accounting statisticsTax accounting statisticsAccounting statistics for industries where public corporations predominateSpecific industry statistics, including agricultural statisticsEnergy statisticsAgricultural statistics

Imports and exports of goods and services:

External trade statistics (Intrastat and Extrastat)Balance of payments statisticsSettlements statistics from the NationalbankVAT statisticsAccounting statistics for sea water transport.

1.5.3 Reasons for the choice of source

In only two areas is there any real competition as regards information on the same variables for theestimate of expenditure-based GDP. One is household final consumption, where for many items thereis information available in both the FU and other sources. The other is imports and exports, whereinformation on external trade transactions is available from Danmarks Statistik’s external tradestatistics and information on payments for imports and exports of goods and services can be found inthe settlements statistics of Danmarks Nationalbank. Below, we discuss the reasons for DanmarksStatistik’s choice of source in these two fields.

Choice between the household budget survey (FU) and information from other sources

It is widely known that information in consumer surveys is surrounded by a good deal of uncertaintyas regards items based on households’ own accounting, i.e. in general small items of expenditure, asopposed to those items where an interviewer notes expenditure as evidenced by supportingdocuments, which are typically the larger items. When the survey is processed, everything possible isdone to eliminate any bias resulting from differential non-response. However, it must be admittedthat there is a good deal of uncertainty surrounding the figures which households themselves haverecorded.

Against this background, the main rule in the Danish national accounts has been that whereverpossible the FU has been replaced by other information when statistics are needed to determine levels,but it is widely used to determine the structure of expenditure – the breakdown of consumption intoindividual foodstuffs, for example. In various important cases, the FU is the only available source,but in the vast majority of such cases the items concerned are consumption items where an

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interviewer has recorded substantial expenditure from the household’s supporting documents or theexpenditure concerned is common to virtually all households. These two circumstances arecharacteristic of those items in the survey which can be determined with a good deal of certainty. Thefact that an interviewer has seen the supporting documents – telephone bills, for example – rules outthe risk of items being forgotten, and the fact that this is general, recurrent expenditure for almost allhouseholds means that the sampling uncertainty for the items in question is relatively low. In thesecases, FU figures are quite justifiably used to determine levels in the national accounts.

For retailable consumption, i.e. that share of private final consumption which occurs through retailtrade, the FU figures are replaced by retail sales figures which must be considered a much betterstatistical source for determining levels of private consumption. But this source is not sufficientlydetailed to enable it to be used as the basis for the breakdown of expenditure into the nationalaccounts consumption groups. The survey figures are therefore used to divide the aggregate groupsfrom retail statistics into the detailed consumption groups. For this breakdown, the FU figures for theconsumption of alcohol and tobacco etc. are replaced by figures based on tax/duty-adjusted quantities.For these expenditure items, the FU figures are known to be very much underestimated. In this way,aggregate retailable consumption is calibrated to retail sales.

For energy products and acquisitions of motor vehicles, there is special information available basedon physical data. In these cases, the FU figures were either replaced previously, when the initialestimates were made of the private consumption of the expenditure components in question, orreplaced during the balancing process. The FU figures for the consumption of hotel and restaurantservices are also known to be seriously underestimated. For these groups, the initial householdconsumption estimate is therefore based on supply, i.e. sales in hotels and restaurants, the startingpoint being that share of the supply which was allocated to household consumption in the most recentfinal national accounts. A detailed description of sources and methods underlying the initial estimatesfor the individual consumption groups can be found in Chapter 5.

Choice between external trade statistics and settlements statistics from the Nationalbank

It is only for export and import totals that there is a choice between these two sources. Settlementsstatistics contain no information on codes for the goods to which the payments refer, and thereforecannot compete with the detailed external trade statistics.

Payments for goods during a given period cannot, of course, be taken as an expression of exports andimports of goods during that same period compiled in line with the rules on periodisation in the ESA95, i.e. on a transactions basis complying with the change of ownership principle. Trade credits playan important part in external trade, and the transaction date and payment date will only exceptionallycoincide. Settlements statistics do, however, include information on both payment and transactiondates, so it is possible to estimate payments for exports and imports on a transactions basis. Until1992, there was in every case a close correlation between the periodised settlements statistics andexternal trade statistics after the former had been corrected for services connected with goods, i.e. acorrection to cif values for imports and fob values for exports. Since 1992, the correlation has beenless good, and in some periods there have been sizeable differences. Since 1992, both external tradestatistics and settlements statistics have been radically reorganised – external trade in connection withthe change to Intrastat as from 1 January 1993.

Because the two sets of statistics did not tally, in 1999-2000 Danmarks Statistik and the Nationalbankdid a great deal of work together to sort out the problems. The most important new initiative toemerge is a comparison at individual respondent level of returns to Intrastat, the quarterly VAT

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returns relating to EU trade and returns to the Nationalbank settlements statistics. The outcome of allthis investigative work was published in the report "Forbedring af udenrigshandels- ogbetalingsstatistikken. Afgivet til Økonomiministeren den 30. juni 2000" [“Improvement of externaltrade and settlements statistics. Submitted to the Minister for Economic Affairs on 30 June 2000”.]One of the conclusions is that there is no reason to doubt the accuracy of Danmarks Statistik’sexternal trade statistics as regards the final estimates of imports and exports used for the definitivenational accounts. Consequently, for the national accounts estimate it was decided to continue to basethe national accounts figures for imports and exports of goods on external trade statistics.

1.5.4 Estimates of acquisitions less disposals versus the commodity flowmethod

All components of expenditure-based GDP can in principle be estimated in two ways, directly usinginformation on the expenditure (uses) side (purchaser's side) to calculate acquisitions less disposalsand indirectly on the basis of supplies of products to the domestic market, using estimated shares ofsupplies to the individual final demand components to calculate final uses from the resources side.One of the most robust cross-checks for the compilation of national accounts consists in comparinginformation from purchasers on their acquisitions less disposals of the individual products or groupsof products with information on the sellers' side on supplies to the domestic market. This latter figurewill typically be imputed from information on sales from domestic producer units correlated withexport and import information.

Since the Danish national accounts are adjusted in a detailed product balance system, there is asystematic confrontation in connection with the balancing. In the vast majority of cases, the initialestimates for the final demand components are compiled as direct estimates from the expenditureside.

However, there are as yet no independent expenditure-based estimates of the economy's totalinvestments in machinery and equipment. For this final demand component, the initial estimate isproduced as an indirect calculation using the commodity flow method. Consequently, there is nocomparison of supply and use information on capital formation in machinery when the balancingtakes place. The reasons why the indirect method of estimating capital formation in machinery isprobably better than the direct method and would presumably in all circumstances be the preferredcompilation method were discussed in Section 5.10.1.

1.5.5 Independence of the other methods of calculating GDP

Other than for those areas of the economy (general government, owner-occupied dwellings etc.),where the output- and expenditure-based calculations cannot by definition be independent, inDenmark's case the two GDP measures are largely independent of one another prior to balancing.The most important exception is the estimate of the household consumption of hotel and restaurantservices, which, as already mentioned, is calculated from the supply side. The fact that investments inmachinery are calculated by the commodity flow method means that the figures depend only to a veryminor extent on output-based GDP, as is emphasised by the fact that around 40% of capital formationin machinery and equipment is made up of imports (direct demand). Imports account for over 50% ofgoods flows at basic price level.

Again ignoring those areas of the economy where the calculations from the expenditure side and fromthe income side by definition give the same result, these two estimates must be considered to be

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completely independent with the exception of the estimate of gross operating surplus and mixedincome for hotel and restaurant services.

1.5.6 Direct versus indirect methods of estimation

By far the largest share of expenditure-based GDP is calculated using a direct estimate of purchasers'acquisitions less disposals. The most important exceptions are capital formation in machinery andhousehold consumption of hotel and restaurant services, along with user payments to publicinstitutions, which are calculated indirectly from the supply side.

1.5.7 Direct calculations of levels as opposed to projections

By far the largest share of expenditure-based GDP is calculated directly in terms of levels. The mostimportant exception is the consumption of dwelling services (actual and imputed rentals) where levelsare calculated every fourth year, in line with the periodicity of the virtually exhaustive surveys ofhouseholds rents, and projected using price and quantity indicators in the period between twobenchmarks. Another important exception relates to allowances for the hidden economy, which arebased on a calculation of levels for years 1992-1994 and subsequently projected using relevantindicators. The above two components accounted for around 9.8% of GDP in 1995.

1.5.8 Most important exhaustiveness initiatives

As regards the "legitimate" economy excluding fringe benefits, the most important steps taken arecorrections and supplements to the sources underlying the calculations of private consumption. Retailsales statistics do not cover all branches of retail trade. In the national accounts calculations, thesestatistics are therefore supplemented by VAT statistics to ensure that the whole of retail trade iscovered. Retail trade statistics do not cover the sales of "new" enterprises, either, i.e. those set upafter the sample was last renewed (it changes every year). In the national accounts calculations, acorrection is made for the resulting undervaluation of retail sales by adding in the imputed sales ofnew retail enterprises, the imputed figures being based on statistics on new businesses, which includeinformation on their sales.

Allowances for fringe benefits and the black economy are discussed in Section 1.7.

1.6 The balancing process and the main approaches to validation

1.6.1 Supply and use tables

The three initial estimates of GDP are balanced in detailed supply and use tables and the productionand generation of income accounts for the industries which go with them. The initial estimates ofGDP using the three different approaches for 1995 and the adjusted value can be seen in the tablebelow. The difference between output-based and expenditure-based GDP reflects the differencebetween supplies and uses of goods and services in the initial estimates used for the balancing. The

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difference between output-based and income-based GDP reflects the macro-level difference betweenproducers' expenditure on wages and salaries and employees' income in the form of wages andsalaries in the initial estimates prior to balancing.

The initial GDP estimates using the three different approaches and the adjusted GDP for 1995 can beseen in the table below.

Table 17 Initial estimates for GDP, three approaches plus balancedvalue

DKK million % of GDPGDP production (output) approach - GDP(O) 1 009 179 99.9GDP income approach - GDP(I) 1 009 562 100.0GDP expenditure approach – GDP(E) 1 013 897 100.4Adjusted GDP 1 009 756 100.0

For 1995, the initial estimates of GDP using the output and income approaches are similar, thediscrepancy being under 0.1%. The initial expenditure-based estimate is somewhat higher than withthe other two approaches, but all three measures are still within a range of 0.5% of GDP, i.e. thenormal range. The final balanced value is closest to the initial output- and income-based estimates,which is logical given the greater statistical weight attached to two initial estimates than to one. Thisfinal adjusted level reflects the best possible compromise between the three initial estimates for 1995in the light of the detailed information on the kind and possible uses of the individual products in theeconomy, which is incorporated into the supply and use tables.

The total difference between final uses and the initial estimates as a result of the balancing is -DKK4.1 billion. This is divided into -DKK 3.8 billion for household final consumption, -DKK 1.3 billionfor gross fixed capital formation and - DKK 1.0 billion for changes in inventories. Publicconsumption expenditure and exports and imports are unchanged from the initial estimates.

The above initial differences between the initial estimates using the three approaches are specific to1995 and cannot be said to reflect any general pattern. For other years, the differences may have theopposite mathematical signs.

Chapter 6 includes details of the techniques behind the balancing of the final national accounts for1995.

1.6.2 Validation with the help of labour market accounts

One fairly reliable way of checking coverage, i.e. whether the national accounts have included allproduction, is to compare the demand side employment underlying the estimate of GDP, i.e. theenterprises' own employment figures, with employment measured from the supply side, i.e. fromdemographic sources such as population censuses and labour force surveys.

A check of this type has revealed considerable gaps in the coverage of economic activity and led tomarked upward revisions in certain other countries. In the wake of a Commission decision ondocumentation and checks on the exhaustiveness of the Member States' coverage of economicactivity, this check was carried out in Denmark, comparing employment as in the Labour ForceSurvey (LFS) with employment according to the sources used for the national accounts calculations ofoutput value and value added. The comparison was carried out for 1991 and revealed no gaps in thecoverage of productive activity. The Commission accepted this result as satisfactory evidence.

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This check is likely to reveal massive gaps in coverage if certain groups of full-time employees arenot included in the legitimate economy. This is not the case in Denmark to any noticeable extent atpresent. The check would not, however, be likely to uncover work in the black economy on a part-time basis or underreporting to the authorities. The steps taken to ensure that the Danish nationalaccounts cover this hidden economic activity are described in Section 1.7.

1.6.3 Financial sectoral accounts

As already mentioned, financial sectoral accounts were not developed for all sectors until completionof the non-financial national accounts for 1995. For the rest of the world (S.2), however, financialsectoral accounts have existed for many years, and this has made it possible to compare the netlending/borrowing of the rest of the world as compiled in the capital account and the financialtransactions accounts. This check validates the items in the rest of the world account to the extentthat, if there were serious problems with the estimates of exports, imports, income in the form ofwages and salaries, property income or current transfers to and from the rest of the world, these wouldbe likely to show up in large differences between net lending/net borrowing as calculated "top down"in the capital account and as calculated "bottom up" in the financial (transactions) account.

Table 18 shows net lending/net borrowing in the rest-of-the-world account as seen from both sides forthe year 1995.

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Table 18 Net lending/net borrowing vis à vis the rest of the world, estimated from two sides

DKKmillion

% of GDP

Net lending/net borrowing, capital account 6 786 0.67Net lending/net borrowing, financial account prior to finalbalancing

6 033 0.60

Difference 753 0.07

The difference was extremely small for 1995. The average annual numerical difference for years1995-1999 was DKK 5.7 billion. In four of the five years, the economy's net lending/net borrowingprior to the final balancing was greater on the capital account. This is only to be expected where thereis a large surplus on the balance of goods and services and the consequent expected growth in nettrade credits. In many cases, trade credits are not incorporated into the financial accounts until thefinal round of balancing.

For the compilation of the financial accounts, a final balancing roun is undertaken to ensure that netlending/net borrowing is identical in the capital account and the financial account for all institutionalsectors. The pre-balancing differences are published so that the users can see the results of theprocessing of the financial statistics on their own premisses, so to speak. The differences for the mostrecent provisional years are taken into account, of course, when both the non-financial and thefinancial accounts for the institutional sectors are worked out for later versions of the nationalaccounts. Any change in the size of the differences or their mathematical sign will naturally lead toan investigation of whether there are any special problems in the calculations, either top down orbottom up, for the year in question.

1.7 Overview of the allowances for exhaustiveness

1.7.1 Explicit allowances

1.7.1.1Output side

In the Danish national accounts, explicit allowances are made for the output of self-employed persons(farmers) for their own final use, own output of software and large databases, output of entertainment,literary or artistic originals, the output of fringe benefits, work in the black economy (tax evasion withthe purchaser's connivance), underreporting (tax evasion without the purchaser's connivance in anyparticular case) and VAT fraud connected with underreporting. This last refers to the situation inwhich sellers demand the price including VAT for transactions not included in their official turnoverand then keep for themselves the VAT they have collected fraudulently.

All explicit allowances are calculated on the output side and corresponding amounts are posted on theexpenditure and income sides. Apart from the output value of owner-occupied dwellings, which isstandard in all national accounts and is therefore not mentioned in this connection, the followingallowances were added to value added and final uses in 1995:

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Table 19 Explicit allowances in the national accounts, 1995

Explicit allowances Value, % ofDKK mill. GDP

Farmers’ output for own consumption etc. 382 0.04Own output of software and large databases 6 290 0.62Output of entertainment etc. originals 1 193 0.12Fringe benefits for employees 6 788 0.67Work in the black economy, underreporting and the correspondingVAT fraud

6 048 0.60

Total 2.05GDP 1 009 756 100

On the basis of the accounting statistics, values have already been calculated for the output of capitalgoods for own use other than own-produced software and entertainment etc. originals, which is notcapitalised in the accounting statistics. Own output of capital goods which the businesses themselveshave capitalised does not require any special allowance.

1.7.1.2Income side

The counterpart on the income side to the output of the self-employed for their own consumption isgross operating surplus and mixed income. The same applies to allowances for own-account software(in the case of market producers) and originals. The allowance for fringe benefits has a counterparton the income side in the compensation of employees. Allowances for the black economy, bothhidden activity and underreporting with the corresponding VAT fraud, have a counterpart in the formof the compensation of employees on the one hand and gross operating surplus and mixed income onthe other. Of the total explicit allowance for the black economy in 1995 of DKK 7 317 million,“hidden” wages accounted for DKK 2 895 and “hidden ” operating surplus and mixed income forDKK 4 422.

1.7.1.3Expenditure side

The counterpart on the expenditure side of the allowance for own-account output of software andentertainment, literary or artistic originals is gross fixed capital formation. For all the otherallowances, it is household final consumption expenditure or intermediate consumption.

1.7.2 Implicit allowances

1.7.2.1Implicit coverage via price times volume calculations

Wherever possible, the national accounts include explicit allowances for the black economy, interalia to demonstrate that account has been taken of productive activity not known to the authorities. Ina few important industries, it is not possible, owing to the method of calculation, to determine howlarge a share of the output calculated is accounted for by the black economy. In such cases, it is vitalto be able to demonstrate that the method of calculation ensures that all output is included, regardless

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of whether it is legitimate or hidden. In the Danish national accounts, this applies to two industries,namely agriculture etc. and housing (dwellings). Since the calculations of agricultural output coverall the agricultural area and all livestock, output in this industry is included in the GDP estimateregardless of the size of any tax evasion. The same applies to the output of dwelling services (actualand imputed rentals). Since the output value of housing is calculated using the “stratificationmethod” with housing stock covering all dwellings in the country, rentals are automatically includedin estimated GDP, regardless of whether or not there is any undeclared rental income.

1.7.2.2Implicit coverage via estimates from the expenditure side

The output value of industry 702040, the letting of non-residential buildings etc, is estimated from theexpenditure side on the basis of the industries’ rental income. One reason is that an estimate of non-residential letting from the supply side is extremely difficult, since in many cases such letting is asecondary activity for which there are no separate data in business accounts, and the second reason isa concern for consistency in the treatment of business accounts, where rental expenditure is part of“other external expenditure”. The method of calculation means that any underreporting of incomefrom non-residential letting has no effect on GDP.

1.7.2.3Implicit coverage via grossing up procedures

As will be discussed in more detail in Section 3.25.3., which analyses the relationship betweentheoretical and actual VAT receipts, it is likely that, in view of the methods used for grossing up, thenational accounts implicitly capture some of the economy which is "hidden" when the self-employedcount actual private consumption as intermediate consumption.

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1.8 Transition from GDP to GNI

1.8.0 Introduction

Table 20 Transition from GDP to GNI, 1995

DKK millionGDP 1 009 756

+ Compensation of employees from the rest of the world 6 847- Compensation of employees to the rest of the world 1 982+ Property income from the rest of the world 108 456- Property income to the rest of the world 134 271- Taxes on production and imports to the rest of the

world2 320

+ Subsidies from the rest of the world 10 588= Nationally published GNI (ESA 95) 997 074- EU’s third own resource (definitional discrepancy) 5 323

= GNI according to ESA 95 991 751

The only instance where the Danish definitions differ from the ESA 95 is in the transition from GDPto GNI. Whereas the EU’s “own resources” on the harmonised VAT basis should, according toparagraph 4.25 b) subsection 3 of the ESA 95, be treated as taxes on production and imports to therest of the world (D.211), in the Danish national accounts they are treated as current transfers (D.74),in line with economic reality. The above table assumes that the change in the treatment of swapsapproved in 2000 is incorporated into the definition of GNI in the ESA 95.

1.8.1 Reference framework

The relevant population for the switch from GDP to GNI is all resident units in Denmark, both naturaland legal persons. The reference framework for the transition items is in practice the respondents forthe Nationalbank's settlements statistics, i.e. commercial banks and all other financial institutionswhich directly receive payments from or make payments to non-residents. According to theNationalbank Order on foreign currencies, all payments to and from the rest of the world have to bereported. In 1995, a statement was required of the purpose of all payments over DKK 60 000. Thereference framework may thus be said to cover the whole of the relevant population.

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1.8.2 Most important sources

For transactions with EU institutions, the source is central government accounts, which include thecorrect periodisation of transactions on an accrual basis. Settlements statistics are the source for allother items except reinvested earnings on foreign direct investments (FDI), which are calculated byDanmarks Nationalbank on the basis of the official annual accounts of those firms which have inwardor outward FDI, together with additional information collected. The Nationalbank keeps a register ofall inward and outward direct investments of direct foreign investors.

1.8.3 Reasons for the choice of source

For almost all items in the transition from GDP to GNI, the Nationalbank’s settlements statistics arethe only available national source. The exception is transactions with EU institutions, where centralgovernment accounts, as already mentioned, are used rather than settlements statistics.

1.8.4 Direct versus indirect methods of estimation

All items in the transition from GDP to GNI are calculated directly on the basis of the availablesources.

1.8.5 Direct estimates of levels as opposed to projections

All items relating to the transition from GDP to GNI are calculated directly in terms of levels.

1.9 Transition from GDP (ESA95) to GNP (ESA79 definition)

1.9.0 Introduction

Table 21 shows the transition from GDP compiled in line with the ESA 95 definitions to GNPcompiled according to the ESA 79 definitions. The table complies with the guidelines in CommissionDecisions 97/178 and 98/501, including the numbering of the definitional differences, and the layoutof the questionnaire approved by the GNP Committee.

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Table 21 Transition from GDP, ESA95 definition, to GNP, ESA 79 definition

DKK millionGDP (ESA 95) 1 009 756

+ Compensation of employees from the rest of the world 6 847- Compensation of employees to the rest of the world 1 982+ Property income from the rest of the world 108 456- Property income to the rest of the world 134 271

Commission Decision 97/178:- (1) Residence criteria 0- (3) Insurance 1 367- (4) Direct investment earnings -491- (5) Interest income -757- (6) Cultivated natural growth of plants 0- (7) Computer software and large databases 14 534- (8) Military equipment and vehicles, other than weapons 588- (9) Work in progress on services 0- (10) Mineral exploration expenditures 271- (11) Consumption of fixed capital on roads, bridges, etc. 7 447- (12) Government licences and fees -1 980- (13) Valuation of output for own final use and output from

voluntary activity337

- (14) Value threshold for capital goods -1 766- (15) Market/non-market criteria 0- (16) Subsidies 0- (17) Entertainment, literary and artistic originals 1 193- (18) Services associated with the licence to use entertainment,

literary and artistic originals0

- (19) Garages 2 713- (20) Car registration taxes paid by households 10 340- (21) Wages and salaries in kind 0- (22) Licences for the use of intangible non-produced assets 0

Commission Decision 98/501 (excessive deficit procedure):- (24) Financial leasing 101- (25) Pension funds

Eurostat Decision (excessive deficit procedure):- (26) Changes in the due dates for taxes etc.

Approved by the GNP Committee:- (27) Minor repairs and maintenance in owner-occupied

housing4 075

Total effect of definitional differences (ESA 95-ESA 79) -37 972

= Gross national product compiled according to ESA 79 definitions 950 834

The table shows that the definitional differences between the ESA 95 and ESA 79 which are relevantto the compilation of GNI in 1995 total -DKK 37 972 million or (numerically) 3.76% of GDPcompiled according to ESA 95 definitions. GNI as calculated in line with the ESA 95 definitions is4.30% greater than GNP according to ESA 79. The national compilation of ESA 95 GNI, with thedefinitional discrepancy relating to the EU’s VAT-based own resource, is 4.86% greater than GNPcompiled according to the ESA 79.

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1.9.1 Reference framework

The reference framework for the transition to ESA 79 definitions covers all the national accounts, i.e.it is a combination of the reference frameworks referred to in Sections 3.1, 4.1, 5.1 and 8.1.

1.9.2 Most important sources

Chapter 9 describes the most important sources. This section will discuss only the sources underlyingthe two definitional differences which in Denmark’s case are the most significant in terms of volume,namely capital formation in software and the consumption of fixed capital on roads, bridges, etc.

For software, a distinction has to be made between software and large databases which have beenpurchased and own-produced software and large databases. The most important source for purchasedsoftware is product statistics for the IT industries , which specify the breakdown of the sales of thoseindustries by product. The estimate is therefore based on a supply-side calculation. For own-produced software, the main source is statistics on wages and salaries, where total wages and salariesare calculated for well-defined groups of IT staff. The mark-up factor used for total wages andsalaries in the calculation of output value is based on the accounting ratios in the accounting statisticsfor the software industry.

The consumption of fixed capital on roads, bridges, etc. is based on a PIM calculation which in turn isbased on a long time series for capital formation in roads and bridges etc. The source is the publishednational accounts for the period from 1930. The series is extrapolated back to 1850 using certainrough indicators. Investments before 1930 play only a minor part in the value calculated. Thesurvival curve used is Winfrey L3. The source is the empirical data underlying Winfrey’sinvestigations of survival curves based on American observations. The calculation assumes a lifetimeof 40 years for roads and bridges etc. The source for this is information from Vejdirektoratet[Ministry of Transport Roads Directorate].

1.9.3 Reasons for the choice of source

In principle, purchased software can be estimated directly from the expenditure (uses) side. Owing tothe major difficulties linked with a direct estimate from the purchasers’ point of view, the Danishnational accounts, in line with practice in the USA, for example, decided to estimate capital formationin purchased software from the supply side, on the basis of supplies of the relevant products on thedomestic market. For one thing, there are no comprehensive accounting statistics for all purchases ofsoftware in all industries. Secondly, the fact that enterprises seldom capitalise purchases of softwarein their own accounts means that information on capital formation in software which can be obtainedfrom accounting statistics is incomplete. All in all, an estimate from the expenditure side wouldappear at present seriously to underestimate capital formation in purchased software. For this reason,the Danish national accounts decided to calculate these investments using the commodity flowmethod. If in the future a correct expenditure-based estimate should prove possible - as part of tailor-made IT statistics, for example, where estimates are independent of business accounting practice - thechoice between the two sources and the methods of estimation will, of course, be different and thecalculation method will be reassessed.

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1.9.4 Direct versus indirect methods of estimation

All the definitional changes are calculated using direct methods.

1.9.5 Direct estimates of levels as opposed to projections

All the definitional changes with the exception of garages are calculated directly in terms of levelsfrom the outset. In a few cases, the breakdown of changes in output values by use is, however, basedon fixed coefficients from 1992. This is of only minor importance, however, as regards the effect onGNP. The output value imputed for garages is based on a benchmark from 1991 which is projectedusing changes in the output value of all-year-round owner-occupied dwellings.

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2. The revisions policy and timetable for provisional and finalnational accounts

2.1 Values in annual prices

Danmarks Statistik's revisions policy as regards the estimates of product transactions in annual priceswas discussed in Section 1.2.1.

2.2 Values in fixed prices

With the April 2000 publication, the base year for the fixed price calculations changed from 1990 to1995. In view of both the need for a change of base year owing to changes in relative prices weightedaccording to importance and the available resources, Danmarks Statistik aims to change the base yearfor the fixed-price calculations every five years. As from 2001 inclusive, the traditional fixed-pricecalculations (Laspeyres fixed base index) have been supplemented by estimates in the previous year’sprices (Laspeyres chain index). The fact that in future there will always be a measure of real growthrates based on current prices reduces the need for frequent changes of base year for the fixed pricecalculations. The fixed price series in both 1995 prices and Laspeyres chain indices scaled to the1995 values are available for the whole period from 1966 at all levels of aggregation.

2.3 Employment, compensation of employees and gross operatingsurplus

In contrast to product transactions, where revisions affect supply and use tables and are therefore verythorough and resource-intensive, partial revisions are possible for the series on employment, thecompensation of employees and gross operating surplus (for a given value added) as long as they donot involve non-market producers. If necessary, Danmarks Statistik will carry out a partial revision ofnational accounts in these areas without a major revision at the same time, but up to now there hasbeen no such partial revision. We may consider one for FISIM in 2003, if the EU decides that FISIMhas to be divided by user sector and industry.

2.4 Timetable for provisional and final national accounts

The timetable for national accounts figures in years 2000-2001 can be seen in the following table:

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Table 22 Planned publication deadlines for 2001 national accounts

Quarterly/annual figures1 Coverage ofcalculation

Publication2

Nyt and/ordatabanks

StatistiskeEfterretn.

Annualpublication

Quarterly figures3rd qu. 2000

4th qu. 19993rd qu. 2000

EndDecember 2000

BeginningJanuary 2001

Annual figures 1999,non-financial NA(December version)

Final figures 1997Provisional figures for1998-1999

BeginningJanuary 2001

Mid-January 2001

March 2001

Symmetricalinput-outputtable

Final figures for 1997Projected figures for1998-1999

BeginningJanuary 2001

April2001

Financial transactionaccounts

Final figures for1995-1997Provisional figures for1998-1999

EndJanuary 20013

BeginningJune 2001

Financial balance sheets(closing)

Final figures for1995-1997Provisional figures for1998-1999

EndJanuary 20013

BeginningJune 2001

Fixed capital stock by kindand industry(opening)

Final figures for 1992Provisional figures for1993-2000

BeginningFebruary 2001

BeginningJune 2001

Quarterly figures4th qu. 2000

1st qu. 2000-4th qu. 2000

EndMarch 2001

BeginningApril 2001

Annual figures 2000(June version)

Provisional figures for2000

BeginningJuly 2001

Mid-July 2001

Quarterly figures1st qu. 2001

2nd qu. 2000-1st qu. 2001

EndJune 2001

BeginningJuly 2001

Quarterly figures2nd qu. 2001

3rd qu. 2000-2nd qu. 2001

EndSeptember 2001

BeginningOctober 2001

Quarterly figures3rd qu. 2001

4th qu. 2000-3rd qu. 2001

EndNovember 2001

EndNovember2001

Fixed capital stock by kindand industry(opening)

Final figures for 1997Provisional figures for1998-2001

Mid-December 2001

BeginningJanuary 2002

Annual figures 2000,non-financial NA(December version)

Final figures 1998Provisional figures for1999-2000

BeginningJanuary 2002

Mid-January 2002

March2002

1 Annual figures are different from quarterly figures in that they give information at a more detailed level and include abreakdown of the economy into institutional sectors.

2 In addition, certain figures will be included in the "Konjunkturstatistik" publication.3 Data supplied to Eurostat plus data access.

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3. GDP by the production approach

3.0 Introduction

For 1995, the calculation of output-based GDP can be summarised as in the table below:

Table 23 GDP, production approach, 1995

Value, % ofDKK million GDP

Output at basic prices 1 663 164 165- Intermediate consumption 791 822 78+ Taxes on products 157 254 16- Subsidies on products 18 840 2

GDP 1 009 756 100

The aggregate estimate of value added is based on an estimate at the level of the national accounts'most detailed industry grouping. The estimates for the 130 individual industries are set out inSections 3.7 - 3.22, which explain the calculations for each of the NACE subsections. Thecalculations of value added up to the initial output-based estimate of GDP are actually at a much moredetailed level, namely the DK-NACE extremely detailed grouping of 810 industries. The nationalaccounts are balanced at the 130-industry level in the supply and use tables. Balanced values forvalue added divided by industry appear in the final national accounts for 130 industries in prices forthe year in question, in fixed 1995 prices and as time series of Laspeyres chain indices based onestimates in the previous year's prices.

3.1 Reference framework

3.1.1 Business register

A high-quality business register is crucial for a reliable and exhaustive calculation of GDP using theproduction approach. If it is not possible to calculate the population of producer units in theeconomy, or if the information on the units' activity, size, etc. is not reliable, a considerable measureof uncertainty is introduced into the national accounts. Full coverage of the population and correctinformation on the registered units are essential, both to enable representative samples to be selectedfor statistical surveys and to enable the figures to be grossed up correctly to cover the total population.A properly functioning business register is therefore one of the cornerstones of the national accounts.

Denmark has a long-standing tradition of central business registers. The first such administrativeregister was set up under legislation in 1975. The content and technical aspects were thoroughlyrevised in years 1989-1995. In 1997-1999, the EDP technology was substantially upgraded, and thishas made it possible for Danmarks Statistik's business register to replace all decentralised registers inother departementer and other administrations as from 1999. Since that year, all public authoritieshave been using the CVR (Centrale Virksomhedsregister, the Central Business Register), which is an

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administrative counterpart to Danmarks Statistik's statistiske erhvervsregister [statistical businessregister].

It is vitally important for the coverage of the Danish business register, which compares favourablywith coverage in other countries, that there should be a very low threshold for mandatory registrationin the Danish VAT system (turnover limit of DKK 20 000), that virtually all non-financial marketactivity other than passenger transport is subject to VAT, and that all employers and the self-employed who have no employees have to be registered for payment of pay-as-you-earn and thelabour market contribution. According to current regulations, only activity liable to VAT which istotally insignificant and is in the nature of a hobby can avoid VAT registration.

The Central Business Register has two types of unit, economic units and local kind-of-activity units.The economic units are the institutional producer units (enterprises), which have autonomy ofdecision-making within their institutional framework. For the time being, the economic unit and thefirm, which is the legal unit, are the same thing in Denmark's case. The definition of local kind-of-activity units in the business register is the same as the definition of local kind-of-activity units (localKAUs) in the ESA 95, i.e. they are the smallest units for which production and generation of incomeaccounts can be compiled. The register continually monitors the links between economic units andlocal kind-of-activity units.

The register contains an activity coding of both economic units and the local kind-of-activity unitsthat go with them which is based on the DK-NACE, the Danish version of the NACE Rev. 1. In thecase of the economic units, the grouping into subsectors divided by the main activity of theseinstitutional units is known as "firm branches". This is a division of the economy into veryheterogeneous groups of industries. This type of grouping is used in various contexts as an indicatorfor the quarterly national accounts, but in no case for the final, annual national accounts. In the caseof the local kind-of-activity units, the business register includes the activity code which is used for thecompilation of the production and generation of income accounts in the national account. In a fewcases, the Danish national accounts operate with (homogeneous) branches defined by function. Withthese exceptions, the statistical unit for production and generation of income accounts is the localkind-of-activity unit, which will normally have secondary output in the supply and use tables. Thebranches defined by function have no secondary output. The statistical units for the estimate ofproduction and generation of income thus comply in full with the guidelines in the ESA 95 and in afew respects, which are extremely important for input-output analysis, they go further than is requiredby the ESA 95 by collecting the output of certain special products into homogeneous branches.

In years 1991 - 1993, when Denmark implemented the NACE Rev. 1 Regulation, a great deal of workwas done to validate and revise the branch coding in the business register. All firms other than thevery smallest were sent survey forms asking them to update the designation of their local kind-of-activity units and to suggest an activity coding for each individual unit in the light of the descriptionof the activity in the NACE Rev. 1. Danmarks Statistik compared the firms' own proposals for codingwith Told&Skat’s proposals for the activity code for the firm as a whole. If they did not tally, theproducer units' own coding was in most cases taken to be the correct one. If there were seriousquestion marks, Danmarks Statistik decided the matter by looking at the products produced by theindividual local kind-of-activity units. For industries such as manufacturing, which are covered byongoing product statistics, this effective form of validation was simple and not particularly resource-intensive. The business register branch coding is continually validated by means of annual branchsurveys covering around 20 000 units, the industry groups covered changing from year to year. Overa five-year period, all producer units in the economy will be included in a branch survey. Told&Skat'sregisters are used to update the register regularly by adding new units and deleting those which haveceased to exist.

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In addition, along with the activity coding - and this is extremely important - the business register tagsall local kind-of-activity units which are classified as government non-market producers, thusensuring that government non-market activity is neither omitted nor double-counted.

Below, we show how the quality of the register is continually assessed. There is a brief discussion ofwhat quality means for a register such as this. The focus is on four key quality dimensions. There isthen brief factual information on the content of the business register. The four key quality dimensionsare assessed as they apply to the business register and, finally, the results of a specific quality measureare presented.

The reasons for working with a set of quality dimensions are obvious:

1. relevance, i.e. the register includes those data (types of unit and variables) which are necessary forbusiness statistics;

2. accuracy, i.e. the information in the register corresponds to reality;3. topicality, i.e. the register is continually updated and any back-log is known, and4. ease of access, i.e. it has to be a simple matter to look things up or extract data.

The register includes the following types of unit:

5. administrative units: SE units/JUR units;6. statistical units: DS-JUR units, economic units and workplaces.

SE units are those which remit VAT, which in most cases are the same as the legal unit, the firm, butmay also be made up of parts of firms (partial registration for export sales, for example) or of morethan one firm (units which are jointly liable for VAT). DS-JUR units are legal units (firms).Economic units are those institutional units which in the ESA 95 are called "enterprises". Workplacesare local producer units, in the SNA93 referred to as "establishments" and in the ESA 95 as "localkind-of-activity units". This last unit is the basis for the calculation of the production and generationof income accounts in the ESA 95. The Danish business register and national accounts comply in fullwith both the Business Register Regulation (2186/93/EEC) and the ESA 95 Regulation, where thisparticularly demanding point is concerned.

One of the main sources for updating is the weekly tape from Told&Skat with data on theadministrative units, from which statistical units are also generated. A further major source forupdating is the Workplace Project, where information is gathered on, inter alia, places of workbelonging to an enterprise.

A third major source of updating is feedback from other divisions of Danmarks Statistik aboutchanges in branches, new workplaces, etc.

In 1998, we received from Told&Skat a total of some 1.2 million transactions relating to new unitsand the updating of existing ones.

The business register contains a good 422 000 active DS-JUR units and a corresponding number ofeconomic units. In all, some 480 000 active workplaces are registered.

In addition, the register contains a substantial number of inactive units and comprehensive historicalinformation, with "real history" (the period in which a particular characteristic actually applied) and"register history" (when the information was updated in the register) for all data.

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Assessment of the quality of the business register on the basis of the four quality dimensions

Ad relevance:

It is logical for the register's users, i.e. Danmarks Statistik's various divisions, to be the ones to assessits relevance.

A further reference point may be what the EU requires of business registers for statistical purposes.

In principle, the register includes those types of unit and variables which, according to the EU'sBusiness Register and Units Regulation, should appear in business registers for statistical purposes.

In two areas, the register does not meet EU requirements 100%, however:

- Economic units are defined as units consisting of one or more legal units. At present, the linkbetween economic and legal units in the business register is in all cases one to one. The datamodel for the register has had built into it the possibility of setting up genuine economic unitsconsisting of more than one legal unit, but owing to technical problems, inter alia, such units havenot so far been recorded.

- The register contains no information on whether a unit falls below the "minimum threshold" ornot. This is a problem, because the register includes all entrepreneurs regardless of the size oftheir entrepreneurial activity. For data extraction, a minimum threshold has been defined as theneed has arisen, in cooperation with Danmarks Statistik's divisions, using information onemployment and turnover in the units, but a standard minimum threshold is needed in the businessregister, for the sake of uniformity. The work for this has been started. The lack of a "minimumthreshold" does not, of course, affect GNI.

Ad accuracy:

In order to assess this quality dimension, a questionnaire-based survey is carried out every year, whenaround 3 000 enterprises in the register, selected at random, are sent information on the way in whichthey are registered and asked either to confirm the information or correct it.

This quality analysis focuses more particularly on: the branch, name and address and number ofworkplaces. The main results are discussed in the section below headed "Main results of the qualitymeasure".

A further 10 000 or so units receive similar questionnaires every year. These units are selected frombranches where the random sample or feedback from Danmarks Statistik's divisions shows that theremay be particular problems with the branch coding. The questionnaire for these groups aims toimprove the quality of the register content.

Ad topicality:

Business start-ups are entered in the business register one to two weeks after they are registered withTold&Skat. Similarly, data updating existing units are in place in the register one to two weeks afterTold&Skat receive them. For new (legal) units, the information must be considered to be extremelyup-to-date, but it is more difficult to assess how topical the updates are.

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Information on employment (ATP [labour market supplementary pension scheme] figures) andturnover is input with a time-lag of at least three months. Employment per workplace is input once ayear.

Data on workplaces are updated continually and once a year there is an overall update of theinformation, when the workplace lists are sent out to most enterprises with more than one workplace.

Ad ease of access:

The system for consulting the register works very effectively, with very short response times, even.

Owing to the volumes of data involved, batch extracts from the register are large data runs. The aimis to deliver extracts to the Danmarks Statistik divisions within a few working days.

Main results of the quality measurement

As mentioned above, once a year a questionnaire-based survey is carried out, primarily to assess thequality of the branch and name-and-address information in the business register.

The main results of this quality measure, as set out below, come from the 1997 survey, which waschosen because the results are already available in note form.

Quality of the branch information

As Table 24 shows, the branch information was incorrect in the case of 12.3% of the enterprisesquestioned. The error percentage varies considerably from one division to another, with the lowestpercentage in group 3 and the highest in 2.

Table 24 Branch changes per division

Sample Branch change

Number Share Distri-bution

%

1. Agriculture, fishing, mining andquarrying

538 72 13.4 25.8

2. Manufacturing 171 34 19.9 12.23. Energy and water supply 40 1 2.5 0.44. Construction 153 9 5.9 3.25. Trade, hotels and restaurants etc. 507 74 14.6 26.56. Transport, post and telecommunications 102 3 2.9 1.17. Financial intermediation etc, business

activities446 71 15.9 25.5

8. Public and personal services 319 15 4.7 5.49. Industry not stated 0 0 0 0

Total 2 276 279 12.3 100.1

Source: "Results from the 1997 industry survey on an arbitrary sample",note dated February 1998.

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Table 25 shows the distribution of incorrect branch information by size group. It would appear thatthe problem becomes less serious as size increases but then increases again for nine or moreemployees.

Table 25 Branch changes by size group (number of employees)

Sample Branch change

Number Share Distri-bution

%

No employees 1 227 180 14.7 64.51 employee 432 44 10.2 15.82 employees 136 16 11.8 5.73 employees 98 13 13.3 4.74 employees 61 5 8.2 1.85 employees 45 2 4.4 0.76 employees 40 2 5.0 0.77 employees 29 1 3.5 0.48 employees 22 0 0 09 or more employees 186 16 8.6 5.7

Total 2 276 279 12.3 100.0

Source: "Results from the 1997 industry survey on an arbitrary sample",note dated February 1998.

Tables 24 and 25 show branch changes at the 6-digit DK-NACElevel. However, a shift within thesame division may be a less serious quality problem than a shift from one division to another.

Table 26 shows branch shifts within and between divisions. Around two-thirds of units changebranch within the same division (diagonally) and around one-third change from one division toanother.

Table 26 Branch changes at division level

From division To division Total

1 2 3 4 5 6 7 8 9

1 49 2 2 13 1 5 722 1 16 6 5 1 5 343 1 14 1 4 1 3 95 2 8 48 1 9 5 1 746 2 1 37 5 5 3 8 1 42 5 2 718 1 13 1 159 0

Total 57 30 1 15 64 5 74 24 9 279

Source: "Results from the 1997 industry survey on an arbitrary sample",note dated February 1998.

Quality of name-and-address information

10.7% of the units questioned reported changes to the name and/or address information.

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Quality of information on number of workplaces

1.7% of the units questioned reported the opening of new workplaces or closure of existing ones.

3.1.2 Main types of source and method

3.1.2.1Breakdown of the economy into sectors, subsectors and industries

The statistical unit for the estimate of output and value added in the ESA 95 is the local kind-of-activity unit (which in Danish is synonymous with the producer unit, the workplace). In the ESA 95,these units are grouped into industries. When discussing the estimate of GDP from the output side, itis therefore logical to proceed industry by industry. However, the primary statistics available - andthus the statistical methods which it is relevant to use - will almost always be based on a grouping ofthe somewhat broader institutional units (firms) by main activity (a grouping into "subsectors", or"firm branches"). For example, the management of housing and business premises as part of theactivity of pension funds will be subject to the requirements for the submission of accounts andstatistical reporting which apply to pension fund activity, which means that all units, right down to thesmallest, have to report. The letting of housing and non-residential property which is not hived offinto a property company but is an integral part of the pension fund's investment activity is thus notincluded in the primary statistics for firms whose main activity is the letting of property. Throughoutthe process of estimating value added on the basis of primary statistics, we have to look out for andtake account of the relationships between institutional producer units (firms) and local kind-of-activity units (producer units).

If we look at the statistical coverage of the economy in primary statistics in the form of accountingstatistics, we see that there is a broad division into four sectors/subsectors:

1. Sectors with complete accounts and (virtually) full coverage of the population via administrative orstatistical returns

S.13 General governmentS.121The central bankS.122Other monetary financial institutionsS.123Other financial intermediaries, except insurance corporations and pension fundsS.125 Insurance corporations and pension funds

2. Sectors with complete accounts and partial coverage of the population via administrative orstatistical returns

S.11 Non-financial corporations (other than agriculture and dwellings)S.14 Households (other than agriculture and dwellings)S.124Financial auxiliaries

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3. Sectors with a combination of physical and economic accounts

S.11 Agriculture and dwellings where the form of ownership is non-financial corporationsS.14 Agriculture and dwellings where the form of ownership is households (sole proprietorships)

4. Sectors with no accounting statistics

S.15 Non-profit institutions serving households.

This breakdown is fundamental. In group 1, there is, of course, no noticeable problem with samplingor grossing up, since virtually all producer units are covered by the ongoing estimates. The challengehere is basically to convert the primary statistics' accounts to the concepts of national accounts. Theexception is S.123, where most of the institutions are covered but where a certain amount of grossingup is necessary. In group 2, which covers the vast majority of activity in the economy, much of thework of producing exhaustive and reliable estimates consists in ensuring that the samples used arerepresentative and that the figures are grossed up to the total population.

For agriculture and dwellings (group 3), one particular point is that grossing up on the basis ofemployment is statistically unreliable and that using VAT sales is either difficult or impossible, eitherbecause the activity includes extensive sales of capital goods or because it is not liable for VAT. Afar better basis for grossing up the figures is in this case physical quantities (areas). The nationalaccounts estimates for these two subsectors of S.11 and S. 14 therefore take advantage of theexistence of physical data.

Finally, for Sector S.15, Non-profit institutions serving households, there are no accounting statistics,but there is an annual total estimate of wages and salaries, which is the starting point for the nationalaccounts calculation.

Below, the four sectors/subsectors are discussed individually.

3.1.2.2Sectors with complete accounts and full coverage

In 1995, these sectors together accounted for 27% of total gross value added in the economy. Of this,financial intermediation services indirectly measured (FISIM), i.e. the financial institutions' interestrate margin, made up 3.6%. A good 23% of the value added of the economy other than from FISIM istherefore covered by statistical estimates where there is no uncertainty resulting from grossing upbecause there is a total count of all producer units.

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3.1.2.2.1General government

3.1.2.2.1.1Delimitation of the sector

In Denmark, S. 13 is taken to cover institutional units consisting solely of government non-marketproducer units. All government-controlled market producer units are considered to constituteindependent institutional units. If they are not corporations, they are treated in the national accounts asquasi-corporations with autonomy of decision-making and are included in the corporate sector. Forexample, all local government utilities are included in the non-financial corporations sector S.11 eventhough their accounts are often lumped together ["integrated"] with local government accounts.

In the Danish national accounts, therefore, the institutional sector is identical with the population ofgovernment non-market producer units. This coincidence is extremely useful from the point of viewof both the actual calculations and the analytical uses of national accounts.

This delimitation does not result directly from the ESA 95 rules. The European System of Accountsallows government market producer enterprises to be assigned to Sector S.13. There may be unitswhich are market producers but which do not meet the requirements for autonomy of decision-makingor complete sets of accounts set out in the ESA 95 paragraph 2.12, and which consequently do notconstitute independent institutional units which can be included in the corporations sector. In theESA 95, such units are counted as market producer enterprises belonging to institutional units ingeneral government. As already stated, Denmark has consistently chosen to avoid this treatment,although it is in principle possible.

It is in practice extremely useful to be able to avoid having market producer units in S.13, generalgovernment, because the whole output value of S.13 is then estimated by convention from the point ofview of costs. The convention about estimating the value of the output of non-market producer unitson the basis of costs places a great many constraints on the calculation systems (accounting identities)and in practice it is far easier to ensure that these constraints are met when S.13 does not at the sametime include market producer units whose output value is estimated on the basis of sales income. Inaddition, this convention that the institutional sector for general government equals government non-market producer units is handy for the users of the figures.

A further point is that market output, where income from sales accounts for over 50% of productioncosts, can in fact occur - and to a large extent does occur - in S.13, but as the secondary activity of theproducer units in question. This secondary market activity does not stop the whole of output value ofsuch producer units being calculated from the point of view of costs.

Those economic units with local kind-of-activity units which are considered to be government non-market producers are tagged in the business register, to distinguish them from full market producersand private non-market producers, i.e. NPISHs. This tagging is crucial, to ensure that there are noexceptions or double-counting such as would occur if a given enterprise were to be counted when thefigures were grossed up as both a market producer and a government non-market producer. Theregister also has ownership codes, to identify all government-owned corporations and quasi-corporations. Those units which are coded as government non-market producer units and those whichare coded as government-owned market producer units are combined in the statistical system into thepublic sector, i.e. S.13, general government, and S.11001, public corporations. In the publicationStatistiske Efterretninger, Offentlige finanser 1999:20 "Dokumentation af statistikken for den

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offentlige sektor" there is a full list of the units which were included in the statistical system for thepublic sector in 1999.

3.1.2.2.1.2Subsectors

In Denmark, the general government sector S.13 is divided into three subsectors:

S.1311 Central governmentS.1313 Local governmentS.1314 Social security funds.

Central government comprises central government institutions, "self-owning" institutions [i.e. thoseowning their own capital], funded and controlled by central government and the Danish NationalChurch ["Folkekirken"]. Under the Danish constitution, the latter has special status compared withother religious communities and unlike them receives direct funding from central government. Localgovernment consists of primærkommuner [district, i.e. "municipal", authorities], amtskommuner[counties], "self-owning" institutions funded and controlled by local government and localgovernment organisations. Social funds cover the ATP [labour market supplementary pensionscheme], the Særlige Pensionsopsparing [special pension savings] administered by the ATP, the a-kasser [unemployment insurance funds] and Lønmodtagernes Garantifond [employees' wageguarantee fund].

3.1.2.2.1.3Statistical sources

For central government, the statistical source is central government accounts. For local government,it is local government accounts for all the 275 municipalities and 14 counties. For social securityfunds, it is their annual accounts, which are collected in for all the units concerned.

3.1.2.2.1.4Links with the business register

As already mentioned, the units included in the statistical system for public finance as producer unitsin S.13 and those units which are coded in the business register as government non-market units areexactly the same. The grouping of government units by purpose, COFOG, is found only in the publicfinance statistical system and is not used in the business register.

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3.1.2.2.1.5From the accounting plan in public accounts to the national accounts estimate

The accounting plan in central government accounts is not the same as that used for local governmentaccounts. All municipalities and counties are obliged to use the local government plan. Forprocessing, the central government, local government and social security funds accounts are codedwith national accounts codes when they are input into DIOR [Databasen for integrerede offentligeregnskaber, i.e. database for integrated public accounts]. The coding rules are based on the ESA 95.

3.1.2.2.1.6Output of government non-market producer units

As set out in the ESA 95, paragraph 3.53, the output value of government non-market producer unitsis the sum of:

Intermediate consumption (P.2)Compensation of employees (D.1)Consumption of fixed capital (K.1)Other taxes on production (D.29) less other subsidies on production (D.39).

For 1995, there are no other subsidies on production (D.39) for government non-market producers.

Government final consumption expenditure is calculated as follows: government sales income (fromboth non-market output - "user payments" - and sales of market products produced as a secondaryactivity) and general government output of capital goods for own use are subtracted from output valueand social transfers in kind of market goods and services are added. In 1995, the only output ofcapital goods for own use was own-produced software. Social transfers in kind of market goods andservices cover general government purchases on the market of health services (health insuranceservices) and facilities made available to households. These last products are not included as theintermediate consumption of non-market services by general government but are entered directly asfinal uses in a special category for government final consumption expenditure on market products.

3.1.2.2.1.7Breakdown of output by industry and product

In the DIOR database for public accounts, all producer units are recorded in terms of DK-NACEindustry and COFOG code by purpose. The total output value of the general government sector isdivided into the national accounts' 130 industries on the basis of the industry codes in DIOR whichare the same as the industry codes for the units concerned in the CVR.

The breakdown by product is based on the detailed DIOR industry codes. In 1995, generalgovernment output was divided in the national accounts product balance system over 101 products,48 for output from various activities counted as public consumption expenditure, 48 for thecorresponding public receipts from sales with uses other than public consumption expenditure plussales income from canteens, two products for internal deliveries and, finally, one product for own-produced software. One example of such a product would be Q802000, Secondary education . Thebreakdown is shown in the table below.

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Table 27 Breakdown of S.13 output by type of product

DKK millionOutput for government final consumption expenditure 247 168Sales receipts, non-market and market products 31 507Own-produced software 468

Total S.13 output value 279 143

In the national accounts product classification, the individual products have seven characters, a letterfollowed by six digits. Products for government final consumption expenditure have Q as the firstcharacter. Products for public receipts from sales have S as the first character and, finally, own-produced software, like other products for capital goods produced for own account, has K as the firstletter.

3.1.2.2.1.8Intermediate consumption

DIOR contains all public accounts with national accounts coding. Intermediate consumption dividedinto the national accounts' 130-industry grouping is obtained by simple aggregation.

3.1.2.2.1.9Breakdown of inputs by product

The industry-level input structure for the individual general government branches was originallyestablished for 1984, when the accounting plan in both central and local government accounts wasconsiderably more detailed than in later years. The input structure established at that time was latermodified, with annual balancing of resources and uses in the light of changes in supplies of theproducts in question and the use of products - estimated on the basis of the input target totals dividedby industry - for the intermediate consumption of government non-market services.

3.1.2.2.1.10Other taxes on production less other subsidies on production

Since the value of government non-market output is calculated from the point of view of costs, othertaxes less subsidies on production are relevant to the estimate of value added at basic prices and henceGNI. Other taxes on production in general government are calculated from public accounts, whichinclude the necessary detail on the structure of costs.

For 1995, there are no other subsidies on production for government non-market producers.

3.1.2.2.2Credit institutions

The sectoral delimitation of the subsectors complies strictly with the ESA 95 rules. Subsectors S.121and S.122 have complete accounts. For S.123, the figures are grossed up for units not covered byeither the estimates of the Financial Supervisory Authority, Finanstilsynet, or Danmarks Statistik'sfinancial primary statistics. The grossed up share is, however, of such little importance in relativeterms that it is more useful to describe the sector as being essentially covered by a full set of accounts.The sources and methods of calculation for the two national accounts industries which correspond tosubsectors S.121, S.122 and S.123 are discussed in Section 3.16.

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3.1.2.2.3Insurance corporations and pension funds

This subsector is covered in full by Finanstilsynet's accounting estimates.

3.1.2.2.4Publicly controlled non-financial corporations

3.1.2.2.4.1Delimitation of the (sub)sector

Sector S.11001, "Public non-financial corporations", along with the national private and foreign-controlled enterprises which carry out activity in the same branches as the public corporations, has aspecial status. Those industries which are dominated by public corporations are normally notcovered by the two general sets of accounting statistics, "questionnaire-based accounting statistics"and "tax accounting statistics", but are instead covered by special accounting statistics produced inDanmarks Statistik's Public Finances and Prices Division for general government statistics. Thereason is that historically it has been particularly useful to cover public corporations, if only becausethey account for a large share of capital formation and the stock of fixed capital goods. The statisticsin question are called "statistics for public enterprises", but in fact cover all producer units in theindustries which they cover. These are industries which have traditionally included a certain share -in many cases a dominant share - of public corporations and quasi-corporations.

When the structural regulation is implemented, as from reference year 2000 inclusive, theseaccounting statistics will be incorporated into the general questionnaire-based accounting statistics.On the whole, the breakdown of the corporate sector into national private, public and foreign-controlled subsectors is less stable than it used to be. Widespread privatisations in thetelecommunications field have meant that this industry is no longer dominated by public corporations(as from 1998, when the State sold its remaining shares in Teledanmark).

The starting point is therefore a sectoral delimitation of S.11001, where the units in that sector aregrouped by industry in accordance with the main activity of the corporations in question. Theresulting branches in which public corporations predominate are then covered in their entirety,regardless of ownership, and that coverage is not reduced by any subsequent privatisations.

In 1995, the following industries in the national accounts' 130 grouping∗ were included in whole or inpart in the special treatment of industries where units belonging to S.11001 predominate:

401000 Production and distribution of electricity402000 Manufacture and distribution of gas403000 Steam and hot water supply410000 Collection and distribution of water601000 Transport via railways602100 Other scheduled passenger land transport610000 Water transport620000 Air transport

∗ [N.B. As before, notes in square brackets and footnotes with asterisks are translator's notes. Numbered footnotesare in the original.]With very few exceptions, the English translation of the 130 industries is taken from "Nyt nationalregnskab 1988- 1996", published by Danmarks Statistik, and the translation at the more detailed 810-industry level is based onthe Danish Yellow Pages (Internet).

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631130 Cargo handling, harbours, etc.: travel agencies640000 Post and telecommunications900010 Sewage removal and disposal900020 Refuse collection and sanitation900030 Refuse dumps and refuse disposal plants920001 Recreational, cultural, sporting activities (market).

3.1.2.2.4.2Statistical sources

For the above industries, the source for the national accounts estimate is "statistics for publicenterprises", extended to cover all units in the industries in question. Section 11.1 describes thesestatistics. They are produced by the Public Finances and Prices Division in connection with generalgovernment statistics. As general government statistics are compiled in line with national accountsprinciples, the extended statistics for public enterprises are processed according to national accountsdefinitions and presented according to the accounting plan for non-financial corporations in the ESA95. One of the reasons is the desire to be able to produce a national accounts estimate of the "publicsector", which is a combination of general government (S.13) and public corporations (S.11001). Thepublic sector is all producer units in the economy which are under public control.

3.1.2.2.4.3Estimate of the production account by industry

Sections 3.7 to 3.23 describe the calculation of value added for the individual industries. Only thegeneral sources and methods in "statistics for public enterprises" are mentioned, and these, as alreadystated, cover all industries.

The accounting figures used are:a) central and local government accounts;b) questionnaires with accounting information;c) official annual accounts;d) accounting figures from branch organisations.

The population of units comes from the business register, and all public units are covered directly.All large national private and foreign-controlled units are also covered directly but small non-publicunits are covered via grossing up.

Ad a): If public quasi-corporations are included in central and local government accounts, thoseaccounts are used as the source.

Ad b): For public corporations and quasi-corporations which are not included in central and localgovernment accounts, Danmarks Statistik collects accounting information on a questionnaire which isshown in Annex 6. The same questionnaire is used for the national private and foreign-controlledunits in the industries in question.

Ad c): Official annual accounts are used in a few cases, primarily in the telecommunications field.

Ad d): For the electricity sector, the vast majority of electricity corporations report accountinginformation to the branch organisation Danske Elværkers Forening. These figures are used as thebasis for the statistics instead of the usual questionnaire, since the organisation's statistics provideinformation on purchases and sales from one electricity corporation to another, information which iscrucial if we are to be able to calculate the value of electricity sold outside the electricity sector.

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The statistical unit in these statistics is the economic unit, which in practice is defined as the legalunit, the firm. For the processing, secondary activity - principally construction and civil engineeringand trading - is removed from the units in which it is carried out and transferred to the relevantnational accounts industries.

For a good many industries, the "statistics for public enterprises" are exhaustive, i.e. they are based onaccounts for all units in the industries in question according to the business register. In various otherindustries, where there are a large number of small units, total activity in the industry is covered viagrossing up on the basis of the industry's VAT sales. Table 28 lists the detailed DK-NACE industrieswhere the statistics are used as the source for the national accounts estimate, showing whether theestimate is based on all producers' accounts or whether the figures are grossed up, together with thepercentage of any grossing up.

Table 28 Degree of coverage in the accounting statistics for industries where publiccorporations predominate

DK-NACE Text National % grossedindustry accounts industry up401000 Production and distribution of electricity 401000 Nil402000 Manufacture and distribution of gas 402000 Nil403000 Steam and hot water supply 403000 Nil410000 Collection and distribution of water 410000 34601000 Transport via railways 601000 Nil602100 Other scheduled passenger land transport 602100 11611020 Shipping business, passengers 610000 Nil621000 Scheduled air transport 620000 Nil622010 Charter flights, transport of passengers 620000 Nil622020 Charter flights, transport of goods 620000 Nil622030 Taxi air services 620000 Nil632210 Harbours (traffic and fishing harbours) 631130 31632220 Yachting harbours (marinas) 631130 49632230 Lighthouse activities and pilotage

activities631130 30

632300 Airports 631130 Nil641100 National post activities 640000 Nil641200 Courier activities other than national

post activities640000 Nil

642000 Telecommunications 640000 Nil900010 Sewage removal and disposal 900010 44900020 Refuse collection and sanitation 900020 42900030 Refuse dumps and refuse disposal plants 900030 28922000 Radio and television activities 920001 Nil927100 Gambling and betting activities 920001 Nil

In those industries where there is no total count, those enterprises which have the largest VAT salesare extracted until appropriate coverage of the branch's total VAT sales is obtained in the sample.This form of sampling is considered to be the most efficient, especially when it is possible to grossthe sample up to the total population using VAT sales instead of employment, for example. The

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sample is grossed up to total VAT sales in the branch (with the exception of 602100, which is notliable for VAT and where the figures are therefore grossed up to total ticket sales).

3.1.2.3Sectors calculated mainly from grossed up accounting statistics

3.1.2.3.1Delimitation

The following are the sectors/subsectors which do not have complete or virtually complete coverageof all institutional units carrying out productive activity:

S.11002 National private non-financial corporationsS.11003 Foreign-controlled non-financial corporationsS.123 Other financial intermediaries, except insurance corporations and pension funds (minor part)S.124 Financial auxiliariesS14 HouseholdsS15 Non-profit institutions serving households.

3.1.2.3.2Statistical sources

In the two financial subsectors S.123 and S.124, certain units are not covered by the financialaccounting statistics collected by the supervisory authority, Finanstilsynet, or by Danmarks Statistik.For S.123, those accounts which are available for the sector are grossed up to cover all units in thatsector on the basis of employment. Enterprises in S.124 are covered by the general tax accountingstatistics (SLS-E), which in the case of S.124 are grossed up on the basis of VAT sales, oremployment in cases where the major part of of activity is not subject to VAT.

In the case of NPISHs, Denmark has the edge on some countries in that their total wages and salariesare estimated on an ongoing basis. This total figure is used to gross up the account of the country'slargest trade union, whose costs structure is considered to be more or less representative of non-profitinstitutions. In any event, trade unions are by far the most important non-profit institutions inDenmark, with membership covering a very large percentage of employees.

The remaining (sub)sectors, i.e. non-financial corporations other than the government-controlled andthe household sector (sole proprietorships and households as owner-occupiers) together account forby far the largest share of market output in the economy. As a general rule, value added is calculatedfrom the two transversal sets of accounting statistics, namely a) the new questionnaire-basedaccounting statistics, which for 1995 cover manufacturing, construction and the retail trade, and b)"tax accounting statistics" which cover virtually all the other industries which have market outputwith the exception of agriculture.

3.1.2.3.3Accounting plan

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Annex 3 shows the form for manufacturing as an example of the questionnaire used for thequestionnaire-based accounting statistics. Similarly, Annex 4 shows the SLS-E accounting form usedto report standardised tax accounts for 1995. Annex 5 then shows the much more detailed SLS-Eaccounting form which was used in years 1988-1990, and whose more detailed plan is used to divideup the present more highly aggregated items into cost components.

The connection between the accounting plan in the questionnaire for manufacturing and the plan inthe intermediate system was seen in Table 4 in Section 1.3.4.3. A similar connection is defined forthe accounting forms for construction and retail trade plus the SLS-E form.

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3.1.2.3.4Degree of detail

The questionnaire for the questionnaire-based accounting statistics is designed to ensure that theaccounting statistics can live up to the requirements of the Structural Regulation. By normalstandards in this field, the degree of detail must be said to be extremely high. In the "tax accountingstatistics", there is much less detail, even when the basis is the more detailed layout which appliedpreviously, where the structure of costs is still used for the detailed breakdowns. For the calculationof value added, the fewer details in the tax accounting statistics have no noticeable significance, butthe lack of information on capital formation in this source is a handicap when it comes to theexpenditure-based estimate of capital formation. As from reference year 2000 inclusive, when thequestionnaire-based accounting statistics are extended to cover virtually all industries, information oncapital formation will be available from the purchasers' point of view for almost the whole of theeconomy.

3.1.2.3.5Degree of coverage and method of grossing up

1. Questionnaire-based accounting statistics

The data are based partly on the replies to the questionnaires sent out to a sample of firms and partlyon information from Danmarks Statistik's business statistics register and from Told&Skat. Thestatistics are a legal requirement and non-response is not a serious problem. After reminders havebeen sent out, the response rate is as high as 96%. Non-response is usually due to death orbankruptcy. Firms which refuse to cooperate are prosecuted in accordance with the law.

From the business statistics register, information is extracted on all firms which have been activeduring the calendar year in question, including their branch, form of ownership and annual full-timeequivalent (FTE) workforce (number of employees converted to full-time employment).

The firms are divided into groups ("strata") on the basis of their branch, form of ownership andemployment. The breakdown into strata concentrates on balancing two points. On the one hand, ithas to be so precise that the firms in one and the same stratum may reasonably be consideredhomogeneous from the accounting point of view, and on the other hand it has to be possible with thesampling method set out below to extract from each stratum as many firms as are necessary to givereliable and stable distribution figures which can be used to calculate accounting figures for the otherfirms in the stratum. The stratification is designed to ensure that at least five firms are selected fromeach stratum.

As a general rule, all firms with at least 50 FTEs are selected, 50% of those with 20-49 FTEs, 20% offirms with 10-19 FTEs and 10% of those with 5-9 FTEs. Firms with between 0 and 4 FTEs are notincluded in the sample, to minimise the administrative burden on very small businesses. The samplerotates so that, over time, the burden of reporting is divided evenly over the firms in each FTE group.

For the 1995 accounting year (defined as including the account closed during the period 1 May 1995to 30 April 1996), a sample was drawn of around 3 000 manufacturing firms, 1 200 construction firmsand 600 retail firms. These were all sent a questionnaire (Annex 3 shows the questionnaire for themanufacturing firms). Each firm can choose either to complete and return the questionnaire or tosend in specified accounts which include the same information. Around 45% of the firms chose thelatter possibility.

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Pharmacists are not included in the sample. They send accounting information toLægemiddelstyrelsen [the Medicinal Products Agency], which sends Danmarks Statistik copies. Thebreakdown used for some of the items is not the same as that used in Danmarks Statistik'squestionnaire, but adjustments are estimated.

The accounting information received is checked and errors are corrected. Checks include ensuringthat the accounts are internally consistent, as they should be, and that the information given by a firmis up to a certain point comparable with corresponding information from other firms in the samestratum and with any information given previously by the same firm. If it is considered necessary, thefirm is contacted to ensure that incorrect information is corrected.

Danmarks Statistik receives from Told&Skat copies of the standardised accounting information whichcorporations and the self-employed have to send in to the tax authorities and which is recorded in aspecial computerised register system (SLS-E). In addition to purely fiscal information, around 20major items are reported from each firm's profit and loss accounts and balance sheets. Some firms,however, including those with annual turnover below DKK 0.5 million, companies quoted on thestock exchange and ordinary partnerships, do not have to report to the SLS-E. These "tax accounts"are the main source for the "tax accounting statistics", but are also important input for thequestionnaire-based accounting statistics.

In addition to those firms included in the sample to which Danmarks Statistik sent questionnaires, in1995 accounting information was received from the SLS-E system covering around 10 500manufacturing firms, 12 300 construction firms and 14 000 retail firms.

The aim of the processing is to produce accounting figures in the degree of detail on the questionnairefor each individual firm whose main activity is in manufacturing, construction or retail trade andwhich has been active during the calendar year.

The processing is in stages:

1. From the information reported at questionnaire level by the firms selected for the sample,distribution figures are worked out for each stratum, to be used to calculate accounting items forthose firms for which only SLS-E information is available - cf. point 2.

2. In the case of those firms for which only SLS-E information is available, the main profit and lossitems from that information are "frozen" for each individual firm and the extra accounting itemsincluded on the questionnaire are imputed from stratified distribution figures based on those firmswhich have reported on the questionnaire.

3. On the basis of the above two groups, accounting figures are then calculated for each stratum perFTE for each accounting item on the questionnaire. The calculations are corrected for items suchas the owners' input of labour in firms which are personally owned. These accounting figures areused to calculate the figures for the remaining group of firms which have to be included in thestatistics but where only the branch, form of ownership and number of FTEs are known. Thisremainder group consists of around 12 800 manufacturing firms, 12 400 construction firms and 17100 retail firms, virtually all of them fairly small. For example, just under three-quarters of themhave no paid employees.

The "questionnaire firms" account for 71% of turnover, "SLS-E firms" for 22% and "remainder groupfirms" for 7%.

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Figure 2 Degree of coverage in the questionnaire-based accounting statistics

Number of firms and their sales divided by source

0

25

50

75

100

Remaindergroup

SLS-E

Questionnaire

%

SalesFirms SalesFirmsSalesFirms SalesFirms

Manufacturing ConstructionRetail trade Total firms

As Figure 2 shows, Danmarks Statistik's new questionnaire-based accounting statistics haveextremely high coverage in the form of accounts which are actually observed. This is due to thecombined use of questionnaires and the SLS-E tax accounts. One characteristic of manufacturing isthat the great majority of activity is carried out in firms with 50 or more employees, which all receivea questionnaire from Danmarks Statistik. In non-manufacturing, small and medium-sized firms aremuch more important and the SLS-E accounts therefore carry much greater weight in the totalaccounting figures underlying the accounting statistics.

Taking together the three main groups of industry which in 1995 were covered by the new accountingstatistics for the Structural Regulation, only 7% of turnover has to be imputed. This high degree ofcoverage is achieved without sending questionnaires to firms with fewer than five annual FTEs, i.e.attaching great importance to not overburdening small-business respondents.

2. Tax accounting statistics

The main basis for these statistics is the standardised accounting information which corporations andthe self-employed have to report to the tax authorities and which is recorded in a special computerisedregister system, Statens LigningsSystem for Erhvervsdrivende (SLS-E).

The reporting unit is the firm, i.e. the legal unit, as determined by form of ownership, i.e. corporationswith share capital, private companies, cooperative associations, partnerships or sole proprietorships.

The obligation to submit returns took effect with the 1986 income year. Since then, variousrestrictions have been introduced, some reducing the amount of detail required and some cutting backthe number of firms obliged to report.

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The most important exemptions from the reporting obligation are:

- firms with net turnover below DKK 500 000 in the current or previous income year;- companies quoted on the stock exchange;- partnerships;- financial intermediation [commercial and savings banks], and- firms which started up or ceased trading during the income year.

The basic data for 1995 include SLS-E information on around 90 000 firms.

Since in some branches (other than manufacturing, construction and retail trade), the basic data do notinclude information on certain major firms (more especially listed companies), accountinginformation for just under 50 firms has been added from other sources, in particular official annualaccounts from Erhvervs- og Selskabsstyrelsen [the Danish Commerce and Companies' Agency]. Toconvert this additional information to the same accounting plan as is used for the SLS-E, a fewbreakdowns have to be estimated.

The degree of coverage of SLS-E accounts and additional annual accounts for those national accountsindustries where tax accounting statistics are the (main) source for the estimate of value added isshown in the table below, divided into coverage via SLS-E tax accounts and coverage viasupplementary annual accounts. The degree of coverage is calculated in relation to the VAT sales offirms whose main activity is in the industry in question, multiplied by 0.98. Experience suggests that,for market activity in urban industries∗, around 98% of VAT sales - which include sales of usedcapital goods, of course - are on average relevant to national accounts.

∗ i.e. all except agriculture, fishing and forestry.

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Table 29 Degree of coverage in tax accounting statistics

Industry Text Sales Covered by Covered byDKKmillion

SLS-E,%

annualaccounts, %

Totalcoverage, %

501009 Sale of motorvehicles

60 524 79 0 79

502000 Repair andmaintenance ofmotor vehicles

12 774 100 0 100

505000 Service stations 10 047 79 0 79510000 Wholesale trade 263 182 61 12 73551009 Hotels 4 288 67 0 67553009 Restaurants 9 321 53 0 53602209 Taxi operation

and coach services3 230 75 0 75

602409 Freight transportby road

18 590 76 2 78

630000 Supportingtransport activities

21 384 61 1 62

703009 Real estate agents 2 517 70 0 70710000 Renting etc. 4 140 62 0 62720000 Computer and

related activities8 693 46 16 62

741100 Legal activities 1 921 42 0 42741200 Accounting 3 511 45 0 45742009 Consulting

engineers etc.11 369 49 3 52

744000 Advertising 8 721 73 0 73747000 Industrial cleaning 3 257 53 26 79748009 Business activities

n.e.c.8 520 75 0 75

851209 Medical etc.activities

6 422 53 0 53

920000 Recreationalactivities

3 741 73 5 78

930009 Service activitiesn.e.c.

2 481 52 13 65

Total 468 632 64 8 72

For those industries where tax accounting statistics are the source for the national accountscalculations, the degree of coverage for accounts actually observed averages 72%, and the imputedshare is therefore 28% (average). This degree of coverage must be considered particularlysatisfactory, considering that the accounting figures in the tax accounting statistics are representativeof all forms of ownership and size groups and include service industries, where there are many smallenterprises.

Whilst the figures are grossed up to the total population in the primary statistics, this does not meetnational accounts requirements as regards either the concept of sales or stratification for the nationalaccounts institutional sectors. Danmarks Statistik's National Accounts Division does not, therefore,

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use the grossed up statistics, but receives from the Primary Statistics Division complete accountingfigures at the level of individual firms (around 90 000 accounts) and then stratifies and grosses up thefigures for national accounts purposes in its own calculation systems.

For this grossing up, a special edition of VAT statistics is used, known as JUR-VAT, indicating thatVAT sales are aggregated/split into legal units, i.e. firms, the units in tax accounting statistics. VATlegislation allows firms/company groups to elect to remit VAT at a unit level which is either lower orhigher than firm level. The two arrangements are called "partial registration" and "joint settlement".By far the most common option is for firms to register a special unit for their export sales, since theythus gain a liquidity advantage. In JUR-VAT (as in ordinary VAT statistics), these partialregistrations are netted out and, in addition, in the JUR-VAT file units which settle VAT jointly aresplit into the individual firms.

The accounting figures are stratified in the national accounts grossing-up by detailed DK-NACEindustry, the institutional sector of the firm (S.11 or S.14) and two size groups measured in terms ofJUR-VAT sales. Within each DK-NACE industry, firms are split into four groups: a) largecorporations, b) small corporations, c) large firms which are sole proprietorships and d) small firmswhich are sole proprietorships. "Large" and "small" are defined by reference to the median sales ofcorporations/sole proprietorships respectively in JUR-VAT. For each individual firm in the taxaccounting figures and the supplementary accounts, the appropriate VAT sales are obtained bymatching with the JUR-VAT register at firm number level. In this context, partnerships are classifiedas corporations, in accordance with the national accounts sectoral delimitation.

The figures for each stratum are grossed up by calculating the ratio:

stratumtheinfiguresaccountingtheinfirmsinsalesVATJUR

stratumtheinpopulationtheinsalesVATJURA

−−=

This "A ratio" is then used as the grossing factor for the aggregated firm accounts within the stratum,to gross the figures to the total population. One advantage of this grossing procedure is that the "netsales" in the accounts, which correspond to sales in the national accounts sense, are grossed up usingVAT sales as the raising variable. Experience has shown that net sales and VAT sales correlate veryclosely.

3.1.2.3.6Periodisation

1. Questionnaire-based accounting statistics

In the case of enterprises covered by the questionnaire survey, the statistics for year t cover firmswhose accounting year closes between 1 May of year t and 30 April of year t+1. Firms whose SLS-Eform is used for the statistics are included for year t if they close their accounts between 1 April ofyear t and 31 March of year t+1.

Questionnaire-based sales figures for 1995, broken down by month, are shown in Table 30. If themain groups of industry covered, namely manufacturing, construction and retail trade, are looked at asa whole, the 1995 distribution of sales would appear in itself to indicate a slight difference comparedwith the calendar year (minus just under one month). But the figures include a number of firms whichwere not operating throughout the year and which therefore tend to shift the average accounting yearforward. The opposite case, namely firms which cease trading, is not included in the sample, for

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obvious reasons. Overall, the accounting statistics' questionnaire-based figures must be considered agood approximation of a calendar-year-based estimate.

Table 30 Closing month for accounts in the accounting statistics questionnaire-based survey

Month when accounts close Number of firms SalesJanuary 10 417 986February 9 3 160 494March 76 5 233 023April 510 37 048 584May 97 7 304 782June 780 33 170 492July 31 1 979 068August 45 24 155 667September 664 91 639 015October 49 19 420 259November 15 2 261 957December 3053 285 917 256

These statistics are not periodised for use in national accounts. For one thing, they are considered toapproximate closely in practice to a calendar-year estimate, and for another there are two factorswhich speak against any attempt to produce an absolutely exact calendar year periodisation ofaccounting statistics. Firstly, there are a good many SLS-E forms on which the accounting period isnot stated, and secondly more accurate periodisation would require accounts for both year t and yeart+1 to be available when statistics for year t were produced, which would delay the calculation of thefinal national accounts.

For that share of the figures which comes from SLS-E forms, the breakdown of turnover by monthwhen the accounting period ends is not known, since a good many firms have not filled in theaccounting year box on the SLS-E form. Whilst the firms in question might possibly all havecalendar-year accounts, this hypothesis would seem unlikely. For firms covered by the SLS-E, theaccounting period for the accounts included is one month different from the period for thequestionnaire-based firms.

If we take as the basis the known distribution by month of sales in the manufacturing, constructionand retail firms covered by the questionnaire, as shown in Table 30, then the difference in theaccounting period compared with the questionnaires would appear on the face of it to indicate aconsiderably larger shift away from the calendar accounting year in the SLS-E figures than in thequestionnaire figures. However, we know from a survey for the 1987 accounting year that small andmedium-sized firms are more likely than large firms to have calendar-based accounting years. Since itis mainly small and medium-sized firms which are covered in the statistics by SLS-E accounts, it maybe assumed that the periodisation of the SLS-E share of the figures is in practice closer to the calendaryear delimitation than Table 30 - viewed in isolation - would suggest.

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As was the case with the questionnaire part of the accounting figures, it is also true that new firmswhich have calendar year accounts exert a pull in the opposite direction to the (slight) deviationcompared with the calendar year which is indicated by the 31 March cut-off date for the accountsincluded.

2. Tax accounting statistics

As is the case with the questionnaire-based accounting statistics, the cut-off date for the accountswhich are included in the statistics, viewed in isolation, exerts a pull towards the previous calendaryear in the estimate of activity. However, this must be seen against the effect that new firms have onthe accounting figures, which would normally lead to a shift forward in time compared with thecalendar year.

It may be assumed that many new enterprises which have not been in operation throughout the yearsend in the SLS-E accounting form even though they are not obliged to do so, since the SLS-Eaccounts tie in so closely with the income tax returns of corporations and sole proprietors that they arein many cases filled in along with the income tax returns, purely as a matter of course - especiallywhen firms of auditors are involved. For new enterprises with calendar year accounts, which are themost common, the inclusion of accounts for the first year of operation - on average, approximately thelast six months' sales - in the calendar year in question will shift the average accounting period awayfrom the calendar year. In this connection, new enterprises do not just mean "new economic activity".They may also be formed from the restructuring of established firms and company groups. There isno information available on the size of the amounts involved.

In view of the above two opposing shifts in the SLS-E figures compared with the calendar year, it wasdecided not to periodise the statistics. The view is taken that the accounts included in the statisticsare, overall, the best possible estimate of the accounts on a calendar year basis. No more exactperiodisation is possible, since a substantial share of the firms involved, as already mentioned, do notcomplete the accounting period field on the SLS-E accounting form.

There is also the practical point that accurate periodisation would require statistics for both year t andyear t+1 to be available when the statistics were worked out for year t, and this would delay theestimate of the final national accounts.

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3.1.2.3.7National accounts processing of the grossed up general accounting statistics, consistencycheck and transition from firm branches to national accounts industries

3.1.2.3.7.1Questionnaire-based accounting statistics received from primary statistics

For years 1995 to 1997, the statistics cover all DK-NACE industries from 140000 to 370000,construction industries from 451100 to 455000 and retail trade and repair industries from 521110 to527490. Within these areas, accounting statistics have exhaustive coverage, which means that allenterprises which have been active during the calendar year ought to be included.

Complete coverage of the above-mentioned DK-NACE industries also means that the former "craftbranches" within manufacturing are now covered by accounting statistics. As long ago as thechangeover to DK-NACE industries in the accounting statistics for manufacturing in 1993, coveragewas extended to include publishing activities, apart from the publishing of sound recordings 221110-221340 and 221500. The new questionnaire-based accounting statistics from 1995 also cover158120, bakers' shops, 221400, the publishing of sound recordings, 2851, the treatment and coating ofmetals, 285200, general mechanical engineering on a fee or contract basis, 291120, the repair of ships'engines, repair of machinery for agriculture and forestry, 316220, electrical engineering workshops,361120, furniture upholstery activities and 361490, the painting of furniture etc. The recyclingbranches 371000 and 372000 are now also covered.

The population in the new accounting statistics is based on a business register extract from November1995, plus units which were not found on the date when the data were extracted, but which wereactive during 1995.

The questionnaire-based accounting statistics are received from the Business Structure Division inthree parts:• a firms file, which includes accounting information for firms with a firm branch within the

industries covered;• a workplace file, which consists of accounting information for workplaces (producer units) with

kind-of-activity unit codes within the industries covered;• a file with summary information on workplaces with kind-of-activity industries which are not

covered by accounting statistics but which belong to firms with a firm branch within the scope ofaccounting statistics, referred to below as the "remainder file". This contains only information onthe JUR number/workplace code, kind-of-activity industry, firm branch and FTEs for theworkplaces in question.

The three parts are set out in Figure 3.

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Figure 3 Overview of the coverage of workplaces in files from primary statistics

Workplace

Firm

Workplaces within thescope of the accountingstatistics

Workplaces outside thescope of the accountingstatistics

Firms withinthe scope ofthe accountingstatistics

1.Go into the firm fileGo into the workplacefile

2.Go into the firm fileGo into the "remainder"file

Firms outsidethe scope ofthe accountingstatistics

3.Go into the workplacefile (FBRUDE units)

4.

Logically, it is the firms and workplaces in areas 1 and 2 which together make up the questionnaire-based accounting statistics supplied to the intermediate system in terms of both firms and workplaces.Area 3 includes workplaces which belong to firms outside the scope of the questionnaire-basedaccounting statistics, typically those which belong to the tax accounting system. As was the caseprior to 1995, it was decided in the case of these workplaces to use the information which can becompiled in the accounting statistics system. To avoid inconsistencies with the breakdown of thefirms in question in the tax accounting statistics system, the accounting information calculated here isremoved from the tax accounting system's firm-level information before the remainder is brokendown by kind-of-activity branch outside the scope of the questionnaire-based accounting statistics.The units in question are called, technically, FBRUDE, which is explained later. In principle, area 4should be blank. If there is anything here, it is because the branch allocation of some of theaccounting statistics workplaces has been corrected.

The firm file contains the most information, with only the county and municipality codes omitted. Ofcourse, balance sheet items and items for property income transactions are missing from theworkplace file, but information on wages and salaries etc. and indirect production costs is alsomissing from this file. The Table below shows which items occur in each of the files when they arereceived from the Business Structure Primary Statistics Division. The right-hand side of the tableshows the MLS [intermediate system] code in those cases where the items translate directly to thiscoding.

117

Table 31 Questionnaire-based accounting statistics at firm level and workplace levelLabel Variable # in firm

record# in

work-placerecord

MLS-code

MLS-text

JUR number (also in "remainder") JURNR 1 1Workplace code (also in "remainder") AKODE 2DB93 branch (also in "remainder") BRANCHE 2 39-branch code BRA009 3 427-branch code BRA027 4 553-branch code BRA053 5 6111-branch code BRA111 6 7Firm's main branch (also in"remainder")

F_DB93 8

Ownership code EJKOD 7 9Combination code KOMB 8 10County code AMTKOD 11Municipality code KOMKOD 12Accounting period PERIOD 9Record entry code JKOD 10FTEs (also in "remainder") VAERK 13FTEs AARSV 11Number of employees BESK 12Sales OMS 13 14Own-account work AUER 14 15 1012 Manuf. of plant and machinery for

own useOther operating income ADR 15 16 1019 Other, secondary operating incomeDifference in inventories DLG 16 17Purchases of goods, ancillary materialsand packaging

KRH 17 18

Purchases of energy (excludingrunning of vehicles!)

KENE 18 19 2013 Purchases (consumption) of fuel andpower

Purchases of processing to order KLOE 19 20 2014 Purchases of processing to orderand subcontracting

Rental expenditure UDHL 20 7020 Expend. on rentals excludingheating

Expenditure on the acquisition ofconsumables etc.

UASI 21 7025 Expenditure on consumables

Ordinary bad debts OTDE 22 7026 Ordinary bad debtsOther external expenditure (incl.running of vehicles)

OEEU 23 7042 Other external expenditure

Wages and salaries LGAG 24 4015 Wages/salaries & employer contribs.Expenditure on pensions PUDG 25 4016 Expenditure on pensionsOther expenditure on social security AUDG 26 4017 Other staffing expenditureWriting off and writing down of tangibleand intangible assets

ANMI 27 5100 Writing off and writing down of non-financial fixed assets

Writing down of current assets NOAK 28 5200 Writing down of non-fin. currentassets

Secondary expenditure SEUD 29 7060 Other operating expenditureProfit/loss before financial andextraordinary items

RFEP 30

Income from lasting interests INKI 31 4030 Income from lasting interestsOther return on financial fixed assets UDFA 32 4032 Other interest and dividend incomeInterest etc. received from financialfixed assets

RIFA 33 4032 Other interest and dividend income

Interest etc. received from currentassets

RIOM 34 4031 Interest etc. rec. from current assets

Writing down of financial fixed andcurrent assets

NFAO 35 5300 Writing down of financial assets

Interest paid etc. RUDG 36 4040 Interest paidExtraordinary income EOI 37 1060 Extraordinary incomeExtraordinary expenditure EOU 38 7061 Extraordinary expenditureAnnual pre-tax profit/loss ARFS 39Corporation tax on annual profit/loss SSAR 40 4041 Corporation taxAnnual profit/loss AARE 41 4043 Profit/loss for tax purposesConsolidation, i.e. trans. to/from equity KEGN 42Dividends UDBY 43 4044 Distributed incomeIntangible fixed assets, total IAAT 44 8110Label Variable # in firm # in work- MLS- MLS-text

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record placerecord

code

Land and buildings GRBY 45 8120 Land and buildingsTechnical plant and machinery ATAM 46 8121 Technical plant and machineryOther plant, machinery and equipment AADI 47 8122 Other plant, machinery and

equipmentAdvance payments and tangible fixedassets etc.

FMAA 48 8129 Other tangible fixed assets (e.g.advances)

Tangible fixed assets, total MAAT 49Amounts outstanding TILG 50 8130 Financial fixed assetsHoldings of shares and equity ABAE 51 8130 Financial fixed assetsHoldings of bonds and other securities ABOA 52 8130 Financial fixed assetsFinancial fixed assets, total FAAT 53 8130 Financial fixed assetsFixed assets, total AAT 54Raw materials, ancillaries, fuel andpackaging (opening stocks)

PRHB 55 21 5060 Opening stocks of raw materials

Raw materials, ancillaries, fuel andpackaging (closing stocks)

URHB 56 22 6060 Closing stocks of raw materials

Work in progress (opening stocks) PVUF 57 23 5065 Opening stocks of finished goodsWork in progress (closing stocks) UVUF 58 24 6065 Closing stocks of finished goodsManufacture of finished goods andgoods for resale (opening stocks)

PFFH 59 25 5061 /5062 /5065

Opening stocks of finished goods

Manufacture of finished goods andgoods for resale (closing stocks)

UFFH 60 26 6061 /6062 /6065

Closing stocks of finished goods

Ongoing work for account of others(opening stocks)

PIAF 61 27 5065 Opening stocks of finished goods

Ongoing work for account of others(closing stocks)

UIAF 62 28 6065 Closing stocks of finished goods

Advance payments, purchased goods(opening stocks)

PFKV 63 29

Advance payments, purchased goods(closing stocks)

UFKV 64 30 8149 Other current assets

Total stocks of goods (opening) POAT 65 31 8141 Opening stocksTotal stocks of goods (closing) UOAT 66 32 8142 Closing stocksAmounts outstanding from sales ofgoods and services

TSVT 67 8149 Other current assets

Other claims ANTI 68 8149 Other current assetsTotal claims TGT 69 8149 Other current assetsHoldings of shares and equity OBAE 70 8149 Other current assetsHoldings of bonds and other securities OBAV 71 8149 Other current assetsLiquidity holdings LIBE 72 8149 Other current assetsSecurities and particip. interests, total VKT 73 8149 Other current assetsTotal current assets OMAT 74 8149 Other current assetsTotal assets AT 75Equity, closing stocks EGUL 76 8210 EquityProvisions HENS 77 8220 ProvisionsLong-term debts to suppliers LGL 78 8230 Long-term debtsOther long-term debts ALG 79 8230 Long-term debtsShort-term liabilities to suppliers KGL 80 8240 Short-term liabilitiesOther short-term liabilities AKG 81 8240 Short-term liabilitiesTotal liabilities PAST 82Intangible fixed assets (additions) TIAA 83 6102 /

6110Software bought in/purchases ofintang. assets, other and unspecified

Purchases of existing buildings(including land value)

KEB 84 33 6121 Purchases of existing buildings(including land value)

Construction expenditure, new building(excluding land)

OPNY 85 34 6123 Construction of new buildings(excluding land value)

Purchases of unbuilt land KUBG 86 35 6122 Purchases of unbuilt landRebuilding and improvements tobuildings and installations

OFBB 87 36 6124 Rebuilding and improvements tobuildings

Roads, ports, open spaces, etc. VHPK 88 37 6125 New layout and rebuilding of roads,ports, etc.

Total real estate (additions) FET 89 38Technical plant and machinery(operating equipment)

DTAM 90 39 6134 Purchases of plant and machinery,other and unspecified

Other plant, machinery and equipment(additions)

TAAD 91 40 6134 Purchases of plant and machinery,other and unspecified

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Label Variable # In firm-record

#Workplace record

MLS-code

MLS-text

Total plant and machinery (additions) TDRT 92 41Total additions ATIT 93 42Intangible fixed assets (disposals) AIAA 94 6202 /

6210Disposals of software/intangibleassets, other and unspecified

Sales of buildings (including landvalue)

SABY 95 43 6221 Sales of existing buildings (includingland value)

Sales of unbuilt land SUBG 96 44 6222 Sales of unbuilt landSales of roads, ports, open spaces,etc.

SVHP 97 45 6223 Sales of roads, ports, open spaces,etc. (including land value)

Total real estate (disposals) FEGT 98 46Sales of technical plant and machinery STAM 99 47 6234 Sales of plant and machinery, other

and unspecifiedSales of other plant, machinery andequipment

SADI 100 48 6234 Sales of plant and machinery, otherand unspecified

Total plant and machinery (disposals) ADRT 101 49Total disposals AFAT 102 50Sales (goods for resale) HOMS 103 51 1016 Sales of goods for resalePurchases (goods for resale) HKOB 104 52 Goods for resale, purchasesOpening stocks (goods for resale) HLPR 105 53 5066 Opening stocks of work in progress

for resaleClosing stocks (goods for resale) HLUL 106 54 6066 Closing stocks of work in progress

for resaleEstimated sales of goods for resale AOH 107Estimated profit as % of sales of goodsfor resale

AAH 108

Total financial leasing expenditure inthe accounts

RSUF 109 7057 Correction for gross leasing taxes(negative in the intermediatesystem)

Real estate (financial leasing) FLFE 110Technical plant and machinery(financial leasing)

FTAM 111

Other plant, machinery and equipment(financial leasing)

FADI 112

UDV111 113

In the questionnaire-based accounting statistics, questions are asked about purchases (as opposed toconsumption) of raw materials and auxiliaries, finished goods and packaging, and for this reason theprevious intermediate system items for the consumption of these goods cannot be derived directlyfrom the accounting statistics files but can be worked out via a correction to changes in inventories(which thereafter can be the changes in inventories for national accounts purposes).

The questionnaire-based accounting statistics make a distinction between expenditure on rentals,consumables and ordinary losses on bad debts in special items, cf. Table 32.

Table 32 Special costs specification in the questionnaire-based accounting statistics

Text Gl. RSI 1983-94 New RG-stat Costs surveyRental expenditure Part of P06 UDHL OMKp31, part of p32,p33,p34,p35Expenditure on acquisitions ofconsumables etc.

Part of P06 UASI OMKp49

Ordinary losses for bad debts Part of P06 OTDE OMKp47

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"Gl. RSI" refers to the former accounting statistics for manufacturing, which as from 1995 werereplaced by the general questionnaire-based accounting statistics. For the processing of theaccounting statistics, it was decided to keep all information on the individual firms and workplaces upto the stage at which the processed statistics are put into a form such that they can be input into theintermediate system. The format and coding from the accounting statistics are also retained until thisstage, to ensure that no information which might later be utilised for other purposes is lost. Thismeans, for example, that the geographical coding in the processed accounting statistics could be usedto compile regional accounts.

3.1.2.3.7.2Processing of the questionnaire-based accounting statistics

3.1.2.3.7.2.1Correcting the workplace and firm file

The logical first stage in the processing is to input corrections to the records for firms and workplaceswhich are received from the Primary Statistics Division. In 1995, we had to start by recoding thebranch allocation of enterprises which should be counted as foundries and the manufacture ofpesticides, since these branches had in fact been deleted from the primary statistics as from 1993owing to a few doubtful criteria. All the figures in records from firm, workplace or remainder filescan be corrected at this stage, and in practice most of the system for processing the accountingstatistics was run through several times, as more and more problems were identified and corrected.

3.1.2.3.7.2.2Collection of firm and workplace information

For both firms and workplaces, a few items are calculated which were not originally in the files: salesof own products, purchases of raw materials (excluding goods for resale), opening and closing stocksof finished goods and approximate output value and acquisitions of buildings (the latter for use withthe breakdown of various figures from the firm information into workplaces). In addition, the firmfile information on the firm branch is moved to variable F DB93, so that this variable overallindicates the firm branch. These items are kept in the files throughout the further processing.

Table 33 Items calculated to supplement the accounting statistics filesLabel Variable # in the

firmrecord

# in work-placerecord

MLS-code

MLS-text

Sales of own products EOMS New New 1018 Other and unspecified net salesPurchases of raw materials, ancillariesand packaging

RKOB New New 2015 Other and unspecified purchases(consumption) of raw materials

Manufacture of finished goods(opening stocks)

PFFV New New 5065 Opening stocks of finished goods

Manufacture of finished goods (closingstocks)

UFFV New New 6065 Closing stocks of finished goods

Approximate output value PROD New NewAcquisitions of buildings, total ABYGN New New

The workplace file is divided into one part which has a firm in the firm file (i.e. where the firm towhich the workplace belongs has a firm branch within the scope of the questionnaire-basedaccounting statistics) and a part which has a Firm BRanch outside (UDE) the firm file (FBRUDEpart). For example, a manufacturing producer unit (workplace) belonging to a firm whose mainactivity is wholesaling occurs in the FBRUDE part. This is because wholesaling is not covered by thequestionnaire-based accounting statistics. For wholesaling, the statistical source is the tax accountingstatistics and the national accounts calculations for this group of industries are carried out in anothercalculation system, namely the tax accounting system.

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The firm file is correlated with the workplace file which has the firm branch covered by accountingstatistics. The remainder of the firm file, which ought to consist of workplaces outside the scope ofthe questionnaire-based accounting statistics, is calculated as a residual, as the firm data minus thesum of workplace data for the same firm. Records with suspect residuals are printed out. Prior to thecorrelation, various workplaces (mainly independent cooperatives) have to be combined into a jointJUR-NR, which is used in the firm file for these units. A file with these workplaces is received everyyear from the Business Structure Division (primary statistics), but the original JUR-NR is also kept inthe record.

The firm file remainders which are not found in the workplace file are correlated with the "remainder"file from the primary statistics division. Those firm remainders which are not found here are printedout so that we can decide whether the firm information needs to be corrected. Once we haveconsidered all cases where workplaces have a corresponding combined JUR-NR in the firm file, theremainder are mainly random differences with sales = 0. Conversely, we look for remainderworkplaces which do not have a corresponding firm remainder. These are usually units with no FTEs- or very few. Warnings are also printed out if the firm file remainder has a number of FTEs which isdifferent from the same firm's FTEs according to the "remainder" file, or if the firm's remainder salesare negative or the figure is otherwise suspect.

In 1995, there were a number of cases where the firm's sales were less in the firm statistics than in theworkplace statistics1. In these cases, it was mostly the workplace figures which were the mostcredible. Cases of conflicting economic data also came to light, along with cases where workplaceswhich had changed owners during the period came up several times under different JUR numbers.

It is important when compiling the final national accounts to establish the correct relationshipsbetween firms and the workplaces which belong to them, partly because many of the firm statisticsitems have to be divided up over workplaces and partly because - as was shown clearly during thework on the files - a large number of errors are revealed during the process, many of them relating tosome of the country's larger company groups.

Once input data have been corrected for obvious major errors, economic magnitudes can be allocatedto the "remainder" file's workplaces. Where a firm has more than one "remainder" workplace, thefigures calculated as residuals are divided up by unit on the basis of the FTEs in the "remainder" file.These workplaces are the accounting statistics' contribution to the intermediate system's industriesoutside the scope of the questionnaire-based accounting statistics (disregarding any subsequentcorrections to the branch allocation of workplaces).

1 The main reason is that the firm statistics were published before the workplace statistics processing was complete.In many cases, the final breakdown of the firm was not fixed at that point, and so a greater or lesser share of thefirm's internal flows were input into the workplace file's total sales and purchases for the firm. The PrimaryStatistics Division supplied the National Accounts Division with a list of firms with known problems of this kind.In the meantime, it has been decided that in the future the definitive firm statistics will be compiled after theworkplace statistics.

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3.1.2.3.7.2.3Recoding of workplace industries which conflict with firm branches

When firm files and workplace files for 1995 were correlated, a large number of firms were foundwhich did not have workplaces in the firm branch. This somewhat suspect state of affairs arosebecause the two files were not based on the same versions of the business register extract. Eventhough it would have been less complicated to use the workplace file's branch coding, it was clear thatthe firm file's branch coding had to be assumed to be the more accurate and the one that most closelytallied with the industrial commodity statistics2. The following checking and correction procedure istherefore carried out.

The branch coding in the firm file is checked for a match with the file with workplaces which have afirm branch covered by the questionnaire-based accounting statistics. On the basis of the workplacefile, figures are worked out for kind-of-activity units, and for each firm (JUR-NR) information iscompiled on the composition of output value by DK-NACE industry (here, the variable previouslyworked out for approximate output value is used). The workplace information is combined with thefirm file information. If a firm consists of a single kind-of-activity unit, the firm branch is transferredas the workplace branch for all the firm's workplaces. This is the most common situation. In othercases with conflicting branch coding, the workplace branch is corrected for the workplaces in thelargest (or next largest) kind-of-activity unit when this will make the branch coding in the files tally.In more complicated cases, we could not justify correcting the branch allocation automatically.Checklists are printed out, showing the firm with the breakdown by workplace before and afterrecoding. If the automatic recoding is considered improbable, the input data are instead correctedmanually.

The problem with conflicting branch allocation in the firm and workplace files was - like otherrunning-in problems - much greater in 1995 than in the following years. The above example showsthat, via its own checking procedures, the National Accounts Division improves the quality of thedata in the primary statistics.

3.1.2.3.7.2.4Breakdown of firm entries by workplace

Some of the items for which there is information in the firm file only are considered in the nationalaccounts to be workplace-related. These items are distributed over the firm's workplaces. Before thatdistribution, steps are taken to reconcile various items which occur in both the firm and the workplacefiles and which are to be used during the later calculation process. At this stage in the calculation it isassumed that the input data are corrected so that firm items can be calculated as the sum of the itemsfor the workplaces which belong to them.

The following items are added to the workplace file:

2 The firm statistics were compiled on the basis of a register version in which the units' branch allocation had beenthoroughly revised. Here, many units in manufacturing had changed branches after an assessment of the productcomposition in the commodity statistics. By the time we managed to work out workplace statistics, this registerversion had been lost, and there was no time to reconstruct it. We therefore had to go back to a version whichwas a simple extract from the business register.

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Table 34 Accounting items divided over workplaces belonging to a given firmLabel Variable # in firm

recordDivided up/grossed up in workplace

record, preferably pro rata with:

Accounting period PERIOD 9 TransferredRecord entry code JKOD 10 TransferredNumber in employment BESK 12 VAERKRental expenditure UDHL 20 OMS-HKOBExpenditure on the acquisition of consumablesetc.

UASI 21 OMS-HKOB

Ordinary losses, bad debts OTDE 22 OMSOther external expenditure (including the runningof vehicles)

OEEU 23 OMS-HKOB

Wages and salaries LGAG 24 VAERKExpenditure on pensions PUDG 25 VAERKOther expenditure on social security AUDG 26 VAERKAcquisitions of intangible assets TIAA 83 TDRTDisposals of intangible assets AIAA 94 ADRTTotal expenditure on financial leasing in theaccounts

RSUF 109 OMS-HKOB

Real estate (financial leasing) FLFE 110 KEB+OPNYTechnical plant and machinery (financial leasing) FTAM 111 DTAMOther plant, machinery and equipment (financialleasing)

FADI 112 TAAD

The calculation is in two stages, the first for those workplaces which belong to firms within the scopeof the questionnaire-based accounting statistics. Here, the work consists in dividing up the entriesrelating to the individual firm among the firm's workplaces. Wherever possible the figures aredistributed pro rata with the above-mentioned variables. If any of these variables is nil and istherefore not suitable for breakdown, the program will use default solutions such as a distributionbased on sales or FTEs. Checks are also made to ensure that no impossible figures arise, such asnegative consumption of raw materials or goods for resale.

The missing items are then added to those workplaces which belong to firms outside the scope of theaccounting statistics (FBRUDE units), wherever possible on the basis of the ratios in thesupplemented workplace records belonging to the same DK-NACE industries. The workplaces areallocated a share of the item which is used as the basis for the comparison, corresponding to theaverage from the records completed earlier for non-FBRUDE workplaces. Default solutions are usedhere, too, if the preferred basis for comparison is not available. If calculation based on the DK-NACEindustry is impossible because the branch contains only FBRUDE workplaces, a comparison with theworkplace's NR130 branch is used for the calculation instead.

3.1.2.3.7.2.5When trading activity is included

During the above stages, records are completed for all the accounting statistics workplaces. Thisedition of the workplace statistics cannot be transferred directly to the intermediate system, sincetrading activity is still scattered around in DK-NACE industries other than trade.

Each workplace outside the trade industries is now broken down into trade and other activity on thebasis of the entries for trade sales and purchases and for opening and closing stocks of goods forresale. These are transferred in full to the trade part. A share of intermediate consumption is alsotransferred, along with shares to the BESK-, OTDE-, LGAG-, AUDG-, PFKV- and UFKV- as well

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as PRHB- and URHB- variables. Here, it is only the last two, opening and closing stocks of rawmaterials, which have any importance for the figures used during later stages.

The file with trade included, broken down into DK-NACE industries, is retained. For use in the taxaccounting system and the intermediate system, a file is set up in which the trade included is as a rulerecoded to branch 510008, but trade in branch 158120, bakers' shops, is allocated to branch 522410,sales of bread.

A new workplace file is set up, consisting of workplaces from which the trade element has beenremoved + the trade element separated out with a breakdown by workplace.

3.1.2.3.7.2.6Recoding to the intermediate system format

The intermediate system contains some information which refers to firm branches (institutional unitsgrouped by industry on the basis of main activity), whilst the rest refers to kind-of-activity unitindustries3. Each individual intermediate system [MLS] code refers to either firm branch or kind-of-activity industry information. It is with the transfer to files in the intermediate system format that theindividual data are removed from the figures aggregated here to data for DK-NACE industries/ESA95 sectors. The figures are already available in a breakdown into DK-NACE industries. The sectorcodes are based on the ownership code, EJKOD, with the following key:

3 For use in the compilation of institutional sector accounts, an alternative file is now compiled with the accountingstatistics' contribution to the intermediate system. Here, some extra MLS codes are added for property incometransactions and items relating to kind-of-activity units appear with both firm and kind-of-activity branch.

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Table 35 Connection between ownership codes and ESA 95 institutional sectorsEJKOD Sector EJKOD Sector

010 S14 Sole proprietorships 060 S11 Cooperative societies(may also be S.12)

013 S14 Sole proprietorships in liquidation 063 S11 Cooperative societies inliquidation

014 S14 Sole proprietorships subject to bankruptcyproceedings

064 S11 Cooperative societies subject tobankruptcy proceedings

021 S11 Ordinary partnerships 070 S13 Central government022 S11 Jointly owned shipping firms 081 S13 Counties [Amtskommuner]023 S11 Ordinary partnerships/jointly owned

shipping firms in liquidation082 S13 Municipalities [Primærkommuner]

024 S11 Ordinary partnerships/jointly ownedshipping firms subject to bankruptcyproceedings

091 S11 Associations (may also be S.15)

030 S11 Limited partnerships 092 S11 Foundations and "self-owning"institutions (also S.15)

033 S11 Limited partnerships in liquidation 093 S13 Danish National Church034 S11 Limited partnerships subject to bankruptcy

proceedings094 S13 National Church parish councils

041 S11 Corporations with share capital (A/S) beingset up

904 S13 Other public authorities(but also HT [the Copenhagen

Transport Authority], S.11)042 S11 A/S operating normally 905 S14 Estates of deceased or bankrupt

persons043 S11 A/S in liquidation 906 S14 Private households044 S11 A/S subject to bankruptcy proceedings 908 S11 Other owners n.e.c.045 S125 Insurance corporations with share capital 980 S11 Foreign enterprises051 S11 Private companies (APS) being set up 990 S14 Owners not known052 S11 APS operating normally 993 S14 Owners not known, in liquidation053 S11 APS in liquidation 994 S14 Owners not known, subject to

bankruptcy proceedings054 S11 APS subject to bankruptcy proceedings

Those items which have to be input at firm level are extracted from the accounting statistics firm part.The accounting statistics codes are transferred to the intermediate system, using the key shown here,and a file is printed out with firm data in the intermediate system format.

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Table 35a Transfer of items to the intermediate system [MLS] at firm levelLabel Variable % MLS-

codeMLS-text

Writing off and writing down of tangibleand intangible assets

ANMI 100.00 5100 Writing off and writing down ofnon-financial fixed assets

Writing down of current assets NOAK 100.00 5200 Writing down of non-financial currentassets

Secondary expenditure SEUD 100.00 7060 Other operating expenditureIncome from lasting interests INKI 100.00 4030 Income from lasting interestsOther return on financial fixed assets UDFA 100.00 4032 Other interest and dividend incomeInterest etc. received from fin. fixedassets

RIFA 100.00 4032 Other interest and dividend income

Interest etc. received from current assets RIOM 100.00 4031 Interest etc. received from currentassets

Writing down of financial fixed and currentassets

NFAO 100.00 5300 Writing down of financial assets

Interest paid etc. RUDG 100.00 4040 Interest paidExtraordinary income EOI 100.00 1060 Extraordinary incomeExtraordinary expenditure EOU 100.00 7061 Extraordinary expenditureCorporation tax on profit/loss for the year SSAR 100.00 4041 Corporation taxProfit/loss for the year AARE 100.00 4043 Profit/loss for tax purposesDividends UDBY 100.00 4044 Distributed incomeIntangible fixed assets, total IAAT 100.00 8110 Intangible fixed assetsLand and buildings GRBY 100.00 8120 Land and buildingsTechnical plant and machinery ATAM 100.00 8121 Technical plant and machineryOther plant, machinery and equipment AADI 100.00 8122 Other plant, machinery and

equipmentAdvance payments and tangible fixedassets etc.

FMAA 100.00 8129 Other tangible fixed assets

Amounts outstanding TILG 100.00 8130 Financial fixed assetsHoldings of shares and equity ABAE 100.00 8130 Financial fixed assetsHoldings of bonds and other securities ABOA 100.00 8130 Financial fixed assetsTotal financial fixed assets FAAT 100.00 8130 Financial fixed assetsAmounts outstanding from sales of goodsand services

TSVT 100.00 8149 Other current assets

Other claims ANTI 100.00 8149 Other current assetsTotal claims TGT 100.00 8149 Other current assetsHoldings of shares and equity OBAE 100.00 8149 Other current assetsHoldings of bonds and other securities OBAV 100.00 8149 Other current assetsLiquidity holdings LIBE 100.00 8149 Other current assetsSecurities and participatory interests, total VKT 100.00 8149 Other current assetsCurrent assets, total OMAT 100.00 8149 Other current assetsEquity, closing stocks EGUL 100.00 8210 EquityProvisions HENS 100.00 8220 ProvisionsLong-term debts to suppliers LGL 100.00 8230 Long-term debtsOther long-term debts ALG 100.00 8230 Long-term debtsShort-term liabilities to suppliers KGL 100.00 8240 Short-term liabilitiesOther short-term liabilities AKG 100.00 8240 Short-term liabilities

Similarly, those items which are to be input at kind-of-activity industry level are transferred from theaccounting statistics workplace section. Most of the intermediate system items can be worked outsimply on the basis of the accounting statistics codes in accordance with the following key:

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Table 36 Transfer of items to the intermediate system [MLS] at workplace level

Label Vari-able

% MLS-code

MLS-text

Sales of own products EOMS 100.00 1018 Other and unspecified net salesOwn-account work AUER 100.00 1012 Manu. of operating equipment for own useOther operating income ADR 100.00 1019 Other, secondary operating incomePurchases of raw materials, ancillary materialsand packaging

RKOB 100.00 2015 Other and unspecified purchases(consumption) of raw materials

Purchases of energy (excl. running of vehicles) KENE 100.00 2013 Purchases (consumption) of fuel and powerPurchases of processing to order KLOE 100.00 2014 Purchases of processing to order and

subcontractingRental expenditure UDHL 100.00 7020 Expenditure on rentals, excl. heatingExp. on the acquisition of consumables etc. UASI 100.00 7025 Exp. on consumablesOrdinary bad debts OTDE 100.00 7026 Ordinary bad debtsOther external expenditure (incl. the running ofvehicles)

OEEU Distrib. as in costs survey etc.

Wages and salaries LGAG 100.00 4015 Wages/salaries and employer contributionsExpenditure on pensions PUDG 100.00 4016 Expenditure on pensionsOther expenditure on social security AUDG 100.00 4017 Other staffing expenditure(1)Raw materials, ancillaries, fuel andpackaging (opening stocks)

PRHB 100.00 5060 Raw materials, opening stocks

(2)Raw materials, ancillaries, fuel andpackaging (opening stocks)

PRHB 100.00 2015 Other and unspecified purchases(consumption) of raw materials

(1)Raw materials, ancillaries, fuel andpackaging (closing stocks)

URHB 100.00 6060 Raw materials, closing stocks

(2)Raw materials, ancillaries, fuel andpackaging (closing stocks)

URHB -100.00 2015 Other and unspecified purchases(consumption) of raw materials

Work-in-progress (opening stocks) PVUF 100.00 5065 Finished goods, opening stocksWork-in-progress (closing stocks) UVUF 100.00 6065 Finished goods, closing stocksManufacture of finished goods (openingstocks)

PFFV 100.00 5065 Finished goods, opening stocks

Manufacture of finished goods (closing stocks) UFFV 100.00 6065 Finished goods, closing stocksOngoing work for account of others (openingstocks)

PIAF 100.00 5065 Finished goods, opening stocks

Ongoing work for acc. of others (closingstocks)

UIAF 100.00 6065 Finished goods, closing stocks

Advance payments, purchased goods (closingstocks)

UFKV 100.00 8149 Other current assets

Total stocks of goods (opening) POAT 100.00 8141 Opening stocksTotal stocks of goods (closing) UOAT 100.00 8142 Closing stocksPurchases of existing buildings (inc. landvalue)

KEB 100.00 6121 Purchases of existing buildings (includingland value)

Constr. expenditure, new building (excl. land) OPNY 100.00 6123 Constr. of new buildings (excl. land value)

Purchases of unbuilt land KUBG 100.00 6122 Purchases of unbuilt landRebuilding and improvements to buildings andinstallations

OFBB 100.00 6124 Rebuilding and improvements to buildings

Roads, ports, open spaces, etc. VHPK 100.00 6125 New layout and rebuilding of roads, ports,etc.

Tech. plant and machin. (operating equipment) DTAM 100.00 6134 Purch. of plant & machin., other & unspec.Other plant, machinery and equipment(additions)

TAAD 100.00 6134 Purch. of plant & machin., other & unspec.

Intangible fixed assets (additions) TIAA 100.00 6110 Software bought in/purchases of intangibleassets, other and unspecified

Intangible fixed assets (disposals) AIAA 100.00 6210 Disposal of software/ intangible assets,other and unspecified

Sales of buildings (incl. land value) SABY 100.00 6221 Sales of existing buildings (incl. land value)

Sales of unbuilt land SUBG 100.00 6222 Sales of unbuilt landSales of roads, ports, open spaces, etc. SVHP 100.00 6223 Sales of roads, ports, open spaces, etc.

(including land value)Sales of technical plant and machinery STAM 100.00 6234 Sales of plant and machin., other and

unspecified.Sales of other plant, machinery and equipment SADI 100.00 6234 Sales of plant and mach., other & unspec.Sales (goods for resale) HOMS 100.00 1016 Sales of goods for resalePurchases (goods for resale) HKOB 100.00 7019 Goods for resale, purchases

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Label Varia-ble

% MLS-code

MLS-text

(1) Opening stocks (goods for resale) HLPR 100.00 5061 /5062 /(5060)

Opening stocks of work-in-progress forresale

(2) Opening stocks (goods for resale) HLPR 100.00 7019 Goods for resale, purchases(1) Closing stocks (goods for resale) HLUL 100.00 6060 /

6061 /(6060)

Closing stocks of work-in-progress forresale

(2) Closing stocks (goods for resale) HLUL -100.00 7019 Goods for resale, purchasesTotal expenditure for financial leasing in theaccounts

RSUF -100.00 7057 Correction for gross leasing taxes (isnegative)

Since few enterprises have filled in the RSUF item "Total expenditure for financial leasing", this itemis in fact never used for the compilation of the intermediate system. It is replaced altogether by aseparate, transversal calculation of financial leasing covering the whole of the economy. On theother hand, it is clear from the text on the new reporting forms that equipment leased under financialleasing schemes should be included in the returns for capital formation. The question is how financialleasing is actually treated in the returns and the accounts. In the national accounts, it was decided toassume that accounting practice is moving closer to the national accounts treatment and that theaccounting figures to a large extent reflect the treatment in the enterprises' own accounts. For thisreason, the 1995 leasing correction (for services relating to financial leasing counted by the users aspurchases of services) has been scaled down to 2/3 of the previous years' level within the areacovered by the questionnaire-based accounting statistics4.

The accounting statistics item for "other external expenditure", OEEU, is divided up over a number ofMLS codes. Within most manufacturing industries, the division may, as hitherto, be based on thosedistributions which are compiled from the latest services enquiry, dating from 1992. The distributionkeys compiled on this basis are converted from DSE industries to DK-NACE industries in connectionwith the compilation of the manufacturing industry system for 1993 and 1994. Since thequestionnaire-based accounting statistics have now split rental expenditure, UDHL, consumables,UASI and ordinary bad debts, OTDE, into independent items, which they were not previously, thedistribution keys from the services enquiry have been revised so that the shares for these items are nolonger included. At the same time, account has been taken of the fact that a share of the OEEU itemis motor vehicle fuel. The revised distribution keys are compiled only for national accountsindustries, and so for each DK-NACE industry the key for the national accounts industry in which itis included is used.

4 A further argument in favour of a smaller leasing correction is that in many branches the correction had becomelarger than 202: renting and leasing prior to correction. However, the fact that this item results from distributionkeys which are based on the 1992 services enquiry, which is not exactly topical, must be taken into account.

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Table 37 Percentage shares of the OEEU item. Examples from the services enquiryindustries

National accounts industry: 140009 1510000 152000 153000 154000 155000MLS-code

4046 Exp. on insurance 2.67 3.38 3.72 2.27 3.17 2.126102 Software bought in 0.38 2.85 0.52 2.83 0.28 1.246121 Purchases of existing buildings 0.44 0.53 0.17 0.23 0.17 0.047021 Renting and leasing of

machinery0.79 1.51 1.60 5.20 2.63 1.72

7022 Renting and leasing of motorvehicles

0.03 0.06 0.03 0.09 0.11 4.15

7023 Renting and leasing of computerequipment

1.14 0.40 0.54 2.45 2.01

7024 Other and unspecified rentingand leasing

0.64 0.63 0.05 0.02 0.10 0.03

7027 Repair and maintenance ofbuildings

2.39 3.25 3.19 2.47 1.16 2.61

7028 Repair and maintenance ofstructures

1.05 0.52 0.65 0.53 0.46 0.63

7029 Repair and maintenance oftransport equipment

3.28 1.37 1.40 0.92 0.43 5.15

7030 Repair and maintenance ofmachinery and equipment

24.38 12.06 15.08 12.35 10.80 14.71

7040 Contributions to tradeorganisations, input

1.26 2.88 1.66 0.96 0.38 1.79

7041 Expenditure on licences androyalties

0.13 0.05 0.11 0.18 0.18

7042 Other external expenditurewhich is input

59.84 69.44 70.16 70.62 76.15 63.49

7043 External expenditure n.e.c. 1.58 1.47 1.26 0.78 1.53 0.31

Total 100.00 100.00 100.00 100.00 100.00 100.00

The questionnaire-based accounting statistics now also cover all previous "craft branches" withinmanufacturing, the construction branches and retail trade etc. in NACE-52 which were previouslycompiled in the tax accounting system, because they were not covered by the old accounting statisticsfor manufacturing. In addition, the questionnaire-based accounting statistics cover "remainder" unitswhich do not come within the scope of accounting statistics. For industries not included in the 1992services enquiry, distribution keys for the OEEU item are based on the tax accounting system's basicregister, so that the distribution key continues the ratios used for the calculation of the samemagnitudes in that system. These keys are available with a breakdown into both DK-NACE andnational accounts industries. Wherever possible, the DK-NACE industry's distribution key is used forthese industries.

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Table 38 Percentages of the OEEU ["other external expenditure"] item. Examples fromindustries not included in the services enquiry:

DK-NACE industry: 524410 524420 524430 524440 524450 524510MLS-code

4046 Expenditure on insurance 4.31 3.32 5.87 5.37 5.58 5.847024 Renting and leasing, n.e.c. and

unspecified2.92 4.87 2.00 2.71 3.46 3.33

7027 Repair and maintenance ofbuildings

2.92 1.04 0.51 1.32 0.92 1.22

7035 Repair and maintenance, n.e.c.and unspecified

1.77 1.38 1.22 2.09 2.26 2.09

7042 Other external expenditurewhich is input

88.09 89.39 90.39 88.51 87.79 87.52

100.00 100.00 100.00 100.00 100.00 100.00

3.1.2.3.7.2.7Correlation of accounting statistics and industrial commodity statistics∗

"Commodity statistics", i.e. product statistics for the extraction of raw materials and manufacturing,are not used directly to determine the enterprises' main economic magnitudes in the national accountsbut are used primarily for the breakdown of sales by product. For this use, too, the commoditystatistics' information on the enterprises' output has to be assigned to the same industries as in theaccounting statistics. Previously, it was automatically assumed that the branch allocation in theaccounting statistics was most likely to be correct, since it was decided at a later stage on the basis ofknowledge of the composition of output in the accounting year in question, whereas the branchallocation in the commodity statistics showed the composition of output for a previous accountingyear.

As already mentioned, the firm accounting statistics for 1995 were branch-allocated on the basis of anexamination of the commodity statistics for that year, whereas the workplace statistics complied to agreater extent with the branch allocation in the business register, which was based on earlierinformation from commodity statistics. Since the national accounts have introduced corrections to theworkplace statistics wherever possible so that they are allocated to the same branch as in the firmstatistics, it must be assumed that it is still most logical, failing better information, to go by theaccounting statistics if these conflict with commodity statistics.

The accounting statistics data on workplace sales of own products are first aggregated into kind-of-activity units. Since the kind-of-activity unit is not identified in the accounting statistics, a unit can beidentified only as the sum of the firm's workplaces within a given DK-NACE industry. Thus thedelimitation of workplaces depends to a large extent on which version of the business register is used,and this can lead to difficulties for the comparison with statistics based on other register versions.

∗ This is the translation used by Danmarks Statistik - cf. Chapter 11.

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Attempts are made to combine the information in commodity statistics into kind-of-activity unitswhich can be matched with those units which are compiled from accounting statistics. In 1995, thecommodity statistics units were still identified using an "SAF" number. Previously, for use inregional accounts, a series of transition keys had been produced for SAF/JUR numbers from years1993 to 1997. By searching in these keys, we managed to link JUR numbers to most of thecommodity statistics' kind-of-activity units5. Not all units could be compared with the correspondingunits in the accounting statistics. There were obviously the fewest problems in firms with only onekind-of-activity unit. The largest of the sales figures among the non-matching enterprises are shownin Table 39:

Table 39 Non-matching units in commodity statistics (VS) andaccounting statistics (RS)

Branch: Sales incommodity

statistics, DKKmillion

151390 Other production, processing andpreserving of meat products

846

155200 Manufacture of ice cream 898158300 Manufacture of sugar 2 723159100 Manufacture of distilled potable

alcoholic beverages556

244200 Manufacture of pharmaceuticalpreparations

7 545

245120 Manufacture of polishing andcleaning preparations

1 436

246300 Manufacture of essential oils 530268210 Manufacture of asphalt and roofing

felt980

297110 Manufacture of domesticrefrigerators and freezers

1 358

In the main, therefore, the matching problem seems to affect large units. In cases where thecommodity statistics' kind-of-activity units appear to cover the same enterprise as in the accountingstatistics to a reasonable extent, the accounting statistics' kind-of-activity industry was transferredautomatically to the commodity statistics unit.

Various doubtful cases were examined more closely and in some cases the branch allocation in theaccounting statistics was corrected in the input data used for the final run6.

The particular difficulties of comparing units by JUR number/DK-NACE industry and SAF numberswere noticeable up to 1997, where the commodity statistics units are also available with JURnumbers. An incomplete match meant that a good number of estimated corrections had to be made tothe breakdown of the industries' sales by product, which is otherwise based on the commoditystatistics. Attempts were made here to ensure that total sales in each of the national accounts' productbalances were not smaller than the sales which appear in the commodity statistics.

5 In cases where the same kind-of-activity unit had more than one possible JUR number, these numbers wereprioritised, so that first of all a match was sought with the most up-to-date. When we managed to match a kind-of-activity unit with the accounting statistics, sales figures were compared to see whether it was the same unitwhich had been found in both sets of statistics.

6 It has also happened that the branch allocation was corrected in both accounting and commodity statistics, ifinformation on the character of the enterprise's output was obtained from other sources.

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3.1.2.3.7.3Dividing lines between the accounting statistics system, the tax accounting system andother calculation systems

Ideally, the different accounting systems, i.e. the accounting statistics system, the tax accountingsystem, the systems for calculating on the basis of industry-specific accounting statistics and thecalculation system for government non-market activity (OIMA) in S.13 should have clear dividinglines at firm level. Within each system, it should be possible to divide up the relevant firms intoworkplaces/kind-of-activity units which can be allocated to functional industries. In particularlysimple cases, the firm branch and the kind-of-activity industry may be assumed to match so well thatkind-of-activity units from one system do not have to be placed in industries belonging to anothersystem. Often, however, the situation is more complicated, and there is a risk of double-counting oromitting units. When the final national accounts are compiled, therefore, a great effort is made toensure that the allocation of firms and producer units (workplaces) by industry remains consistent.

I. FBRUDE

As already mentioned, the questionnaire-based accounting statistics information on workplaces is alsoused where the workplaces belong to firms within the scope of the tax accounting system. In general,the accounting statistics must be assumed to be the more robust source. Their accounting plan ismore specific and grossed up to the total population at a more detailed level. For a consistentestimate of the accounting statistics system and the tax accounting system overall, however, the wayin which the tax accounting system firms are divided into kind-of-activity units must conform to theprinciple that the accounting items for a given firm's workplaces sum to the firm's accounting items(when these are estimated correctly in line with the chosen breakdown of the firm into kind-of-activity units). The national accounts calculation systems are constructed in a way which ensures thatthis basic constraint on totals is met.

The FBRUDE workplaces are transferred to the intermediate system together with the otherworkplace information in the questionnaire-based accounting statistics. The firms in the taxaccounting system should be divided up in a way which respects the accounting figures for theseworkplaces that have already been calculated. In practice, this happens by deducting the FBRUDEfigures from the firm totals before the firm remainder is distributed over the other kind-of-activityunits.

If the questionnaire-based accounting statistics and the JUR-VAT which is used as the basis forgrossing up in the tax accounting system were based on a common view of the delimitation of firmsand their workplaces, and used the same unit allocation by industry, the task would be simpler. Eventhough it would be misleading to claim that there are big differences in the different versions of thebusiness register in force at different times, there are nonetheless so many dissimilarities that theresulting problems are substantial, especially since the really large firms are frequently reorganisedand acquire or dispose of enterprises during the year. Checks have had to be run to avoid obviouslyunreasonable results, e.g. large residual items with the opposite mathematical sign in the taxaccounting system's firm branches.

In the first instance, the accounting figures relating to the FBRUDE units have to be allocated to firmbranches which match their allocation in the JUR-VAT file. The accounting statistics file withFBRUDE workplaces is correlated with JUR-VAT. Where the accounting statistics JUR numberscan also be found in JUR-VAT, the firm branch is corrected to the JUR-VAT branch allocation. Inaddition, a list is printed out showing those amounts, divided by branch, which it was not possible tomatch with the JUR-VAT file. In such cases, the workplaces involved must be those which the

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register allocates to different units in the two sets of statistics. In 1995, there were many such smallunits spread over most industries. In some industries, however, the magnitudes involved aresignificant. These are: 503010, Wholesale of motor vehicle parts and accessories, and variousbranches within NACE 51, Other wholesale: 515100, Wholesale of automotive fuels etc, representsvery large unmatched sales which, however, do not account for a gross margin of any significance.As might be expected, there are problems in the area of 521110 - 521210: grocers' shops,supermarkets and department stores, where value added of the order of DKK 500 million could not bematched by JUR number in 1995. Finally, there are problems with 602410, haulage contractors, andwithin 74: other business activities. Even though we did not manage to find the units in JUR-VAT, itis assumed that the units are allocated uniformly in the statistics unless there are indications to thecontrary.

Next, an FBRUDE data set is worked out in the intermediate system format. This is the contributionof the same workplaces to the intermediate system, but it differs in being divided up into (thecorrected) firm branches instead of kind-of-activity branches.

When the FBRUDE units are then separated out from the tax accounting system's "firms", the itemsare first of all recoded, to convert them to the (reduced) accounting plan used here. The FBRUDEfigures are compared with the corresponding accounting figures in the tax accounting system's firms.In cases where the separating out would leave the remainder with an invalid negative sign, theremainder are printed out in a warning list and the remainder item is entered as nil in the file which isthen used for the breakdown into kind-of-activity units in the tax accounting system. No furtheraction is taken with insignificant and probably random differences of this kind. With largerdifferences there is a more thorough investigation into what has gone wrong. Typically, the largerenterprises which can give rise to problems can be found in the business register and on the Internet.In some cases, this may lead to corrections to the data input into the calculation systems. In others, itmay be necessary to estimate corrections to any implausible initial estimates (target totals), whichmay have been produced by the calculation systems.

II. Correlation of accounting statistics and MS-JUR. Removal of dual coverage. Correlation ofquestionnaire-based accounting statistics and MS-JUR

Experience shows that the JUR-VAT file which is the starting point for the tax accounting registermay include firms liable for VAT which at the same time may occur in public enterprises,government non-market activities or the questionnaire-based accounting statistics. For the nationalaccounts estimate, it is vital that firm units be included once and once only, since otherwise there maybe incomplete coverage or double counting.

Since tests have made it clear that the allocation of firms to branches is not always the same in thevarious sources, as a result, for example, of extracting from the business register on different dates, asystem has been built into the national accounts calculation systems to separate out that part of thefirms which would appear to belong to the calculations based on industry-specific accountingstatistics, government non-market output (OIMA) in S.13 or the questionnaire-based accountingstatistics, before the remainder is divided up in the tax accounting statistics system.

In particular, the public units in the JUR-VAT had to be "cleaned out". Those which are liable forVAT are picked out and divided up according to whether they have market or purely non-marketactivity, the basis for the split being a list of central and local government VAT units compiled by thePublic Finances and Prices Division. Enterprises with no market activity are taken out. Checklistsare printed out with the VAT sales and purchases of those units which have been removed/retained, as

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the case may be. In 1995, a large number of units with ownership code 093: the National Church and194: parish councils also had to be taken out of the market activities of JUR-VAT. Finally, a checkwas made on which large units with ownership codes 070: central government, 081: counties and 082:municipalities were still occurring in the file. The majority proved to be units we treat as beingcovered by non-market activity, and which were therefore also removed from the data.

The firm file from the questionnaire-based accounting statistics is then correlated with JUR-VATfrom which public units have been removed. In cases where a firm is found in both accountingstatistics and JUR-VAT, VAT sales and purchases according to JUR-VAT are compared with thecorresponding figures which can be compiled from the accounting statistics. In principle, theaccounting statistics' firms should not be included in the population of firms divided by kind-of-activity unit in the tax accounting system - assuming, of course, that the firms have the samedelimitation in both sets of statistics. The 1995 comparison highlighted a number of firms wherethere were considerable differences in the two sources, and it is therefore scarcely reasonable toassume automatically that the differences can be explained by differences in periodisation. It wasdecided not to assume automatically that the JUR-VAT unit is covered in full by the questionnaire-based accounting statistics if the JUR-VAT figures are very much larger than the correspondingfigures in the accounting statistics. In 1995, the criterion was a difference in sales > DKK 25 millionand > 3% and a difference in sales minus purchases > DKK 3 million and > 15%. Just over 100 firmshad differences which met this criterion. In these cases, the differences were kept in the JUR-VATfile, and in the other cases the firms were removed. To the extent that these are firms which, in thefinal analysis, are allocated to the national accounts branches which fall within the scope of thequestionnaire-based accounting statistics, the remainder retained is unimportant for the tax accountingsystem's calculation and thus the calculation of total value added. The major differences were with afew large firms in the tobacco industry, pharmaceutical products manufacturing, shipyards,supermarkets and department stores, i.e. units where it must be assumed that the accounting statisticsprovide the best basis for determining the economic magnitudes and should therefore take precedenceover other sources. The differences which are allowed to remain therefore have no great effect onvalue added. Other than any periodisation problems, the main reason for these differences mustpresumably be sought in differences between the accounting statistics' breakdown into kind-of-activity units/workplaces and the VAT statistics breakdown into VAT units, since it can be assumedthat internal deliveries have not been removed altogether from JUR-VAT.

A further check consists in comparing sales and purchases in the questionnaire-based accountingstatistics for non-matching JUR numbers. In 1995, print-outs of these figures divided by DK-NACEindustry showed total calculated VAT sales of DKK 13.7 billion and total VAT purchases of DKK10.7 billion for non-matching accounting statistics units. In JUR-VAT, there were overall in the samebranches non-matching units with VAT sales totalling DKK 14.0 billion and VAT purchases of DKK10.2 billion7. Some of the non-matching units in JUR-VAT have few if any sales, and there is noreally good convergence between the breakdown by branch for the non-matching sales in the twosources. The figures show, however, that it is reasonable to argue that the accounting statistics givemore or less the same result for the non-matching units as would have emerged if the calculation werebased instead on the JUR-VAT units. In the light of these checks, it was decided to take the view thatthe accounting statistics give a complete description of the industries they cover and that the firmswhich are left in the JUR-VAT after the accounting statistics firms and the public units have been

7 In 1996 and 1997, the non-matching share of JUR-VAT sales increased by a good deal more than thecorresponding non-matching share of accounting statistics sales. This would appear to be due primarily to thefact that a number of pro rata consortia were included in the JUR-VAT figures in connection with bridge-building(the Storebælt and the Øresund bridges) but were deliberately excluded from the accounting statistics since theyrecurred in the accounts of the individual contractors and did not contribute to the value added of construction.

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removed are the best possible estimate of those firms which should be included in the tax accountingsystem's calculations.

3.1.2.3.7.4Transition from firm branches to national accounts industries in the tax accounting system

A "control key" controls which industries are to be collected from the accounting statistics system/taxaccounting system for the intermediate system. This key is continuously adjusted as thequestionnaire-based accounting statistics are extended and are gradually replacing the accounts basedon tax accounting statistics within the services industries.

To avoid delimitation problems, units which are calculated in full in the questionnaire-basedaccounting statistics and, wherever possible, units included in OIMA or calculated on the basis ofindustry-specific accounting statistics or accounting statistics for industries where public corporationspredominate are stripped out of the JUR-VAT file, as mentioned in the previous section, before it isused as the basis for grossing up in the tax accounting system.

The FBRUDE data are separated out, as previously described, in such a way that the accountingfigures which come from them are removed from the firm branch figures before the remainder isdivided into kind-of-activity industries outside the scope of the questionnaire-based accountingstatistics. This also means that total wages and salaries and employment relating to producer unitswithin the scope of the questionnaire-based statistics are subtracted from the firm branch figures fordistribution by kind-of-activity industry outside the scope of these statistics. As already mentioned,FBRUDE data are not allowed to remove more than the item's original value from any accountingitem which should be positive. Otherwise, a good many cases of invalid negative items would occur.

The remaining part of firm branches are broken down into other kind-of-activity industries - forexample, a wholesaling firm with combined wholesaling activity and engineering consultancy activityis divided up - in two stages. First of all, initial values are calculated for what has to be transferred toeach kind-of-activity industry which receives something from the firm branch, on the basis of thebreakdowns of the corresponding firm branches into accounting items. For example, the accountingitems in a producer unit classified as engineering consultancy activity and which is to be transferredfrom the wholesale trade firm branch to the engineering consultancy kind-of-activity industry isinitially estimated on the basis of the accounts observed in the engineering consultancy firm branch.The norms for these breakdowns of firms on the basis of the producer units which make up the firmsare normally, and as the default, defined as the accounting item per krone of wages/salaries.Information on total wages and salaries is available with a cross-distribution by firm branches andkind-of-activity industries and is therefore a generally useable and economically extremelymeaningful basis for the split. These initial distributions are summed, and for each item thedistribution is adjusted so that the contributions to the different kind-of-activity branches total theamount which is to be distributed. Account is thus taken of the ratios in both the industries whichhave values added to them and the firm branch which relinquishes value.

In a number of cases which are significant in quantity terms, further information is available in theform of a distribution of the firm branch turnover by product group, for example. In this case, thisinformation is used to determine the output which is to be transferred between the industries with theswitch from firm branches to kind-of-activity industries, and it replaces the calculation describedabove which is based on the distribution of the firms' total wages and salaries by industry according tothe industry breakdown of the associated workplaces. This kind of direct information on thebreakdown of sales/output is available, for example, for the extremely important motor vehicle repairactivity in the trading industries and for sales of convenience goods at service stations.

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3.1.2.3.8Sector-industry tables

Since the national accounts processing of accounting statistics includes a systematic double coding ofboth the accounts actually observed and the grossed up share by industry for the individual producerunit and institutional sector for the firm to which the producer unit belongs, sector-industry tablesappear directly in the accounting system, including for those sectors where the accounting figurescollected are grossed up.

3.1.2.4Industries with output value calculated as price times volume

3.1.2.4.1Agriculture, horticulture and the raising of fur animals

3.1.2.4.1.1Delimitation and consistency vis-à-vis other industries

Agriculture, horticulture and the raising of fur animals covers national accounts industries 011009agriculture and 011209 horticulture, orchards, etc. In agriculture, to which the raising of fur animalsbelongs, there is only market activity. Horticulture consists of both market and non-market activity,the non-market being landscape gardeners in the general government sector. For this share of outputand value added, reference should be made to Section 3.1.2.2.1, general government. A certainpercentage of government non-market activity in the DK-NACE classification comes underhorticulture.

The following description refers to market activity. In the national accounts, this is defined byactivity, i.e. "agriculture", for example, is the single activity of producing agricultural products. Allproductive activity on agricultural holdings which does not involve the production of agriculturalproducts is transferred to the relevant industries. In practice, secondary activity on agriculturalholdings is predominantly the letting of dwellings (including holiday homes) and non-residentialpremises. This secondary activity is transferred to the relevant industries (702009 the letting ofdwellings or 702040 the letting of non-residential buildings etc.). The statistical producer units foragriculture, horticulture and the raising of fur animals are thus units of homogeneous production asdefined in the ESA 95, paragraph 2.112. If a given agricultural holding produces both agriculturaland horticultural products, the holding is divided into an agricultural share and a horticulture shareand output and value added are calculated separately for these two shares. The two shares are eachunits of homogeneous production whose output value is calculated as the sum of the value of theproducts in question.

3.1.2.4.1.2Statistical sources

The statistical source for agriculture, horticulture and the raising of fur animals is DanmarksStatistik's agricultural statistics which, as already stated, are a national accounts estimate. Thestatistics comply with the guidelines in Eurostat's agricultural statistics manual. The calculations ofintermediate consumption are based on 1) quantities of products used multiplied by the averageselling price, 2) accounting information collected by the economic advisers for agriculture and 3)annual accounting statistics for agriculture and horticulture compiled by Statens Jordbrugs- ogFiskeriøkonomiske Institut.

Agricultural statistics are the statistical source in the national accounts for the estimate of nationalaccounts industries 011009 agriculture and 011209 horticulture and orchards, etc.

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However, the agricultural statistics estimates include machine pools, which in the national accountscome under 014000, agricultural services∗. Since all the output of agricultural services is inputs foragriculture, this does not affect the estimate of value added. In the national accounts, agriculturalservices [machine pools] are calculated separately from tax-based accounting statistics and theactivity is transferred to industry 014000, agricultural services.

For reference year 1995, the Danish agricultural statistics were compiled in line with the "nationalfarm" principle set out in the previous edition of the EU agricultural statistics manual, which meansthat direct sales between agricultural holdings which do not involve intermediaries are netted out.Strictly speaking, this conflicts with the ESA 95, which requires internal deliveries within agricultureto be included in the estimate of gross output and intermediate consumption. According to the ESA95, the statistical unit for the production account is the local kind-of-activity unit (producer unit) inagriculture as in all other industries. Since this discrepancy is, however, temporary and does notaffect GNI, it was decided not to deconsolidate in the national accounts but to keep the direct andeasily verifiable link with the published agricultural statistics. As from reference year 1999 inclusive,agricultural statistics have switched to using the local kind-of-activity unit as the statistical unit. Asfrom that year, this relatively unimportant point therefore complies in full with the ESA 95 principles.

3.1.2.4.1.3Method of calculation

The usual method of calculating output is to use prices multiplied by quantities (volumes). For thelargest crop product, cereals, the yield of the individual kinds of cereal harvested is calculated first ofall. These figures are then multiplied by the average selling prices for cereals collected from all thelarger cereal merchants. For the largest animal product, i.e. pigs for slaughter, the sales value iscalculated in a similar way on the basis of the total number of slaughterings at abattoirs andslaughterhouses as reported to Fødevaredirektoratet [the Danish Veterinary and FoodAdministration]. This quantity divided by the number of types of animals slaughtered is multiplied bythe average settlement weights reported to the Danske Slagterier organisation. Thus a figure isarrived at for the number of kilograms of slaughter meat divided by category of pig. The pricevariable is calculated monthly on the basis of the official Danske Slagterier prices.

3.1.2.4.1.4Estimate of intermediate consumption

On the basis of the sources referred to in 3.1.2.4.1.2, total intermediate consumption is calculated bygrossing up to the total population of agricultural holdings. The figures are grossed up separately forthe very small holdings not covered by the annual agricultural censuses. A large share of intermediateconsumption can be calculated extremely reliably on the basis of domestic supplies, either as physicalquantities multiplied by an average price or as an estimate of total sales to agriculture. The source forthat share of inputs to which the above does not apply is accounting information available either fromaccounts collected by economic advisers to agriculture or the annual sample-based accountingstatistics for agriculture and horticulture which come from Statens Jordbrugs- og FiskeriøkonomiskeInstitut.

3.1.2.4.1.5Breakdown of output by product

Since agriculture, horticulture and the raising of fur animals are activity-defined on the basis of theproducts produced and the estimate of value added using a price times volume method, the productbreakdown is self-evident.

∗ The Danish translates literally as "machine pools, landscape gardeners, etc.".

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3.1.2.4.1.6Breakdown of intermediate consumption by product

In the agricultural statistics, the majority of intermediate consumption is broken down by productdirectly, usually on the basis of information on quantities of the products in question used (e.g. cerealsfor fodder) multiplied by average prices or from information on sales to agricultural holdings(feedingstuffs, fertilisers, pesticides). The remaining share of intermediate consumption - energy andservices, for example - which is typically calculated from accounting statistics, is available inagricultural statistics in a breakdown by main type of product. For the compilation and balancing ofthe national accounts supply and use tables, national accounts statisticians divide these main typesinto individual products, generally using the most detailed accounting plan in the accountingstatistics.

3.1.2.4.2Dwellings

3.1.2.4.2.1Delimitation and consistency vis-à-vis other industries

Industry 702009, dwellings, is activity-defined. The statistical units are units of homogeneousproduction which have no activity other than the letting of dwellings/own-account production ofdwelling services. The industry covers both the production of dwelling services in the form of lettingdwellings (actual rentals) and imputed rentals in owner-occupied dwellings.

The letting of dwellings is an important secondary activity for institutional units whose main activityis in other industries, especially banks, insurance corporations and pension funds. In the nationalaccounts, this activity is in every case separated out into quasi-corporations in the non-financialcorporations sector. In the calculations for the financial corporations, the return on their housinginvestments is recorded as property income (dividends).

Conversely, the letting of non-residential premises is an important secondary activity for manyproducer units which are primarily concerned with the letting of dwellings. A considerableproportion of housing in towns includes retail premises, and similarly there may be offices,workshops etc. in property which is primarily residential. The activity of letting non-residentialpremises is separated out from the output of dwelling services and transferred to industry 702040 theletting of non-residential buildings etc.

In practice, the output value in the "dwellings" industry is estimated from a price times volumecalculation where the stratified stock of dwellings is multiplied by appropriate average rentals, whilstthe output value of industry 702040, the letting of non-residential buildings etc., is estimated from theexpenditure side.

3.1.2.4.2.2Statistical sources

The output value of dwellings is estimated every fourth year as a benchmark calculation of the pricetimes volume type, based on the total stratified housing stock and comprehensive rental figurescovering almost two-thirds of all dwellings in Denmark which are let. A description of the annualestimates of the housing stock and of the major four-yearly rental surveys can be found in Section11.3. Both sources must be considered to be of high quality.

In years between the benchmark calculations, the latest benchmark is projected using price andvolume indicators. The price indicator is rental information from the sample survey of rentals which

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is carried out every six months to provide information on changes in rentals in the consumer priceindex. Section 11.3 describes this source. The volume indicator is information from buildingstatistics based on Bygnings- og Boligregistret (BBR) [the Register of buildings and dwellings] whichgives the number of square metres constructed combined with an estimate of the number of dwellingsdemolished.

3.1.2.4.2.3Method of calculating output

The benchmark calculation is particularly detailed and uses the stratification method which the GNPCommittee approved as the preferred method. The stratification of the housing stock is much moredetailed than the minimum requirements set out in the Commission Decision (95/309/EC, Euratom).Whilst this Decision requires a minimum of 30 strata, the Danish calculation of levels for 1995 uses896 strata. A detailed account of the method of calculation can be found in Section 3.17.

In general, a new benchmark can be calculated two years before the national accounts become finalfor the year to which the estimate refers. The discrepancies - normally slight - that will occur betweenthe projected former benchmark estimate and the latest estimate can therefore normally be spread overtwo years as general data revisions between provisional and final estimates. The four-yearlybenchmarking is intended to ensure that the calculations for dwellings, which are some of the mostimportant in the national accounts, do not "go off the rails".

3.1.2.4.2.4Estimate of intermediate consumption

This is calculated separately for dwellings which are let and owner-occupied dwellings, using an inputpercentage (intermediate consumption/output) derived from accounting material for landlords/owners.The source for dwellings which are let is the accounts for all social housing corporations. These aremarket non-profit institutions which come in the non-financial corporations sector. They let housingwhich more often than not has been built with the help of public funds in the form of direct or indirectrent subsidies. This social housing makes up around 43% of all dwellings which are let, and there isno reason to assume that their costs structure (operating expenditure excluding interest expenditure) isnot representative of the letting market as a whole. For owner-occupied housing, the accountingfigures come from the FU [Survey on income and expenditure = household budget survey] Therespondents who are owner-occupiers are extracted. Stamp taxes on housing loans and financialintermediation services which are paid for directly∗ and which are inputs for the dwellings industryare calculated not from the above-mentioned accounting figures but from separate information fromtax statistics and statistics on financial institutions.

∗ Please see note on the use of "paid for" in Chapter One.

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3.1.2.4.2.5Breakdown of inputs by product

The most important intermediate consumption item is ordinary repairs and maintenance. Informationon these items can be found separately in the accounts for the social housing corporations and in theFU. The whole of expenditure on ordinary repairs and maintenance in corporations which letdwellings must by definition be considered as intermediate consumption. As regards expenditure onowner-occupied housing, that share of ordinary repairs and maintenancewhich would normally bepaid for by the tenant if the dwelling were let, i.e. minor routine repair and maintenance work, istreated not as intermediate consumption but as private final consumption expenditure. Typically, thisis internal maintenance in the form of painting, wallpapering and flooring maintenance. Such itemsare calculated from the detailed FU estimate of expenditure on craftsmen and materials.

The other intermediate consumption expenditure items, apart from stamp taxes on housing loans andfees to financial institutions, are generally divided by product on the basis of the summary breakdownof operating expenditure other than on repairs and maintenance by major type in the social housingcorporation accounts.

3.1.2.4.3Non-profit institutions serving households

3.1.2.4.3.1Delimitation and consistency vis-à-vis other industries

In exactly the same way as Sector S.13, General government, by definition covers only governmentnon-market producer units in the Danish national accounts, Sector S.15, Non-profit institutionsserving households, by definition covers only private non-market producer units. All market producerunits which belong to private non-profit institutions are treated as quasi-corporations and transferredto the non-financial corporations Sector S.11 or the financial corporations Sector S.12.

The only real delimitation and consistency problem which occurs with private non-market producersis the link between unemployment funds and trade unions. Unemployment funds are part of S.13whereas trade unions come under S.15. In practice, many unemployment funds are administered bythe trade unions to which they are linked, and the funds reimburse the trade unions for the relevantadministration costs. This activity overlap is calculated on the basis of the accounts for the country'slargest trade union HK [the Union of Commercial and Clerical Employees in Denmark], which isconsidered to be representative of this field. That share of trade union activity which is for theaccount of the unemployment funds is already included in the public accounts which are the basicdata for the calculation of S.13, and therefore have to be stripped out from the calculation of activityin trade unions.

3.1.2.4.3.2Statistical sources

By far the largest expenditure component in the case of private non-market output is the wage orsalary bill. If, in this area where statistical coverage in the accounts is weak in virtually all countries,one can at least be certain that the total wage or salary bill is included, then one has gone a long waytowards reliable and exhaustive estimates. This is the case in Denmark, where the ERE∗ statisticscalculate the total wage or salary bill in all producer units in the economy, including in private non-profit institutions serving households. This is the main source for the calculation.

∗ Erhvervsbeskæftigelsesstatistik, translated into English in Danmarks Statistik publications as "Establishment-related employment statistics" (ERE). Please see Section 1.4.2.

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For want of accounting statistics in this field, the other components in the estimate of output from thecosts side, i.e. intermediate consumption, consumption of fixed capital and other taxes and subsidieson production, are calculated on the basis of the accounts for the largest trade union (HK). The ratioof, for example, intermediate consumption and total wages and salaries in this trade union is thusassumed to be representative of all private non-market producers. The validity of this assumptionshould be judged in the light of the fact that trade unions in Denmark make up by far the largest shareof private non-market producers and that it is reasonable to take the HK costs structure to berepresentative of trade unions in general.

3.1.2.4.3.3Method of calculation

The starting point is, as already mentioned, direct and complete coverage of the total wage bill. Sinceall employees are covered by the ERE statistics, there is no need for any grossing up on the basis ofemployment data etc, with the uncertainty that this would imply. The total wage bill in the EREstatistics is raised by 15% to cover the employer contributions to pension schemes etc, which are to beincluded in the national accounts compensation of employees. Intermediate consumption excludingrepairs and maintenance are estimated, on the basis of HK's accounts, at 55% of total wages andsalaries (excluding employer contributions). The repair and maintenance of buildings and machineryis put at 5%/1% respectively of total wages and salaries. On the basis of the national accounts capitalstock estimates, the consumption of fixed capital is put at 49.4% of the wage bill. Finally, other taxesand other subsidies on production are calculated in the national accounts' special calculation systemfor taxes and subsidies.

3.1.2.4.3.4Production in private, non-market producer units

Output value is estimated as the sum of the cost components intermediate consumption, compensationof employees, other taxes on production less other subsidies on production and the consumption offixed capital.

3.1.2.4.3.5Breakdown of output by industry and product

Private (other) non-market output occurred in the following national accounts industries in 1995:

853209 Social institutions etc. for adults910000 Activities of membership organisations.

In addition to the private non-market output of NPISHs, these two national accounts industriesinclude output in government non-market producer units. There are no market producer units in thesetwo industries.

The total output value of NPISHs was DKK 8 187 million in 1995, divided into the followingproducts which each correspond to an industry code at the most detailed industry grouping (DK-NACE):

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Table 40 Output of NPISHs divided by product, 1995

Productnumber

Text Output (DKK 1000

853255 Associations combating diseases and performingactivities aimed at social work, etc.

1 031 456

853260 Charitable trusts and foundations 242 683911200 Activities of professional organisations 666 381912000 Activities of trade unions 4 511 771913120 Activities of religious institutions and organisations 389 868913200 Political parties 162 711913310 Tenants' associations 82 206913320 Outdoor organisations 126 690913330 Other political and ideological organisations 259 905913340 Other professional and cultural organisations and

institutions308 180

913390 Social associations, lodges, etc. 404 920Total 8 186 771

3.1.2.4.3.6Breakdown of intermediate consumption by product

The items "rentals" and "repair and maintenance" are estimated directly in HK accounts and thesepercentages are used for all NPISHs combined. For the other intermediate consumption, there is noaccounts-based costs structure. The breakdown is based on the costs structure in similar activitieswithin business services and on common sense considerations, such as the fact that a certain numberof office staff equals a certain supply of window polish for the windows in the offices occupied.

3.1.2.4.4Private households with employed persons

3.1.2.4.4.1Delimitation

National accounts industry 950000, private households with employed persons, comprises privatehome help supplied by persons who do not invoice their customers for the work they do. By far themajority is some kind of hidden activity or work such as babysitting by children and young peoplewho do not pay tax because their income is below the threshold. Private cleaning and gardenmaintenance etc. carried out by firms under the "home service scheme" are not covered. This activityis included as market activity in national accounts industry 747000, industrial cleaning. The publicsubsidy for the "home service", one of the purposes of which is to counteract work in the blackeconomy, is treated in the national accounts as a subsidy on products.

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3.1.2.4.4.2Choice of sources

Consumer surveys versus labour force surveys:Since most of the activity is "concealed", tax information is not useable here, covering as it does onlya small part of the activity. A priori, it is likely that the FU [household budget survey] will be asuitable source, since it puts questions to the purchasers and not the vendors. Since it is only aminority of households which have help in the house to any noticeable extent, however, the samplinguncertainty in the FU is too high for it to be a realistic source. Instead, it was decided to carry out abenchmark survey linked to the labour force survey for 1992, in which the households were asked aseries of questions on their untaxed activities. Interviewees were asked about the number of hoursworked and their income. On the basis of these figures, a benchmark value was fixed for output bygrossing up to the total population.

3.1.2.4.4.3Benchmark years versus current years

The benchmark value calculated for 1992 is projected in the current years using changes in the netprice index (consumer price index excluding taxes on products and subsidies) for cleaning. Thismeans assuming that hours of work remain constant. The price index reflects changes in cleaningrates charged by professional firms. A new benchmark will next be established when resources canbe made available to extend the labour force surveys to include special questions on work in the blackeconomy.

3.1.2.5Industries where output is estimated from the expenditure side

3.1.2.5.1Letting of non-residential buildings etc. - consistency

In the Danish national accounts, there is only one industry where all output value is calculatedindirectly from the expenditure side, namely 702040, the letting of non-residential buildings etc.There are two reasons for this, firstly that the letting of non-residential buildings is commonly asecondary activity, and secondly that the estimates of the output and input of non-residential rentalsneed to be consistent. The problem is particularly crucial in that non-residential rentals in 1995totalled DKK 25 billion. By their very nature, they have only one use, namely as intermediateconsumption.

As already mentioned, the letting of non-residential buildings is very largely a secondary activitycarried out within institutional units (firms) which are classified according to their main activity inother industries such as life insurance and pension funds. An estimate of output value based directlyon the accounts for firms whose main activity is in industry 702040 would in all cases omit a hugevolume of non-residential rentals which should be transferred from secondary activities in otherindustries. And even without this complication, a direct estimate of actual output value would bedifficult because the letting of non-residential premises is not subject to VAT although manylandlords voluntarily register so that they can deduct VAT on purchases. VAT sales in the industryare therefore not a suitable basis for grossing up the figures. For obvious reasons, the apparentalternatives, namely employment or total wages and salaries, are not particularly good bases forgrossing up in an industry where by far the most important primary factor of production is capitalstock.

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The calculation of the output value of those industries which are the main activity of firms which alsohave a secondary activity in the form of letting non-residential buildings ignores rental income.Under the Annual Accounts Act and all regulations relating to accounts and accounting statisticsforms, such income is to be posted under the accounting item "secondary income", which coversordinary income not earned from the ordinary operations of the enterprise concerned, such asreimbursements of daily allowances for sick leave and maternity leave, income from canteens andincome from non-residential rentals. None of these items is included in the estimate of the outputvalue of the main activity - cf. the description of the link between the intermediate system and thetarget total module. Like non-residential rental incomes, income from canteens is processedseparately. It is transferred to restaurants, along with the intermediate consumption which goes withit.

If we are to avoid omissions and double counting in this field, it is crucial that the product balance fornon-residential rentals be compiled as determined in advance and that the output value be calculatedseparately from all other output and counted as equal to the non-residential rental expenditureincluded in the calculation of total intermediate consumption in the individual industries. Anythingelse would mean a risk of inconsistency in the calculations, with a direct effect on GDP. As anillustration, let us assume that the output value of the letting of non-residential buildings wascalculated on the basis of grossed up accounting statistics as value x and that the input of non-residential rentals was lumped together with other services in the calculation of intermediateconsumption in the industries on the basis of grossed up accounting statistics and was adjusted at amuch more aggregated level. An analysis of the "rentals" accounting item in the grossed upaccounting statistics could reveal that a value y for non-residential letting was in fact entered as inputto the economy, whilst output of non-residential rentals was calculated as x. This inconsistencywould obviously lead to an incorrect measure of GDP. Since, as already mentioned, non-residentialletting accounts for a substantial amount, the error could be quite significant. Estimating non-residential rentals from the expenditure side guarantees consistency and ensures that any incorrectmeasure of total non-residential rental expenditure has no effect on GDP/GNI.

3.1.2.5.2Statistical sources

Since the output value of non-residential rentals is estimated as the sum of non-residential rentalexpenditure in all industries in the economy, the sources for the estimate are those accountingstatistics which underlie the estimate of value added in all the industries in the economy as describedearlier in this chapter.

Intermediate consumption in industry 702040, the letting of non-residential buildings, is calculated byapplying the input percentage, i.e. the ratio of intermediate consumption to output value, in the lettingof dwellings to the letting of non-residential premises as well. For 1995, this figure was 25.6%.(This percentage is applied to output value excluding fringe benefits.)

As a result of widespread secondary activity in the letting of non-residential buildings, this method ofcalculation is considered more reliable at present than a method consisting of applying the inputpercentage from the available accounts for non-residential letting corporations. When the newquestionnaire-based accounting statistics are complete for reference year 1999 onwards, the amountof detailed accounting information from property companies will increase markedly, and it will beappropriate to reconsider whether the input percentage should be based on these accounts.

3.1.2.5.3Breakdown of inputs by product

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Since there is no separate information on the structure of costs for non-residential letting, the inputstructure is based on the input structure of the letting of dwellings. This is then adjusted with theannual balancing in the light of the supply and use of the products in question. As is the case with theletting of dwellings, the largest component of intermediate consumption is the repair and maintenanceof buildings.

3.2 Valuation

According to the ESA 95, output has to be valued at basic prices. Since the 1940s, this has been thevalue used in the Danish national accounts, so in this respect nothing has changed for Denmark,which has always thought that the "producer prices" concept in the ESA 79 was inappropriate in thenational accounts from the point of view of both producing and analysing statistics.

Danish accounting and product statistics have always asked for turnover in basic prices, partly fornational accounts purposes but also simply because Denmark has always considered that this was theprice concept which firms could relate to best, since it corresponds to the income which goes into thefirm's own till rather than to government coffers. The concept of "net sales" in the Danish legislationon the submission of annual accounts (the Annual Accounts Act) corresponds to the basic priceconcept, since it covers the sales value after deduction of discounts and VAT and other excise duties(and, conversely, additions for subsidies on products).

In Denmark's case, therefore, there is generally no need for any procedure to switch from observedprices such as producer prices to the ESA 95 concept of basic prices. The sales observed in thesources are sales at basic prices.

3.3 Transition from private accounting and administrative concepts to ESA95 national accounts concepts

3.3.1 Uniform principles for the transition from business accounting conceptsto national accounts concepts

One characteristic of the Danish national accounts is a consistent and uniform transition from theprinciples of business accounts to national accounts concepts. This means, firstly, that the necessaryconceptual corrections are made for all industries in the economy and not simply for selectedindustries where they are of particular importance. Secondly, the transition is based on uniformprinciples, using the same sources and methods in all industries in the economy. For example, thesame method is used for all industries to correct for that share of insurance premiums paid whichmust not be included in the estimate of intermediate consumption.

In Denmark, the accounts of corporations are governed by the Annual Accounts Act if they are non-financial, and if they are financial corporations by orders issued by Finanstilsynet referring to thefiling of accounts under various laws. Sole proprietorships are not subject to the Annual AccountsAct but to the Bookkeeping Act, the requirements of which are less stringent. However, since theseenterprises have to submit standardised accounting information (SLS-E) forms when the owner(s)file(s) income tax returns, they are in fact subject to legislation on the submission of accounts which

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is almost as demanding as the Annual Accounts Act, apart from the fact that there is, of course, norequirement for the accounts to be certified by an auditor. The auditing of the accounts of soleproprietorships will normally be an audit for tax purposes connected with the check on the owner's taxreturns.

The fact that the filing of business accounts in Denmark is governed by legislation laying downaccounting principles which are, by and large, uniform is extremely important in practice for nationalaccounts. For example, it is important that there should be clear and uniform rules for the wholeeconomy stating which expenditure should be posted as operating expenditure in business accountsand which has to be capitalised, i.e. treated as capital formation. If enterprises were free to choosehow to present their accounts in this respect, it would be very difficult to convert them to nationalaccounts concepts, since the accounting principles used for each individual enterprise would have tobe investigated. Fortunately, this is not the case in Denmark. The legislation regulates strictly whichexpenditure may be treated as ordinary operating expenditure and which may be capitalised, i.e.counted as an investment, and this is the key factor which means that when the industries' value addedis estimated in the national accounts, the switch from operating expenditure in the business accountsto intermediate consumption as defined in the ESA 95 can be reasonably accurate.

After the accounting statistics in the relevant calculation systems:(1) the "accounting statistics system" for the questionnaire-based accounting statistics;(2) the "tax accounting system" for tax accounting statistics;(3) the calculation systems based on industry-specific accounting statistics - technically known as

the "A-file system";(4) the calculation system for general government statistics - technically known as "OIMA"

have been converted to the common accounting plan for business accounts, there remains thetransition to national accounts concepts, as follows: various correction items are entered in theaccounting plan, which, in combination with the accounting information transferred from the businessaccounts, enable figures to be compiled in line with national accounts concepts in the "target totalmodule", MTM. Statistics for general government (S.13) and for industries where publiccorporations predominate are, however, as already mentioned, converted to national accountsconcepts on the basis of information which the Public Finances and Prices Division passes on to theNational Accounts Division. The further processing, which for these statistics is carried out in theNational Accounts Division, consists basically of incorporating them into the supply and use tables.

The conceptual adjustments which have to be made to arrive at an estimate for national accountspurposes can be divided into two categories:

- corrections which do not depend on the industry concerned, where the same distribution keys forthe accounting items in the intermediate system accounting plan are used for all industries andsectors;

- corrections which do depend on the industry concerned, where the corrections to the individualaccounting items vary from industry to industry.

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3.3.1.1Corrections which do not depend on the industry concerned

These are:

1. dividing expenditure on "consumables" into capital formation and intermediate consumption;

2. determining the shares of secondary income and secondary expenditure which relate tocanteens, and

3. isolating that share of external expenditure which consists of contributions to fighting funds.

Ad 1. Consumables

According to ESA 95, paragraph 3.70 e), producers' purchases of durables with a (total) order value ofunder ECU 500 in 1995 prices should be treated as intermediate consumption and not as gross fixedcapital formation.

The tax legislation includes an equivalent rule on consumables which may be posted as operatingexpenditure, i.e. written off immediately. It is assumed for national accounts purposes that theaccounting statistics information on expenditure on consumables is compiled according to the taxrules. Since these rules are different from the ESA rules, the accounting item has to be split into thatpart which, according to the ESA rules, is consumables, and has to be counted as intermediateconsumption, and the remaining share which goes to capital formation. In the Danish nationalaccounts, a method has been developed for making this split on the basis of the tax rules andassumptions about the division of purchases by amount.

The limits for tax purposes on amounts spent on consumables which can be written off immediatelywere adjusted upwards several times during years prior to 1995. This means that that share of the"consumables" item which has to be counted as intermediate consumption in the national accountshas had to be reduced and the capital formation share increased. Table 41 shows changes in that shareof the consumables item in the accounting statistics which, during the period 1988-1995, was enteredas intermediate consumption or gross fixed capital formation.

Table 41 Breakdown of the "consumables" accounting itemYear % share for intermediate

consumption% share for gross fixed capitalformation

1988 28.0 72.01989 28.1 71.91990 26.5 73.51991 27.2 72.81992 21.0 79.01993 16.5 83.51994 16.1 83.91995 15.1 84.9

The correction is substantial. For 1995, only 15% of the expenditure on consumables considered inthe business accounts to be current operating expenditure was treated as intermediate consumption inthe national accounts.

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Ad 2. Canteens

In the accounting statistics, canteen sales are counted as secondary income and the related costs -other than staffing expenditure - are included in secondary expenditure. Part of the secondary incomehas therefore to be transferred to net sales and part of secondary expenditure to intermediateconsumption.

The amount transferred to net sales is a fixed share of the enterprise's total expenditure on wages andsalaries and employer contributions, based on the 1987 FU as follows:

Table 42 Calculation of the running of canteensAmounts Comments

1. Canteen expenditure per person,purchasers' prices

DKK 259 1987 FU [household budgetsurvey]

2. Canteen expenditure excludingVAT

DKK 224 Average VAT 15.5% in 1987

3. Wages and salaries inc.pension contributions perperson

DKK 78421 1987 FU

4. Percentage 0.3 % Item 2/item 3

Since it is assumed that the running of canteens produces neither a deficit nor a surplus, the outputvalue thus calculated is divided into purchases of raw materials and wages and salaries in line withthe percentage distribution in restaurants. For years 1988-1995, the breakdown was more or lessconstant at 64% to raw materials and 36% to wages and salaries, but in the future the breakdownshould in principle be assessed every year.

Ad 3. Trade organisations' fighting funds

The subscriptions paid by enterprises to trade organisations are counted in the national accounts aspurchases of services and are included in intermediate consumption. However, this does not apply tothat share of the subscription which goes towards building up fighting funds, which is considered as atransfer. In the accounting statistics, the total subscription is counted as external costs, and an amounttherefore has to be estimated which is entered for national accounts purposes as a transfer and not asinputs.

There is not a great deal of evidence in the statistics on which to base such an estimate. One feasiblemethod would be to estimate the total amount used to build up fighting funds in a given year and torelate this amount to an estimate of total wages and salaries and employer contributions. Acorresponding share of wages and salaries as recorded in the accounts is then moved to transfers.

According to a one-off survey of the trade organisations' funds undertaken for the year 1982, theirtotal own funds in that year were DKK 4.7 billion and the DKK 500 million or so in provisions setaside during the year was financed largely from the funds' property income. Since there were noconflicts during the period 1982-1997 on a scale likely to have weakened the funds' finances, it maybe assumed that in those years no contribution was made from subscriptions to build up the funds.The share of wages and salaries to be transferred was therefore put at 0 for those years. This share isreviewed annually.

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In 1998, there was a major conflict on the Danish labour market, which ate into the employerorganisations' fighting funds. In the national accounts for 1998 and subsequent years, the necessarycorrection is being made for the rebuilding of fighting funds via subscriptions.

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3.3.1.2Corrections which vary from industry to industry

Under this heading, corrections are made for the following 11 output or cost items:

1) bad debts2) changes in inventories and intermediate consumption price correction3) correction for net insurance premiums4) financial intermediation services paid for directly5) other taxes (subsidies) on production6) purchased software7) own-produced software8) financial leasing9) public fees10) licences and royalties11) entertainment, literary and artistic originals.

Ad a) Correction for bad debtsIn business accounts, ordinary losses on bad debts and (ordinary) changes in provisions for bad debtare posted under "Other external expenditure" or "Other current overheads", which as a general rulecover types of expenditure which are to be included in the national accounts estimate of intermediateconsumption. Losses on bad debts are not to be treated in the national accounts as part ofintermediate consumption, since goods do not disappear from the economy. In the national accounts,losses on bad debts (other than those which are forgiven or cancelled by agreement) are other changesin the volume of assets.

In the questionnaire-based accounting statistics, there is a separate item for "ordinary losses on baddebts". For that share of the accounting figures which is based on the less detailed tax accounts (SLS-E), the item is estimated from the accounting ratios in those firms which have answered thequestionnaire. The questionnaire-based item can be transferred directly to the intermediate systemaccounting plan.

In the "tax accounting statistics", bad debts are included in the "Other current overheads" item. Foryears prior to 1991, however, they were shown separately on the SLS-E tax account form. The 1990accounting ratios for the individual industries are used for those industries where the calculation isbased on tax accounting statistics, to separate out the bad debts item for the transition to theintermediate system's accounting plan.

Ad b) Price correction for changes in inventories and intermediate consumption

The price correction for changes in inventories is made separately for the following five inventorycategories:

(1) Finished goods and work-in-progress(2) Inventories of raw materials(3) Wholesaling inventories(4) Retailing inventories(5) Special inventories.

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The starting point is the accounting statistics information on final stocks in the last year (= openingstocks in the present year) and final stocks in the present year. These inventory estimates use thefirms'/producer units' own valuation, which in the majority of cases is based on historic cost. Changesin inventories in business accounts which are calculated as closing minus opening stocks willtherefore, with inflation (or deflation), generally include an element of revaluation. When prices arerising, output (sales plus changes in inventories of finished goods) will be overvalued and theintermediate consumption of goods will be undervalued. Together these will lead to an overvaluationof value added if the changes in inventories as they appear in business accounts are not price-corrected. For trading industries, where output value is defined as gross margin (sales of goods forresale minus consumption of goods for resale), output and value added will be overvalued if pricesrise and inventories of goods for resale are not price-corrected.

The counterpart to the price correction to changes in inventories in business accounts is a correctionof output (stocks of finished goods, stocks of goods for resale) or intermediate consumption accordingto the business accounts. The two corrections are two sides of the same coin. The correction to thebusiness accounts' output value/intermediate consumption ensures that output- and income-basedGDP are compiled in line with ESA principles. Similarly, the correction to changes in inventoriesaccording to business accounts ensures that expenditure-based GDP is compiled in accordance withthe ESA 95 principles. The correction to intermediate consumption and inventory movements by thesame values follows directly from the accounting identity, i.e. supplies are equal to uses of products.

The national accounts use the best possible approximation of the theoretically correct estimate of thenational accounts changes in inventories and the price correction that goes with them according to thePIM. Owing to a lack of information on daily movements in inventories, the PIM can only be used inexceptional cases, in Denmark as in other countries. The Perpetual Inventory Method consists incompiling initial stocks and then monitoring all movements into and out of them.

Where information is available on physical quantities of goods in stock at the beginning and the endof the accounting period, the best possible approximation is obtained by multiplying the physicalchange in the inventory for the individual goods over the period in question by the mean prices for theyear and then summing over all goods in the inventory in question. In Denmark, this information onphysical quantities is available for agricultural and energy goods.

In all other cases, the only available information is the value of the enterprises' stocks at the end of theperiod in their annual accounts (quarterly accounts) and in the accounting statistics. Opening stocksare the same as the closing stocks of the previous accounting period. To calculate the nationalaccounts changes in inventories, we make an assumption about the prices at which stocks areestimated at the end of the period and on this basis inflate the opening stocks to the year's averageprice level, likewise deflating closing stocks to the year's average price level. The national accountschange in inventories in current prices can then be calculated as the difference between openingstocks and closing stocks calculated at average prices for the year in question.

The price correction to the business accounts' changes in inventories, output and intermediateconsumption is worked out as the difference between the change in inventories in business accountsand the change as estimated according to national accounts principles. In the Danish nationalaccounts, closing stocks are assumed to be compiled at the latest noted end-of-year acquisition prices,which are assumed to be the mid-December prices. This method of estimating stocks is compatiblewith the Annual Accounts Act and is known to be used by many producer units because it is simpleand practicable. Given this assumption, the figures are inflated from the price level in December t-1to the mean price level for year t and deflated from the price level in the December of year t to themean level in year t. The calculation is made at product level, with opening and closing stocks

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divided by product on the basis of a distribution key specific to each industry. For inventories offinished products, including work-in-progress, the distribution key is the distribution by product ofsales in the latest final year (t-1). For inventories of goods for resale, a key is used which provides thelink between wholesale and retail trade industries and the products in which they trade. Finally, thedistribution key for stocks of raw materials is determined by the breakdown of intermediateconsumption by product according to the balanced supply and use tables for the latest final year.

The following formulae show the calculation process for the change in inventories of individualproducts. The change for a given industry is then worked out by summing over products:

CDE

tptp

Atp

tp

BD

ABC

−=

−−=

−=

)())12(1(

)())12((

where A = value of opening stocks in line with business accounting principlesB = value of closing stocks in line with business accounting principlesC = value of change in inventories in line with business accounting principlesD = value of change in inventories in line with national accounts principles

E = price correction to change in inventories and output/intermediateconsumption

p(t-1(12)) = price index for December year t-1p(t) = mean price index for year tp(t (12)) = price index for December year t.

The national accounts change in inventories, i.e. the product transaction P.52, is then obtained as P.52= C + E. E is item K.11 in the revaluation account for asset category AN.12, inventories, apart fromthe price change between mid-December in year t and the end of December in the same year. Wheninflation is low and there is little fluctuation in the relative prices, this last figure can be ignored forpractical purposes, so E can be considered as the revaluation or holding gain on the inventory duringthe year.

It is important to be aware of the risk of omissions and double counting when two methods ofcalculating inventories are used at the same time, one based on physical quantities of certain goodsand another based on business accounts. For example, the calculated inventories of energy goods areposted in the accounts for producers of energy products (stocks of finished goods), distributors ofenergy products (stocks of goods for resale in wholesaling enterprises) and, finally, as stocks of rawmaterials.

The Danish national accounts calculation system for inventories includes a key which allocates thoseagricultural and energy products which are covered by the physical calculation to certain industries,from which they are subtracted in the calculation based on the value of inventories according toaccounting statistics. This ensures consistency, i.e. all inventories and movements in inventories inthe economy are included once and once only.

Finally, it may be noted in parentheses that the theoretical and practical problems which arise in thenon-financial national accounts in connection with estimating changes in inventories and revaluinginventories have their counterpart in the financial national accounts, where the problem is how to split

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the change between opening and closing stocks of financial assets into a financial transactions shareand a revaluation share, plus "other volume changes", i.e. bankruptcies etc.

Ad c) Net insurance premiums and supplementary premiums

As discussed in Section 1.3.4.5, there is here, with good reason, a difference between the accountingprinciples in business accounts and in national accounts. In national accounts terminology, theinsurance premium actually paid on a policy is called the "gross insurance premium". That share ofthe gross premium which goes to cover risks, i.e. the payment of claims and allocations to provisions,which are the policyholders' property, is referred to as the "net insurance premium". The differenceconsists of the actual payment for the services of the insurance corporation, a share known as the"services element in the gross premium". In addition to the premium actually paid, there is, however,a further component of the total premium, namely the returns which the insurance corporations earnfrom insurance technical reserves, which, as already stated, are money belonging to policyholders.These returns are known as "supplementary premiums". In the national accounts, the amount iscounted as a flow of property income (D.44) to the insurance policyholders, who use the amount inquestion to buy insurance services in addition to those paid for via the actual insurance premium. Theeconomic argument is that this is the way insurance corporations operate. One essential aspect ofinsurance business is that the corporations should have clients' funds at their disposal in the insurancetechnical reserves. The supplementary premiums are therefore included in the insurance corporations'output value.

The calculations for insurance corporations and pension funds are discussed in detail in Section 3.16.Here, therefore, we discuss only those corrections which are needed to work out intermediateconsumption in those enterprises which are part of the population of policyholders.

In business accounts, the gross insurance premium is included in the accounting item "other externalexpenditure" (other overheads). To enable this to be used as the basis for an estimate of intermediateconsumption, the net insurance premium has to be deducted and the supplementary premiums added.

In the national accounts insurance calculation system, gross premiums, claims paid out, net insurancepremiums and supplementary premiums are estimated for each main type of insurance. After thesehave been aggregated by type of insurance, they are available in a breakdown over the nationalaccounts 130 industries, plus households as consumers and the rest of the world. The net insurancepremiums calculated plus the additions for supplementary premiums are input into intermediatesystem 2, and thus the treatment of insurance transactions is brought into line with the ESA 95 ruleswith the compilation of the target total module (MTM).

Ad d) Financial intermediation services paid for directly

In business accounts, fees, including commitment fees etc. paid to financial institutions, are normallycounted under financing expenditure, along with interest expenditure etc. In the main, financingexpenditure covers distributive transactions and should not be included in the estimate of intermediateconsumption, which is a product transaction (P.2). In the national accounts, the financial expenditureitem therefore has to be screened for purchases of services consisting of bank fees etc. and thosepurchases transferred to an accounting item which goes into the estimate of intermediateconsumption.

In the national accounts calculation system for financial institutions, an estimate is made of financialintermediation services which are paid for directly, in a breakdown by certain types corresponding to

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the financial institutions involved - cf. Section 3.16. In this calculation system, the total is divided upamong users on the basis of the available information, including the size of borrowing and lendingfrom/to industry groups and households as consumers plus the rest of the world.

The values calculated for payments for bank services etc. are input into intermediate system 2, thusensuring that they are included in the estimate of intermediate consumption when the target totalmodule is calculated.

Ad e) Other taxes (subsidies) on production

These taxes - property taxes or road fund licences, for example - are included in the business accountsunder the items "Other external expenditure" or "Other overheads". They are thus not shownseparately in the business accounts but are part of a more broadly defined accounting item whichprimarily covers types of expenditure which are to be included in the estimate of intermediateconsumption. If no correction were made, these taxes on production would incorrectly be counted inwith the calculation of intermediate consumption.

The source is the national accounts calculation system for other taxes on production. In this system,these taxes are available in a breakdown into the national accounts' 130 industries, and the values aredistributed over the detailed DK-NACE industries on the basis of the distribution of output withineach of the 130 national accounts industries. The other taxes on production thus calculated arededucted from the accounting item "Other external expenditure" in the intermediate system and hencein the compilation of the target total module, MTM.

Other subsidies on production also come from a special calculation system in the national accounts.In the business accounts, they will normally come under the "secondary income" item which isgenerally not used for the estimate of national accounts.

Ad f) Purchased software

In Danish business accounts, software which is purchased is not normally capitalised but isconsidered as current operating expenditure. This practice stems from the custom of applying aprudence principle. The value of purchased software, which, according to the ESA 95, has to becounted as gross fixed capital formation, therefore has to be deducted from the operating expenditureitems in the business accounts which cover purchases of goods and services.

In the national accounts, purchased software is calculated in a subsystem which, inter alia, includes abreakdown by industry. The calculation is made from the resources side on the basis of productstatistics for the IT industries. The total domestic supply of purchased software for the industries thuscalculated is distributed by industry on the basis of a key which, inter alia, depends on the number ofcomputers in the individual industries. To some extent, the key is an approximation, for want ofexpenditure-based information on software purchases. The uncertainty about the distribution byindustry within market industries does not, however, affect GNI, and the total for the economy as awhole may be said to be based on reasonably solid foundations.

The values in the subsystem are input into the intermediate system, with purchased software deductedfrom the business accounts' purchases of goods and services for the estimate of intermediateconsumption in the target total module.

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Ad g) Own-produced software

In Danish business accounts, own-produced software is not normally capitalised but is considered ascurrent operating expenditure (wages and salaries and the consumption of goods and services). Thispractice stems from the Annual Accounts Act and the customary application of a prudence principle.An allowance therefore has to be added to the business accounts' value of the output of capital goodsfor own use, to include the value of software (and large databases) produced on own account and forown use.

In the national accounts, own-produced software is calculated in a subsystem which, inter alia,includes a breakdown by industry. The calculation is based on total wages and salaries for highly-qualified IT staff, divided by industry. The values for own-produced software are input into theintermediate system and are thus included in the MTM.

Ad h) Financial leasing

In Danish business accounts (other than the accounts for shipping companies), rental payments underfinancial leasing contracts traditionally count as expenditure on the intermediate consumption ofservices. This expenditure is assigned to the accounting item "Other external expenditure" or "Othercurrent overheads". According to the ESA 95, rental payments under financial leasing contracts,other than the minor share which is FISIM, and which for the time being is not broken down by user,are not transactions in products. According to the ESA 95, rental payments consist of threecomponents: 1) interest, 2) repayments and 3) financial intermediation services paid for indirectly(FISIM). If business accounts were not corrected for financial leasing, the result would be anovervaluation of intermediate consumption.

In the national accounts, payments under financial leasing contracts are broken down into threecomponents as above. The interest component is a property income transaction which goes into thenon-financial sector accounts. The repayment share is a financial transaction occurring in thefinancial sector accounts and the FISIM is for the time being posted as intermediate consumption inan artificial sector and an artificial industry.

Payments under financial leasing contracts and the breakdown by industry are calculated in a nationalaccounts subsystem. In the questionnaire-based accounting statistics, there are special questions onfinancial leasing. The values are recorded in the intermediate system and for the calculation of theMTM the financial leasing payments are deducted when intermediate consumption is estimated.

Where payments under financial leasing contracts are concerned, business accounting practice overthe past few years has been moving towards recording on the basis of the national accounts principlesin the ESA 95. This change is being monitored closely for national accounts calculation purposes,and the correction for conceptual differences is continually being adjusted industry by industry in thelight of changes in accounting practice.

Ad i) Government fees

According to the ESA 95, paragraph 4.23 e), government fees and payments connected with checkscarried out by government are to be considered as purchases of services unless the amount charged isout of all proportion to the costs of the check. In business accounts, they will normally be consideredas direct taxes rather than purchases of services, and will thus not be included in intermediateconsumption unless a correction is made. Information on government fees, taxes paid for checks etc.

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is obtained from tax statistics. In a special calculation system, the figures are then broken down byindustry, with the result being input into the intermediate system and included in intermediateconsumption for the estimate of the MTM.

Ad j) Licences and royalties

According to the ESA 95, payments for licences and royalties on patents etc. are payments for theprovision of services which have to be included the estimate of output and intermediate consumption.In business accounts, they will in many cases be counted differently, as acquisitions of intangibleassets, for example, even though all that has been acquired is permission to use an intangible asset fora given period and not the asset itself. In the national accounts, therefore, allowances are added in forlicence and royalty payments as regards both intangible non-produced assets (patents etc.) andintangible produced assets (entertainment, literary and artistic originals, etc.). Licence payments forsoftware are already covered elsewhere - cf. f) above. These values are recorded in intermediatesystem 2 and included in output and intermediate consumption when the MTM is compiled.

Ad k) Entertainment, literary and artistic originals etc.

In the business accounts of authors, artists etc, the value of the originals they create will not becounted as output of capital goods, since this would break the rules in both the Annual Accounts Actand the Bookkeeping Act, as well as the SLS-E tax accounting rules.

To bring the accounts for these producers into line with the ESA 95 rules, own output of originalsmust be estimated separately and added to the business accounts output. Similarly, the amountcalculated has to be added to gross fixed capital formation on the expenditure side.

3.3.2 Correlation of accounting data and transition to national accountsestimate in kind-of-activity units

3.3.2.1Transition to common accounting plan

After processing, all the accounting statistics underlying the national accounts calculations of valueadded are transferred to a common accounting plan, namely the plan in the intermediate systemshown in Table 4. After this first stage, however, various accounting items are still defined as inbusiness accounts. For example, insurance premiums are still gross, where only that share of thepremium which is the services element (insurance payment) should be counted in the estimate ofintermediate consumption, and the remainder, which is the payment for risk coverage, i.e. the claimspaid out by the insurance corporations, should be treated as a distributive transaction. This databaseis referred to as the "intermediate system, version 1". After this, there is a transition to nationalaccounts definitions covering all industries and sectors. In the same connection, firms (institutionalunits) are broken down wherever necessary into producer units, so that the statistical unit for thecalculation of value added, as required in the ESA 95, is the producer unit or a hypothetical unit ofhomogeneous production. After these two types of account processing, the database is called"intermediate system, version 2".

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3.3.2.2Transition from institutional units ("firm branches") to producer units

Of the national accounts main sources in the form of accounting statistics, namely

1) detailed accounting statistics based on questionnaires and tax accounts2) less detailed accounting statistics based on standardised tax accounts3) accounting statistics for industries where public corporations predominate4) industry-specific accounting statistics and individual accounts for large entities5) accounting statistics for general government,

1), 3) and 5) are supplied from the primary statistics divisions in Danmarks Statistik in terms ofproducer units (local kind-of-activity units), whereas 2) and 4) are broken down by firm, i.e. areinstitutional units (legal units). In the primary statistics, the latter are grouped into "firm branches",i.e. by main activity for the firms covered by the statistics. For the national accounts estimate - morespecifically, for the transition from intermediate system version 1 to the final version 2 - sources 2)and 4) have to be processed, to convert them into producer units which are more homogeneous fromthe point of view of activity. The way in which this is done must be consistent with sources 1), 3) and5), so that all producer units in the economy are included once and once only.

Compared with many other countries, the economic activity of the actual "firm branches" is fairlyhomogeneous in Denmark, where it is extremely simple and inexpensive to set up a corporation withshare capital or a private company, and where there are few requirements for putting up liable capital.In other words, there is no institutional barrier to deter owners of corporations from setting up groupsin which the individual corporations are responsible for the group's various areas of business oractivities. It is therefore the exception rather than the rule in Denmark that legal units havewidespread secondary activities.

Whilst the transition from "firm branches" to the national accounts' 130 industries defined on thebasis of producer units is fundamental, of course, its importance should not be exaggerated. The mainactivity accounts for by far the largest share of activity in the legal units, and large-scale secondaryactivities occur primarily within manufacturing, where all the larger producer units with an industrycode other than that of the "firm branch" for the legal unit are sent a questionnaire, and where theproducer units are therefore observed directly.

The methods for the transition from "firm branches" to industries based on producer units in caseswhere these are not observed is based on use of the maximum currently available information on theproducer units within a firm. In all cases, the methods used ensure that the constraints on totals arecomplied with, i.e. that the sum of the figures calculated for the producer units is equal to the total forthe variable in question as stated in the firm accounts. Three situations arise:

1) sales are known at producer unit level2) sales are not known but total wages and salaries are known at producer unit level3) the transition is already made in the primary statistics.

In Section 3.1.2.3.7 above, we discussed the method used for the transition from firm branches tokind-of-activity unit industries, the basic unit for which is the local kind-of-activity unit (producerunit).

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3.4 Direct versus indirect methods of estimation

A direct estimate of value added in a given industry is understood to mean that, on the basis ofexhaustive accounting statistics for the industry in question, output and intermediate consumption,and thus value added, can be obtained via the statistical processing of the underlying businessaccounts.

The national accounts use indirect estimates of the value added of industries if accounting statisticsare not available. The critical factor is usually the estimate of intermediate consumption, since areasonably reliable estimate of sales in the various industries is usually available from the VATsystem, for example. An indirect estimate of the value added of a given industry may, for example,consist in calculating the industry's output value as x % of its sales (using firms as the statistical unit),where x is based on hypotheses or historical information about the ratio of sales value in the kind-of-activity units in the industry to firm-based VAT sales. Note that VAT sales include, inter alia, salesof used capital goods which should not be included in the estimate of output .

In the previous Danish national accounts system, which was replaced by the present one in 1997,these indirect calculations were used fairly widely, since up to the reference year 1987 there were noaccounting statistics in Denmark which covered all the industries in the economy. Coverage ofmarket services was particularly poor.

In the Danish national accounts published after 1997, the situation is very much better. With a singleexception, the value added of all industries is calculated from a direct estimate of output value andintermediate consumption in business accounts.

There is an indirect estimate of value added only for NR [national accounts] industry 702040, theletting of non-residential buildings etc, where output is calculated from the expenditure side as thesum of the rental expenditure of all other industries and where intermediate consumption is calculatedusing the input percentage (intermediate consumption/output value) for the letting of dwellings (i.e.actual letting) in industry 702009, dwellings, for want of satisfactory accounting information on theletting of non-residential buildings. Since the two activities are closely related, the uncertaintyregarding the calculation of value added is assumed to be minor.

The share of gross value added estimated by direct as opposed to indirect methods can be seen in thefollowing table.

Table 43 Share of gross value added, direct versus indirect methods of estimation, 1995

Method of estimation Gross value added, DKK mill. %Direct estimation 853 239 98Indirect estimation 18 103 2Total 871 342 100

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3.5 Direct estimates of levels as opposed to projections

"Direct estimates of levels" is understood to mean estimates of value added of industries where thelevel of both output and intermediate consumption is calculated each year as a level on the basis ofaccounting statistics or via an indirect calculation, cf. Section 1.3.6. Projections are taken to beestimates where output and intermediate consumption are calculated directly as levels for abenchmark year, whilst estimates for the current years are obtained by projecting output andintermediate consumption from the benchmark year using appropriate indicators. A more uncertainmethod of projection consists in assuming a constant ratio (input percentage) of intermediateconsumption to output in either current or (better) constant prices and projecting output , intermediateconsumption and implicitly value added using a single indicator.

In the final Danish national accounts, virtually all value added is based on current-year estimatesproduced directly as levels. In the final calculations, projections are used in only three areas:

4) housing (dwellings)5) a minor share of value added in NPISHs6) the allowance for underreporting etc. and for hidden activity ("work in the black economy").

Housing is an extremely important industry for the whole of the economy. In this area, extensivebenchmark calculations are carried out every fourth year in connection with the large-scale rentalsurveys - cf. description of the benchmark calculations in Section 3.17. The figures are projected onlywithin the four-year intervals. The practice in other countries is similar, though in many cases therewill be ten years between the calculations of levels, depending on the periodicity of population andhousing censuses.

As regards the second point, i.e. non-profit institutions serving households, by far the largest share ofvalue added, namely total wages and salaries, is calculated as a level every year, whilst projections areused only for the minor components, capital consumption and other taxes less subsidies onproduction.

Moving on to the third point, Denmark, like other countries, has neither the statistical sources norresources to produce a new estimate of the hidden economy every year. In most cases, it has beendecided to use a benchmark which is then projected. In Denmark's case, the benchmark for theestimate of underreporting is based on observations in years 1992-1994, whilst the level for work inthe hidden economy is based on observations connected with the 1992 harmonised labour forcesurveys. The method then consists of projecting output and value added linked to the black economyby assuming for each "product" in that economy that the changes run in parallel with domestic outputin the corresponding "legitimate" product balance. For example, the major item "work in the blackeconomy connected with building repairs" is assumed to move in parallel with "legitimate" buildingrepairs, i.e. building repairs complying with current legislation on taxes and contributions to socialsecurity schemes. The same assumption is made in the case of underreporting in the restaurantindustry, which is assumed to move in parallel with legitimate turnover in the industry. This methodof projection is equivalent to using constant correction percentages at the most detailed level in thecalculations. The levels for the hidden economy are determined at 5- to 10-year intervals, butadjustments for fringe benefits are estimated directly in terms of levels each year, since in most casesthe underlying sources are available on an annual basis. The levels for the hidden economy were thus

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last revised in the final national accounts for 1997 and 1998 in the light of new interview surveys ofthe extent of hidden activity.

Value added in the non-market activity of non-profit institutions serving households (NPISHs) iscalculated using projections for the (minor) part which consists of other taxes on production andconsumption of fixed capital. These value added components are calculated as constant percentagesof the compensation of employees. This latter, which accounts for the major share of value added, iscalculated directly in terms of levels each year on the basis of a particularly reliable statistical source,namely the estimate of total wages and salaries broken down by legal units and workplaces.

In conclusion, GDP as calculated using the production approach in the Danish national accounts forthe final years is projected from a benchmark only to a very limited extent. The situation is, ofcourse, very different with the provisional yearly and quarterly national accounts, which to a largeextent are based on projections from the latest final year.

Table 44 Share of gross value added estimated as a level as opposed to being projected, 1995

Method of estimation Gross value added, DKK mill. %Annual estimates, levels 784 982 90.1Projected from benchmark 86 360 9.9Total 871 342 100

3.6 Most important initiatives to provide exhaustive coverage

The main initiative aimed at ensuring that coverage is exhaustive consists primarily of the veryimportant work being carried out to ensure that the business register is updated to include newproducer units. This work is made easier by the fact that the threshold values in the VAT and taxsystems are extremely low, so that all regular economic activity, apart from that which counts as ahobby and is insignificant, currently has to be registered in a public administrative register whichfeeds into the business register. It is difficult to overstate the importance of this rapid registerupdating for the quality and degree of coverage of the national accounts . It is estimated that allregular economic activity, apart from that which is in the form of a hobby and is insignificant, iscaptured via use of the business register. As regards employees in private households, who, by theirvery nature, are very seldom included in the business register, by far the largest share of this activity isin the hidden economy, and all such activity is estimated via a special calculation not based on thebusiness register.

Fringe benefits and irregular economic activity such as underreporting and hidden activity are coveredby corrections which are explicit wherever possible. These are based on the principles ofCommission Decision 94/168/EC, Euratom, the "exhaustiveness decision", in compliance with whichthe Danish national accounts do not include production activity which in itself is illegal.

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3.7 Agriculture, hunting and forestry (NACE A)

3.7.1 Introduction

NACE Section A is defined by function and comprises four of the national accounts' 130 industries,namely:

011009 Agriculture011209 Horticulture, orchards, etc.014000 Agricultural services∗

020000 Forestry

It covers 23 industries at the most detailed DK-NACE level. In 1995, this NACE Section accountedfor 3.5% of the value added of the Danish economy - cf. Table 45.

Table 45 NACE Section A's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

011009 Agriculture 49 658 25 704 23 955011209 Horticulture, orchards etc. 4 276 1 792 2 483014000 Agricultural services 5 774 2 861 2 913020000 Forestry 2 107 1 137 970Total NACE A 61 815 31 494 30 321Percentage of the economy 3.7 4.0 3.5

3.7.2 Statistical sources

The primary statistics sources underlying the estimate of value added can be seen in the table 46 .

Table 46 Statistical sources underlying the calculation of value added for NACE A

National accounts industry Source011009 Agriculture Specific industry statistics: agricultural statistics011209 Horticulture, orchards etc. Specific industry statistics: agricultural statistics014000 Agricultural services (part), machine pools Tax accounting statistics014000 Agricultural services (part), landscape

gardeners (market producers)Tax accounting statistics

014000 Agricultural services (part), landscapegardeners (non-market producers)

General government statistics

020000 Forestry Tax accounting statistics

∗ The literal translation would be "machine pools, landscape gardeners etc.".

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The statistical source for agriculture, horticulture and the raising of fur animals is DanmarksStatistik's agricultural statistics which, as already stated, are a national accounts estimate. Thestatistics comply with the guidelines in Eurostat's agricultural statistics manual. The calculations ofintermediate consumption are based on 1) quantities of products used multiplied by the averageselling price, 2) accounting information collected by the economic advisers for agriculture and 3)annual accounting statistics for agriculture and horticulture compiled by Statens Jordbrugs- ogFiskeriøkonomiske Institut.

Agricultural statistics are the statistical source in the national accounts for the estimate of nationalaccounts industries 011009 agriculture and 011209 horticulture and orchards etc. These statistics donot cover landscape gardeners, the market share of which is instead covered by tax accountingstatistics, with the non-market share taken from general government statistics.

The estimates do, however, include machine pools, which in the national accounts come under014000, agricultural services. Since the output of all agricultural services (machine pools) is inputsfor agriculture, this does not affect the estimate of value added. In the national accounts, agriculturalservices (machine pools) are calculated separately on the basis of the tax-based accounting statisticsand the activity is transferred to industry 014000, agricultural services .

The agriculture and horticulture census of 2 June 1995 put the total number of agricultural andhorticultural holdings at 68 771. The census unit was the holding, which consists of the land area andthe buildings, machinery and livestock which go with it and are considered by the holders asbelonging to the same farm. A holding may thus consist of one or more properties assessedindependently and/or one or more parts of properties assessed independently. Areas which are rentedand leased are included with the holding but those which are let or leased out are not considered tobelong to the holding.

In 1983, the lower limit for a holding to be included in the agricultural and horticultural census wasraised. Since then, it has covered holdings with at least 5 ha under cultivation (including horticulturalcrops) and holdings with under 5 ha if the holding's total standard gross margin is at least ECU 3 000in 1980 prices. The standard gross margin is calculated on the basis of average gross margins perhectare or per head of livestock. Up to 1984, the SGM reflected output and prices during a three-yearperiod around 1973 and the threshold value was ECU 2 000. In 1985, the reference year for SGMswas changed to 1980. As a result of price changes, in particular, the threshold value was at the sametime increased to ECU 3 000. In 1995, the threshold value was put at ECU 4 000 in 1990 prices.The increased lower limit as from 1983 means that around 6 300 very small holdings, or around 8%of all agricultural and horticultural holdings, are no longer included in the census. However, theiragricultural output was under ½% of the total. For the estimate of output and value added inagriculture, the figures are grossed up for these very small holdings.

Until 1983, Danmarks Statistik collected information for the annual agricultural and horticulturalcensus from all holdings (over the lower limit). As from 1984, the survey has been carried out onlyevery second year (in odd years) as a total census. In the intervening years, information was collectedfrom only around one-quarter of holdings. Owing to budget cuts, it was decided that the annualstructural surveys, which, as already mentioned, alternated between sample and total surveys after1984, would be carried out as sample surveys only as from 1990. Consequently, the 1989 FarmStructure Survey was the latest total census available for the 1995 estimates. A new total census washeld in 1999.

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The 1995 sample survey covers around 24 300 holdings. The population is those holdings whichwere included in the total agricultural and horticultural census in 1989, updated by the sample surveysin 1990-94. Around 4 000 census units were added to this sample, covering all properties leased outwhich had changed hands since the last census and which could not be allocated directly on the basisof the owner's personal identity number to an existing holding with the same owner in the agriculturalstatistics register, plus new agricultural properties (on which information was obtained from themunicipal property registers). With a view to updating the agricultural statistics register, a sample ofaround 1 800 small holdings was added to the census.

The agricultural and horticultural census collects together many different kinds of information onindividual holdings. It is therefore almost impossible to make up a sample which can be expected togive the best possible estimate of each individual item of census information seen in isolation. Formost crops and livestock, the size of the census variables in question varies with the size, type andlocation of the holding. For the sample selection, therefore, the holdings were divided into some1 500 groups by type (main type of farming), size (standard gross margin) and location (county). Anumber of holdings within each group were then selected at random. The number in a given groupwas fixed to ensure that the estimate of the holdings' total standard gross margin was as statisticallyreliable as possible. The SGM was chosen as the optimisation variable because, owing to itsdefinition as a measure of economic size, it may be assumed that the main census figures and the totalstandard gross margin correlate closely. As a result of the selection method, the sample includes acomparatively large number of the largest and most specialised holdings.

The information reported by the holdings selected is grossed up to total level by multiplying theholding information within each group of holdings by the reciprocal sampling fraction. As a measureof the statistical uncertainty in the sample estimate, the relative spread of the estimates over the mainresults was calculated. The relative standard deviation gives the standard deviation of the estimate asa percentage of the estimate. With 95% certainty, the true value will lie within certain limits, whichcan be calculated as the estimate +/- the spread of the estimate multiplied by 1.96. The statisticaluncertainty of the estimates increases as the degree of detail increases. For the total area undercultivation, the relative deviation was calculated at 0.2%.

3.7.3 Method of calculation

Output is normally calculated using a price times volume method. For the largest crop product,namely cereals, the harvest yield of the individual kinds of cereal is calculated first of all, and this isthen multiplied by the average selling prices collected from all the larger cereal merchants. Foranimal products, sales value is calculated in a similar way by multiplying the quantities sold by theaverage selling prices obtained by the producers. The value of changes in inventories and livestocknumbers, as well as output for own use, is added.

Output in agriculture and horticulture, other than landscape gardeners, is divided into 49 productbalances in the national accounts supply and use tables. The ten largest products account for over90%. Animal output is by far the most important. Its distribution by product is shown in the figurebelow.

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Figure 4 Output values for animal products, 1995

M ilk 3 2 % E g g s 2 % C a t t le 1 0 % P ig s 4 6 %

P o u lt ry3 %

F u ra n im a ls 6 %

O th e r1 %

It can be seen that pigs for slaughtering and raw milk are the two most important products.

The estimate of agricultural value added is based on a set of definitions and methods of calculationwhich accord with the guidelines agreed by the EU countries for returns to the EU statistical office,Eurostat. These guidelines are in turn drafted to comply with the ESA 79 definitions.

The following points should be made, in particular, about the above guidelines:

The sales values of the products listed give the value of total sales at ex-farm prices, including theshare which is sold to dealers and bought back later during the same period to be used as means ofproduction within the industry. Similarly, expenditure on means of production which are bought backis included in total intermediate consumption expenditure. Only sales from the agricultural sector,lumped together, and purchases which go to the agricultural sector are included in the estimate.Internal sales and purchases between agricultural enterprises are not included. Quantities which areproduced and then used as means of production (e.g. cereals for animal fodder) on the propertieswhere they are produced are included in the sales value via the final product.

In accordance with the accounting rules in the ESA 79, expenditure on ordinary repair andmaintenance of the production apparatus and on hand tools and the like is considered to be currentexpenditure on production and is therefore included in intermediate consumption.

Agricultural statistics use gross value added at factor cost (gross factor income) as the primaryconcept of value added. The national accounts primary value added concept, gross value added(GVA) at basic prices, is obtained by adding other taxes on production to gross factor income anddeducting other subsidies on production.

Gross factor income in agriculture is estimated by adding general subsidies to the agricultural industry(but excluding investment subsidies) and deducting taxes and duties on the agricultural productionapparatus, primarily property taxes. Gross factor income is thus equal to: total sales value + the valueof changes in stocks and livestock herds with the producer - expenditure on intermediate consumption+ general operating subsidies - taxes on the production apparatus.

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Gross factor income is that amount which is available as compensation for the total labour and capitalinput in the agricultural sector, including depreciation, the return on equity and borrowed capital,wages for non-family workers and remuneration for the farmer's labour input, etc.

Danmarks Statistik's estimate of agricultural gross factor income before the addition of generaloperating subsidies and the deduction of property taxes and indirect taxes can be seen in AgriculturalStatistics Table 14.1 (cf. point D). The figures given equal total sales value plus the value of changesin stocks and livestock herds held by the farmers minus agricultural expenditure on purchased rawmaterials and auxiliaries and services from other industries.

The estimate includes payments to producers from support schemes which involve payments based onindividual products, and similarly the taxes on products paid by producers under the relevant taxationschemes are deducted from the values for the individual products. The sales values given thuscorrespond to the national accounts basic price concept.

This applies primarily to proceeds to agriculture in the form of product subsidies from the EU'sagricultural fund - see Agricultural Statistics Table 14.2 (EAGGF), which are included in the valuesfor the individual products, and similarly the charges paid by agriculture to the EU are the largestshare of total taxes on products. For those schemes which form the basis of the amounts in question,reference should be made to the Official Journal of the European Communities and to the guidelineson the various schemes which are issued by the Ministry of Agriculture and the EU Directorate.

The value of products sold covers total sales of the individual products, including to dealers and thelike, and the producers' consumption of their own output. The values are calculated on the basis ofquantities sold and the average selling prices obtained by the producers.

The sales values for cereals cover total sales during the periods in question, including to dealers. Thefigures shown represent sales values obtained after deduction of the co-responsibility levy for cereals.The sales value for the other crop products covers the sale of the output of the periods in question.Other crop products are primarily straw, but fodder beet etc. is also included.

Sales values for meat and livestock cover, for each individual type of livestock, both animalsslaughtered in Denmark and the ex-farm value of live animals exported for slaughter. In addition, theex-farm sales value of livestock for breeding and production is included in the case of animals whichare exported whilst sales from one farmer to another are not included, even though the sales may bethrough dealers (e.g. sales of piglets). The value for cattle includes the male bovine premium up to1994 inclusive. Since 1995, this premium has been added to general operating subsidies and,accordingly, deducted from output value.

The sales value of natural milk is the value of the total quantity of milk weighed in at dairies, plus theproducers' own consumption and direct sales to consumers. The figures quoted are sales valuesobtained after deduction of co-responsibility levies (until 1 April 1993) and any superlevies undermilk quota schemes plus general taxes on production etc., whilst amounts paid out to producers undersuspension schemes are included in the figures.

The sales value of eggs for human consumption covers sales of hens' eggs for human consumptionincluding producers' own consumption and sales directly to consumers. Other animal productsinclude sales of honey, wool, rabbits for fattening and exports of hens' eggs for hatching and eggsfrom poultry other than hens.

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The value of changes in stocks and livestock herds held by producers is estimated on the basis of aspecial calculation for each of the periods for which changes can be estimated in quantity terms. Forthe value calculation, time-weighted average selling prices for the period are used and the value forthe whole year is estimated as the sum of the values of the changes in the individual periods.

For cereals, the changes in the business year/calendar year are estimated for each of the periods inquestion as a whole, and for the value calculation the average sales prices for the whole period areused. For other crop products sold (including horticultural) and for roughage, no estimate is made ofchanges in stocks.

According to paragraph 3.58 of the ESA 95, the output of crop products should be estimated not atharvest time but continuously over the entire period of growth. In Denmark, the vast majority ofcrops are harvested in the year in which the crop grows. The exception is winter cereals (winterwheat and barley), which are sown the year before the harvest. However, plant growth up to the yearend is so minimal that for practical purposes it can be ignored. In the annual accounts, there istherefore no need to correct stocks as estimated after the harvest. In the quarterly national accounts,however, there are substantial movements in inventories of work-in-progress to implement the rule inparagraph 3.58 of the ESA 95.

For pigs, the changes are estimated on the basis of the changes in the periods between the six annualcensuses. For cattle, they are estimated from six-monthly censuses. For horses, sheep and furanimals, only annual changes are estimated, but these calculations are made in terms of both theagricultural year and the calendar year. For poultry, only changes during the agricultural year arecalculated. The changes in livestock numbers thus estimated must be seen as the best possiblefeasible measure of animal production in the agricultural sector in line with the added growthprinciple - cf. ESA 95, paragraphs 3.58 and 3.119 b) (2). According to the ESA 95, the output valueof animals for slaughter should not be counted as at the date of slaughter but continuously throughoutthe period of growth. Again according to the ESA 95, changes in numbers of animals for slaughtershould be recorded as changes in inventories of work-in-progress (finished goods, etc.) whereaschanges in stocks of livestock for breeding should be treated as gross fixed capital formation (P.51).However, agricultural statistics do not make a distinction between the two types of changes inlivestock. In the national accounts, total changes in inventories of animals for slaughter and livestockfor breeding are treated as part of gross fixed capital formation under the heading "changes inlivestock". This failure to distinguish between the two types does not, of course, affect GNI.

Expenditure on intermediate consumption is total expenditure on the raw and auxiliary materials usedin production, including purchases from dealers and the like, expenditure on the repair andmaintenance of the production apparatus and various expenditure on services from other industries. Ifinformation is available on the quantities and prices of the raw and auxiliary materials used, theexpenditure is calculated on the basis of total purchases and average prices paid for the individual rawand auxiliary materials, whilst for the other expenditure items, information from the availableaccounting estimates and various special estimates is used.

Expenditure on seed corn and cereals for fodder includes purchases from dealers. Expenditure onfeedingstuffs is calculated on the basis of actual purchases of either straight or compoundfeedingstuffs and the prices actually paid by the farmers for the products supplied. Expenditure onmilk returned for fodder covers the repurchase of skimmed milk, buttermilk and whey. Expenditureon other purchases of feedingstuffs covers items such as molasses, meat and bonemeal, fodder yeast,pulp, brewing dregs and lees, together with various imported vegetable feedingstuffs (e.g. tapiocaflour and citrus pulp) and sugar for feeding bees.

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Expenditure on fertilisers is calculated as the value of the total consumption in Denmark with aroughly estimated deduction of 1% to cover consumption other than agricultural or horticultural.

Expenditure on pesticides is calculated on the basis of information from Miljøstyrelsen [the DanishEnvironmental Protection Agency]. Expenditure on energy covers the total consumption of electricityand fuel by the agricultural and horticultural industries, including for the business use of privatevehicles. The consumption of fuels by machine pools for work in agriculture and horticulture isincluded. The CO2 tax is included in energy expenditure. Expenditure on repairs and maintenancecovers buildings for stock-rearing, production plant, machinery and tools (including purchases ofhand tools) and the repair and maintenance of soil improvement and land reclamation. Foragriculture, expenditure is calculated on the basis of accounting information collected by economicadvisers. For horticulture, the repair and maintenance expenditure excludes landscape gardening,which is not included in the estimate.

Other expenditure on raw and auxiliary materials and services covers expenditure on growing media,pots and plastic for use in plant-breeding in agriculture and horticulture and expenditure on servicessuch as those provided by machine pools (shown as a separate industry in the national accounts),veterinary surgeons, milk-recording associations, insurance corporations and banks, and subscriptionsto trade unions, sales taxes, freight charges, etc.

Agricultural statistics also cover, in addition to agricultural and horticultural activities (including therearing of animals for fur), hunting, fishing and related services.

In addition to the above sources, total intermediate consumption is calculated by grossing up to thetotal population of agricultural holdings. As already mentioned, there is a separate calculation tocover very small holdings not covered by the annual agricultural censuses. A good deal ofintermediate consumption can be calculated extremely reliably on the basis of domestic supplies, ineither physical quantities, which are multiplied by an average price, or in the form of an estimate oftotal sales to agriculture. For the remaining share of inputs, the source is the accounting informationavailable either from accounts collected by agricultural economic advisers or the annual sample-basedaccounting statistics for agriculture and horticulture from Statens Jordbrugs- og FiskeriøkonomiskeInstitut.

3.7.4 Breakdown of output by product

Since agriculture, horticulture and the rearing of fur animals are activity-defined on the basis of theproducts produced and the estimate of output value using a price times volume method, the productbreakdown is self-evident.

3.7.5 Breakdown of intermediate consumption by product

In the agricultural statistics, the vast majority of intermediate consumption is allocated directly byproduct, in most cases on the basis of information on quantities of the products used (e.g. foddercereals) multiplied by average prices or information on sales to agricultural holdings (feedingstuffs,fertilisers and pesticides). The remaining share of intermediate consumption, such as energy andservices, which is typically based on accounting statistics, is available in the agricultural statistics inan estimate by main type of product. For the compilation and balancing of the national accountssupply and use tables, national accounts statisticians divide these main types into individual products,in most cases using the most detailed accounting plan in the accounting statistics.

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3.8 Fishing (NACE B)

3.8.1 Introduction

NACE Section B is defined by group of producer units and covers one of the national accounts' 130industries, namely 050000 fishing. It covers two industries at the most detailed DK-NACE level,namely:

050100 Fishing050200 Operation of fish hatcheries and fish farms.

This section accounted for 0.3% of the value added of the Danish economy in 1995 - cf. Table 47.

Table 47 NACE Section B's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

050000 Fishing 4 137 1 845 2 292Total NACE B 4 137 1 845 2 292Percentage of the economy 0.2 0.2 0.3

3.8.2 Statistical sources

The primary statistical sources underlying the estimate of value added can be seen in Table 48.

Table 48 Statistical sources underlying the calculation of value added for NACE B

National accounts industry Source050000 Fishing (value added) Tax accounting statistics050000 Fishing (product breakdown) Ministry of Fisheries: fish landings

3.8.3 Method of calculation

Value added is calculated by the standard method for industries covered by the general accountingstatistics based on tax accounts - cf. Section 3.1.2.3.

3.8.4 Breakdown of output by product

The output value calculated is broken down by type of fish on the basis of the Fisheries Ministry'scatch statistics, which cover landings in both Danish and foreign ports. The output value according tothe national accounts calculations is much higher than the value of the quantities of fish landed. Thedifference can be explained partly by internal deliveries of fish in the fishing industry (in fact, atrading activity) and partly, perhaps, by avoidance of the fish quotas by means of unofficial landings.Estimated internal deliveries are posted as inputs for the fishing industry itself when the supply anduse tables are compiled.

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3.8.5 Breakdown of intermediate consumption by product

There are no continuous cost structure surveys for fishing. The input structure is based oninformation on the structure of costs which can be found in the SLS-E accounting plan up to 1990 andannual information on the consumption of energy in energy statistics.

3.9 Mining and quarrying (NACE C)

3.9.1 Introduction

NACE Section C is defined by group of producer units and covers two of the national accounts' 130industries, namely:110000 Extraction of crude petroleum etc.140009 Extraction of gravel, clay, salt, etc.

These in turn cover 11 industries at the most detailed DK-NACE level. In 1995, this sectionaccounted for 0.9% of the value added of the Danish economy - cf. Table 49.

Table 49 NACE Section C's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

110000 Extraction of crude petroleum etc. 8 615 1 977 6 638140009 Extraction of gravel, clay, salt etc. 2 364 1 362 1 001Total NACE C 10 979 3 339 7 639Percentage of the economy 0.66 0.42 0.88

3.9.2 Statistical sources

The primary statistical sources underlying the estimate of value added can be seen in Table 50.

Table 50 Statistical sources underlying the calculation of value added for NACE C

National accounts industry Source110000 Extraction of crude petroleum etc. Business accounts (all units)140009 Extraction of gravel, clay, salt etc. Questionnaire-based accounting statistics

Industry 110000, the extraction of crude petroleum etc, covers all activity relating to the production ofcrude petroleum and natural gas, which is concentrated in the Danish sector of the North Sea. Theoutput of petroleum and gas is estimated ex-North Sea, i.e. the value of pipeline transport is includedin the output value. Pipeline transport is operated by a single publicly owned and controlledcorporation, DORAS, which is part of national accounts industry 602409, freight transport by roadand via pipelines. No further distribution or processing is counted in output value. The pipeline taxof 5% of the value of the oil transported, which has to be remitted to the government, is considered as

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a product tax on pipeline transport services. The output value of DORAS, plus the pipeline transporttax, is posted as intermediate consumption in the "extraction of crude petroleum etc." industry.

The industry covers Dansk Undergrunds Consortium (DUC) and other licence holders in this area,plus the activities of the DOPAS corporation other than prospecting for oil and gas. In 1995, DUCwas by far the most important operator, the only one which had production plant. The industryconsists solely of these companies. Danmarks Statistik collects very detailed accounting informationfrom DUC and any other corporations which may begin to extract petroleum and gas. In addition,accounting information collected by Energistyrelsen is used for those corporations which have aconcession in parts of the North Sea and which are prospecting for oil and gas but do not yet have anyproductive wells, with the exception of the state corporation DOPAS.

Industry 140009, the extraction of gravel, clay, salt etc, is covered by the questionnaire-basedaccounting statistics.

3.9.3 Method of calculation

The output value of 110000, i.e. the value of the volume of oil and gas produced, is taken directlyfrom the accounts divided into these two products. Exploratory drilling for own account is also takenfrom the accounts.

Exploratory drilling by units in the industry for their own account (other than by the DOPAScorporation) is included in the industry's output value. This output is not transferred to construction.Exploratory drilling etc. which is purchased comes either from domestic suppliers in the constructionindustry or is imported. All exploratory drilling is capitalised, i.e. is treated as gross fixed capitalformation in the national accounts.

The exploratory share - output, intermediate consumption and the compensation of employees - of theactivity of the DOPAS corporation, which also carries out certain ancillary functions for oil and gas,is transferred to the construction industry. The share of DOPAS's intermediate consumption whichdoes not relate to exploratory activity is included in the intermediate consumption of industry 110000,extraction of crude petroleum, natural gas etc. The corresponding output value is netted out, i.e. isincluded neither as output nor as intermediate consumption in the industry.

The output value of 140009 is taken directly from the questionnaire-based accounting statistics, whichare grossed up to cover all producer units in the industry. Intermediate consumption is calculated bythe standard method for the transition from the accounting statistics accounting plan to the target totalmodule via the intermediate system.

3.9.4 Breakdown of output by product

The output of the extraction of crude petroleum etc. is broken down directly into the three productsconcerned: crude petroleum, unprocessed natural gas and exploratory drilling, on the basis of theaccounts collected in. The extraction of gravel, clay, salt etc. industry is covered by product statisticsfor manufacturing. The output calculated is divided by product on the basis of the breakdown in theindustrial commodity statistics.

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3.9.5 Breakdown of intermediate consumption by product

In the extraction of crude petroleum etc, operating expenditure is divided in the accounts into input ofpipeline transport services (DORAS + oil pipeline tax), repair and maintenance and other operatingexpenditure. These first two together cover by far the greater share of intermediate consumption. Inthe national accounts supply and use tables, the remainder is broken down by product, using roughfigures in some cases.

3.10 Manufacturing (NACE D)

3.10.1 Introduction

NACE Section D is defined by group of producer units and covers 55 of the national accounts’ 130industries - cf. Table 51. In the detailed DK-NACE, manufacturing consists of 322 industries, each ofwhich is calculated separately when the primary statistics are processed.

In 1995, this section accounted for 17.7% of the value added of the Danish economy - cf. Table 51.

Table 51 NACE Section D’s contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

151000 Production etc. of meat and meat products 38 746 31 447 7 299152000 Processing etc. of fish and fish products 10 347 8 165 2 182153000 Processing etc. of fruit and vegetables 4 595 3 554 1 041154000 Manufacture of vegetable and animal oils

and fats2 855 2 476 379

155000 Manufacture of dairy products 21 811 18 310 3 501156009 Manufacture of starch products 14 891 10 856 4 034158109 Manufacture of bread, cake and biscuits 4 750 3 114 1 635158120 Bakers’ shops 3 940 1 910 2 030158300 Manufacture of sugar 2 809 1 773 1 037159000 Manufacture of beverages 9 056 5 817 3 239160000 Manufacture of tobacco products 3 035 1 597 1 438170000 Manufacture of textiles 8 398 5 307 3 091180000 Manufacture of wearing apparel 5 403 3 441 1 962190000 Manufacture of leather and leather

products2 092 1 557 534

200000 Manufacture of wood and wood products 11 828 7 573 4 255210000 Manufacture of pulp, paper and paper

products10 154 6 436 3 719

221200 Publishing of newspapers 6 245 3 013 3 232221309 Publishing activities, excluding

newspapers9 048 5 708 3 340

222009 Printing activities, etc. 12 395 6 555 5 840230000 Manufacture of refined petroleum products

etc.8 756 8 477 279

241109 Manufacture of industrial gases andinorganic basic chemicals

912 410 503

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241209 Manufacture of dyes, pigments andorganic basic chemicals

4 424 2 413 2 010

241500 Manufacture of fertilisers 1 488 1 173 315241617 Manufacture of plastics and synthetic

rubber842 546 296

242000 Manufacture of pesticides and other agro-chemical products

1 410 849 561

243000 Manufacture of paints, printing ink, etc. 3 532 2 523 1 009244000 Manufacture of pharmaceuticals, etc. 14 088 6 706 7 382245070 Manufacture of detergents and other

chemical products7 005 4 476 2 529

251122 Manufacture of rubber products and plasticpacking goods

9 609 5 876 3 733

252300 Manufacture of builders’ ware of plastic 1 487 962 525252400 Manufacture of other plastic products

n.e.c.5 278 2 780 2 498

261126 Manufacture of glass and ceramic goodsetc.

3 951 2 249 1 702

263053 Manufacture of cement, bricks, tiles,flags, etc.

1 961 1 009 952

266080 Manufacture of products of concrete,cement, asphalt, etc.

10 863 6 356 4 507

271000 Manufacture of basic ferrous metals 2 337 1 646 691272030 First processing of iron and steel 4 261 2 918 1 343274000 Manufacture of basic non-ferrous metals 2 287 1 574 714275000 Casting of metal products 1 672 859 813281009 Manufacture of construction materials of

metal etc.17 216 9 158 8 058

286009 Manufacture of hand tools, metalpackaging etc.

11 438 6 328 5 110

291000 Manufacture of marine engines,compressors, etc.

15 772 7 576 8 196

292000 Manufacture of other general purposemachinery

16 310 10 011 6 298

293000 Manufacture of agricultural and forestrymachinery

4 260 2 556 1 704

294009 Manufacture of machinery for industriesetc.

14 129 8 147 5 982

297000 Manufacture of domestic appliances 5 424 3 602 1 822300000 Manufacture of office machinery and

computers1 708 1 086 623

310000 Manufacture of electrical machinery andapparatus

14 774 9 325 5 449

320000 Manufacture of radio and communicationequipment

8 899 5 304 3 595

330000 Manufacture of medical and opticalinstruments etc.

10 972 5 859 5 113

340000 Manufacture of motor vehicles, etc. 5 712 3 519 2 193351000 Building and repairing of ships and boats 9 408 5 871 3 537352050 Manufacture of transport equipment

excluding ships, motor vehicles etc.1 921 1 158 762

361000 Manufacture of furniture 17 510 10 783 6 727362060 Manufacture of toys, gold and silver

articles etc.5 807 3 195 2 612

370000 Recycling of waste and scrap 793 628 165Total NACE D 430 615 276 520 154 095Percentage of the economy excluding FISIM 25.9 34.9 17.7

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NACE Section D covers a much greater share of the national accounts’ 130 industries than its shareof the value added of the economy because the input percentage, i.e. the ratio of intermediateconsumption to output , is greater in manufacturing than in most other industries. This is due largelyto specialisation, i.e. in many cases manufacturing enterprises buy semi-finished products from othermanufacturing enterprises and concentrate on those parts of the total process where they havecomparative advantages. Manufacturing thus accounts for a greater share of output (gross), ofintermediate consumption and thus of the product flows in the economy than is the case if valueadded is the criterion.

For an optimum description of product flows in the economy in the supply and use tables and in thesymmetrical input-output tables, manufacturing should be allocated a share of the number ofindustries covered by the calculation system which is greater than its share of value added. Comparedwith the previous Danish national accounts system, the number of industries within manufacturinghas actually been reduced substantially, from 82 to 55. The breakdown of the services industries,however, is much more detailed in the present Danish system than in the previous one.

3.10.2 Statistical sources

By far the most important primary statistics source underlying the estimate of value added is thequestionnaire-based general accounting statistics, use of which in the national accounts was describedin Section 3.1.2.3. Below, therefore, we discuss only statistical sources and the correspondingcalculations which are not connected with the questionnaire-based accounting statistics. Table 52gives an overview of manufacturing industries where the general accounting statistics aresupplemented by other information for the national accounts’ estimate of value added.

Table 52 Statistical sources underlying the calculation of value added for NACE D

National accounts industry Source151000 (part: coverage of all slaughtering) Information from the Meat Inspectorate,

Agricultural statistics151000 (part: back payments) Agricultural statistics155000 (back payments) Tax accounting statistics370000 Tax accounting statisticsOther NACE D industries Questionnaire-based accounting statistics

3.10.3 Method of calculation

The method of calculation for by far the largest share of manufacturing is the standard method for useof the general questionnaire-based accounting statistics described in Section 3.1.2.3. We willtherefore discuss below only those methods used for the sources listed in Table 52.

In 151000∗, production etc. of meat and meat products, a correction is made first of all forslaughtering at public slaughterhouses [slagtehuse] which are not classified as slagterier and homeslaughtering. Where value added is concerned, this correction is extremely modest, since the valueadded consists only of the cost of the actual slaughtering. As regards the total output of meat,

∗ A literal translation of the Danish for 151000 would be simply "slaughterhouses etc.". But two words are used inthis paragraph for "slaughterhouses". It would seem that there is a distinction between "slagterier", which areallowed to export, and "slagtehuse", which may not.

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however, it is not insignificant, and is therefore important for the adjustment of the product balancesfor meat.

Much more important for value added is the other correction in the production etc. of meat, namelyfor the treatment of back payments to agriculture for the supply of animals for slaughter. In 1995, thiscorrection amounted to DKK 1 090 million, which is the amount subtracted from the accountingstatistics’ uncorrected value added in the production etc. of meat when the figures were processed fornational accounts purposes.

Many slaughterhouses [slagterier] in Denmark are organised on a cooperative basis, members of thecooperative being the farmers who supply to the slaughterhouses. When agriculture supplies animalsto cooperative slaughterhouses, the farmers receive a payment on account based on the official pricesfor pigs, cattle, etc. When the slaughterhouses’ accounting results are worked out, a substantial shareof the surplus is distributed to the suppliers as back payment over and above the original settlementprice paid on account. It is these price adjustments to the suppliers’ settlement prices which areknown as “back payments”. In agricultural statistics, the amounts in question are considered as partof the basic price and are therefore included in the output value of slaughter animals from theagricultural industry. In the slaughterhouses’ accounts and in the questionnaire-based accountingstatistics, however, they are not counted as payment for goods, i.e. as intermediate consumption, butas profit, i.e. property income to the members of the cooperative. The national accounts’ correctionfor back payments corrects for the inconsistent accounting in the two sets of primary statistics. Thenational accounts comply with the agricultural statistics accounting and consider back payments aspart of agricultural selling prices. The value added which they represent is therefore included in thenational accounts under agriculture and not under meat production [slagterier]. Without thecorrection, agricultural back payments would be counted twice over in total value added. Thecorrection consists of reclassifying back payments in the accounts for the slaughterhouses [slagterier]from profit to intermediate consumption.

The correction for back payments in 155000, the manufacture of dairy products, is made in exactlythe same way. There are a large number of cooperatives in the dairy industry, too, operating withback payments to suppliers, in this case the milk producers. The correction for back payments in themanufacture of dairy products was DKK 684 million in 1995.

Finally, 370000, the recycling of waste, a manufacturing industry which is a small one in Denmarkand not covered by the questionnaire-based accounting statistics, is given special treatment. The twosub-industries in 370000 are covered instead by the general tax accounting statistics. The method ofcalculation is the standard method for industries covered by these accounting statistics, as described inSection 3.1.2.3.

3.10.4 Breakdown of output by product

For manufacturing, there are particularly comprehensive and detailed product statistics, namely theindustrial commodity statistics (VS). These cover all producer units within manufacturing whichhave 10 or more employees. However, certain new units above this threshold will in many cases notbe included in the statistics during the first year of their existence. On the other hand, they are alwaysincluded in accounting statistics, either directly in the sample or indirectly through the grossing up onthe basis of employment. Their output value is covered in full, but the breakdown by product is notknown in every case and therefore has to be estimated on the basis of the product distribution forother producer units in the same industry.

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The product classification in the industrial commodity statistics is the Combined Nomenclature,which has some 10 000 headings. These are aggregated with the help of the national accounts'product file, which is a continuously updated key between the CN commodity codes and nationalaccounts products (around 2 750 goods and services). From the national accounts products, there is aclear-cut link to the 4-digit level CPA.

For the vast majority of sales in a given manufacturing industry, the breakdown by product isobserved directly in the VS. For the remaining share up to total sales according to national accounts,two different methods are used for the product breakdown. In those cases where the enterprises notincluded in the VS must be assumed to produce the same kinds of goods as enterprises which arecovered, the figures are simply grossed up on the basis of the VS product structure. In certain othercases, where the enterprises not covered are primarily small ones with fewer than 10 employees, aspecial product breakdown is used instead, which is more representative of small enterprises in theindustry in question. These breakdowns are made at the most detailed level in the industryclassification, i.e. corresponding to 322 manufacturing industries.

The breakdown of output in manufacturing by product was illustrated in Section 1.3.9.1.2 using as anexample 320000, the manufacture of radio, television and communication equipment etc. Below is amore detailed description of the sources and methods underlying the product breakdowns.

What sales include:Code 1010 in the functional target total module, MTM, shows total sales in each of the nationalaccounts 130 branches.

In manufacturing branches, total sales will consist of:

net sales according to accounting statistics+ manufacture of plant and machinery for own use+ own output of software+ fringe benefits, output

where net sales according to accounting statistics will be exclusive of sales of goods for resale, whichare picked out and transferred to wholesale.

Coding of sales in the intermediate system:

In the intermediate system, the different parts of sales are coded as follows:

MLS- MLS-code code text

1007 Fringe benefits, output1012 Manufacture of plant and machinery for own use1015 Own output of software1017 Income from licences and royalties (part of net sales)1018 Other net sales, excluding 1017 and excluding 1059 (part of net sales)1059 Other (services) sales, excluding 1017 (part of net sales).

Product definitions

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When the national accounts product balances are compiled, total sales are divided over detailedproducts, which in the case of goods are defined on the basis of HS (Harmonised System) groups andfor services are based on the CPA (Central Production Classification by Activity).

Products are allocated codes consisting of an initial letter followed by 6 digits. The initial lettercharacterises the product as follows:

E Output for own consumptionF Fringe benefitsH “Hidden” output (black economy)K Plant and machinery (capital goods), plant for own useL Processing to orderM Repairs and installation work in manufacturingN Services, in non-profit organisationsQ Government non-market services for consumptionS Public sales incomeT Services, marketU Non-HS goodsV HS goods.

Breakdown of sales by product:Those parts of sales which are coded in the intermediate system as 1007, 1012 or 1015 are allocateddirectly to F and K products.

Licensing income and other (services) sales, which in the intermediate system are coded 1017 or1059, are then calculated in special subsystems. These shares are allocated to two specific Tproducts.

Remaining net sales (MLS code 1018) are divided up by product with the help of the industrialcommodity statistics and a DK-NACE branch-specific key for minor manufacturing activity. Thebreakdown and the basis for it can be seen in the following tables, 53 and 54. For much the largestshare of sales in this manufacturing industry, the product breakdown is directly observed, and for thisreason there is very little uncertainty about the product composition. This is characteristic of virtuallyall national accounts industries within manufacturing.

Table 53 Extract from the 1995 intermediate system for NACE 320000

MLSNationalaccounts Basic

MLS code text code industry priceFringe benefits, output 1007 320000 8 807Manufacture of plant and machinery for own use 1012 320000 39 238Own output of software 1015 320000 17 680Income from licences and royalties 1017 320000 0Other and unspecified net sales (excl. “other sales” and excl. licences androyalties)

1018 320000 8 399 868

“Other sales”, excluding licences and royalties 1059 320000 286 862Total sales 1010 320000 8 752 455

Inventories of finished goods 2065 320000 146 767

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Output value 320000 8 899 222

Table 54 Breakdown of sales in NACE 32 by product

National DK-NACE Sales of own Industrial Differences Differences For the For theaccounts industry products in Commodity MLS-VS MLS<VS breakdown breakdownindustry the MLS Statistics with the VS with

(own products (VS) (Total for year t “craftfrom sales P.01 VM1995DB.tx

tindustries”

input intoMLS

Excluding year t-1

excluding goods for HÅ_NGL.92other sales resale P.43P.63 from VS and excluding

other salesP.63)

320000 321010 1 028 815 965 995 62 820 0 965 995 62 820320000 321090 651 472 486 773 164 699 0 486 773 164 699320000 322010 1 157 638 1 257 462 -99 824 -99 824 1 157 638 0320000 322020 1 492 698 1 217 933 274 765 0 1 217 933 274 765320000 323010 2 169 401 2 021 142 148 259 0 2 021 142 148 259320000 323020 976 371 1 021 435 -45 064 -45 064 976 371 0320000 323030 923 473 781 554 141 919 0 781 554 141 919Total 8 399 868 7 752 294 647 574 -144 888 7 607 406 792 462

The VS “net sales” include a breakdown of sales into “sales of own goods”, “processing to order” and“repair and installation work carried out for others”, which makes possible a corresponding productbreakdown into V-, L- and M-products.

3.10.5 Breakdown of intermediate consumption by product

For that part of the intermediate consumption of manufacturing which consists of goods, includingenergy and packaging, there are particularly comprehensive and detailed costs structure statistics.Energy consumption is obtained from a special annual survey.

Information on the consumption of goods other than energy is obtained from periodic - as from 2000annual - costs structure surveys. These have traditionally been referred to as “raw materialscensuses”, a term which today, however, may be considered misleading, since most inputs of goods inmanufacturing consist of semi-finished products rather than raw materials. Formerly, the statisticswere not annual but were collected at 5- to 6-year intervals. The two most recent "raw materialscensuses" refer to 1991 and 1997. The input structure in the national accounts and the input-outputtables for 1995 are based on a projection of the raw materials census for 1991, taking into account theadjustment of the national accounts product balances during the intervening period. These surveys ofthe structure of the consumption of goods during the production process covers manufacturing onlyand, as a general rule, all manufacturing kind-of-activity units belonging to firms with 50 employeesor more. The commodity classification in the costs structure surveys is based on the CN classificationand has six digits. The first four digits in the commodity coding system are identical in the externaltrade and commodity statistics and in the raw materials statistics.

When this information is incorporated into the balancing of the national accounts supply and usetables, the figures are first of all grossed up to cover all units in manufacturing. There is then a

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systematic comparison with the values estimated from the technical coefficients in the supply and usetables from the previous year. A probability check is also carried out: the technical coefficients fromthe current survey are compared with those from previous surveys. Finally, the plausibility of theinformation is assessed on the basis of the total supply and use of the products in question in theeconomy and changes in the industries’ output structure since the last "raw materials census".

Unless otherwise indicated by the probability check, the grossed up "raw materials census" value forthe intermediate consumption of a given good in a given manufacturing industry is incorporateddirectly in terms of a level into the supply and use tables for the year to which the survey refers.Otherwise, the technical coefficients are fixed on the basis of an overall assessment of the informationreferred to in the paragraph above.

The costs structure in the intermediate consumption of services is covered by periodic surveys, thelatest of which refers to 1992. This survey covers manufacturing firms with at least 200 employeesand coverage is therefore much less good than in the costs structure surveys for the consumption ofgoods. The results are grossed up in the national accounts processing of the figures to cover allmanufacturing enterprises and are incorporated into the supply and use tables following the sameguidelines as the costs surveys relating to the consumption of goods. In the annual costs surveys for2000 and subsequent years, the consumption of services is included in full in the same way as theintermediate consumption of goods.

For the costs structure surveys, it is vital to ensure that respondents comply with accountingstringency and discipline. If the questionnaire does not relate absolutely clearly to well-defined itemsin the enterprises’ own accounts and in the accounting statistics questionnaire, there is a serious riskof low-quality replies owing to failure to observe the fundamental constraints on totals. In both thecosts structure survey on the consumption of goods and the structural survey on consumption ofservices, respondents are asked to subdivide well-defined accounting items on the accountingstatistics questionnaire by product, although 5% may be unspecified. This strong linkage betweenaccounting statistics and costs structure statistics for manufacturing is without any doubt instrumentalin ensuring that the data in these statistics are of generally high quality. This in turn is crucial for thesupply and use tables and the symmetrical input-output tables in the Danish national accounts, andone of the factors contributing to their solid statistical foundation. As a result of the validation of theinitial GDP estimates from the three angles in the form of the balancing in a detailed product balancesystem, this particularly solid statistical basis for an important industry group in the economy isinstrumental in increasing the overall reliability of the estimate of GDP as regards both levels andgrowth rates.

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3.11 Electricity, gas and water supply (NACE E)

3.11.1 Introduction

NACE Section E is defined by function and includes four of the national accounts’ 130 industries,namely:

401000 Production and distribution of electricity402000 Manufacture and distribution of gas403000 Steam and hot water supply410000 Collection and distribution of water.

It also covers four industries at the most detailed DK-NACE level. In 1995, NACE E accounted for2.5% of the value added of the Danish economy – cf. Table 55.

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Table 55 NACE Section E's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

401000 Production and distribution of electricity 13 317 4 029 9 288402000 Manufacture and distribution of gas 6 706 2 735 3 971403000 Steam and hot water supply 10 990 3 747 7 243410000 Collection and distribution of water 2 358 1 224 1 134Total NACE E 33 371 11 735 21 636Percentage of the economy excluding FISIM 2.0 1.5 2.5

3.11.2 Statistical sources

The statistical source underlying the estimate of value added in all four industries is accountingstatistics for industries where publicly controlled units predominate, which for these industries arebased partly on questionnaires and partly on local government (municipal) accounts. The accountsfrom public units which are included in the municipal accounts are collected from municipalaccounting statistics. The calculations for electricity and district heating works are based onaccounting information collected and published by Danske Elværkers Forening and Foreningen afDanske Fjernvarmeværker.

Table 56 Statistical sources underlying the calculation of value added for NACE E

National accounts industry Source401000 Production and distribution of electricity Accounting statistics for industries where public

corporations predominate402000 Manufacture and distribution of gas Accounting statistics for industries where public

corporations predominate403000 Steam and hot water supply Accounting statistics for industries where public

corporations predominate410000 Collection and distribution of water Accounting statistics for industries where public

corporations predominate

3.11.3 Method of calculation

All four supply industries are defined by activity. All output of electricity, gas, district heating andwater is assigned to the respective industries. This is important particularly for the combinedproduction of electricity and district heating. The output of district heating and the intermediateconsumption that goes with it are transferred from the electricity supply industry to the district heatingindustry. This is feasible in practice because in 1995 electricity prices were subject to public control,which obliged the electricity producers to break down costs for the combined production of electricityand district heating into two parts.

For all the supply industries, the output value in the national accounts is the output for supply tooutside the industry, i.e. it excludes internal deliveries. The figures are therefore recorded net, i.e.internal supplies of energy from one unit to another in the industry are netted out. In the case ofelectricity and district heating, there are very large deliveries between production companies anddistribution companies. The national accounts’ output values for electricity and district heating aretherefore much below the sales values which occur in other statistics. The main argument for nettreatment of supply activity is that the supply and use tables are much more useful as a basis for the

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compilation of provisional national accounts when output and intermediate consumption are notinflated by large internal deliveries, which may fluctuate markedly.

For the production and distribution of electricity, accounting statistics from Danske ElværkersForening and municipal accounts cover all electricity utilities apart from a single generating unit in apower station in South Jutland which exports all the electricity it produces. This unit's output iscalculated from external trade statistics and added in. The accounting statistics and municipalaccounts do not cover the output of electricity other than from actual power stations, such as thatproduced by private windmills and small decentralised heat and power plants. This output (other thanelectricity for the producer’s own use during production) is included on the basis of information onquantities of electricity produced and an average kilowatt-hour price. Some of the electricityproduced by private windmills, for example, is used for the owners’ own consumption and some issold to power stations which are obliged to take the power and distribute it via the general grid. Theproduction of electricity using renewable energy sources such as wind is subsidised. For the estimateof output value, this product subsidy is added to the sales income reported. In 1995, the subsidy wasDKK 652 million.

For the manufacture and distribution of gas, accounting statistics are based on accounts from all unitsin the industry, which is dominated by the distribution of natural gas. In 1995, gasworks producedonly 223 million. This industry includes the cleaning and processing of the natural gas which comesto the mainland from the North Sea gasfields. In the product balance system, there are three types ofnatural gas: natural gas I is the raw gas from the North Sea which is an input for the supply of gas.Natural gas II is that share of output which goes to “general” natural gas customers, i.e. all uses otherthan as an input in electricity power stations or district heating stations or as an export. Natural gas IIIis that share of output which goes to these last-named uses.

In the supply of district heating, the accounting statistics cover all units’ accounts either viaquestionnaires or via the municipal accounts. No grossing up is therefore needed. In addition to theaccounting information, annual information from Danske Fjernvarmeværkers Forening on totalpurchases of heat in district heating plants (internal deliveries) is used, along with information fromenergy statistics on the total expenditure on fuel for all production of district heating in the country.Thus the netting out discussed above is possible in this industry, and the link with the physical energybalances is retained.

For the collection and distribution of water, the accounting figures collected for accounting statisticsdo not cover all units and are therefore grossed up to the total population of producer units. In 1995,the raising factor was 1.34. The figures are grossed up on the basis of VAT sales. The great majorityof accounting figures in the accounting statistics come from municipal accounts.

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3.11.4 Breakdown of output by product

All output of electricity is included in a single product balance. Economic theory, however, considersthe various supplies of electricity to be very different products, and this is reflected in largedifferences in electricity prices per kilowatt-hour at basic price level, i.e. pre-tax, from one use toanother. Large industrial users, for example, pay a much lower price than private consumers. Thefact that there is only one product balance for electricity does not cause any problems for nationalaccounts at current prices or for supply and use tables, since energy statistics can be used to estimateeach individual use of electricity separately. For the estimate of volume changes, however, it isimportant to deal correctly with changes in the composition of the uses of electricity. For the nationalaccounts constant price calculations, the product balance for electricity, like that of all other energyproducts, is deflated from the uses side, taking into account the different economic values of theindividual deliveries of electricity and individual deliveries of other energy products.

The output of gasworks is, as already mentioned, divided into three products, namely gasworks gas,natural gas II and natural gas III.

The output from district heating works and the collection and distribution of water are shown inseparate product balances.

In addition to the primary products referred to above, the supply industries, like all other industries,produce software for their own use and fringe benefits for employees.

3.11.5 Breakdown of intermediate consumption by product

By far the largest input in the supply industries is, of course, energy, and this intermediateconsumption is established directly. Another large input is repair and maintenance, information onwhich is available in accounting statistics. There are no supply industry costs structure surveys whichprovide information on the distribution by product of the remaining, minor share of intermediateconsumption consisting, for example, of services which come under business services. In the supplyand use tables, this residual input is divided over product balances in the light of the known costsstructure in related manufacturing industries, together with common sense considerations such as thelink between the number of office workers and the consumption of stationery.

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3.12 Construction (NACE F)

3.12.1 Introduction

NACE Section F is defined by function and comprises four of the national accounts 130 industries,namely:

450001 Construction of new buildings450002 Repair and maintenance of buildings450003 Civil engineering450004 Construction materials.

This section accounted for 4.7% of the value added of the Danish economy in 1995 – cf. Table 57.

Table 57 NACE Section F’s contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

450001 Construction of new buildings 28 185 16 643 11 542450002 Repair and maintenance of buildings 37 859 17 645 20 215450003 Civil engineering 36 328 27 018 9 309410000 Construction materials 12 205 12 205 0Total NACE F 114 577 73 511 41 066Percentage of the economy 6.9 9.3 4.7

The industry covers all construction and civil engineering activity in the Danish economy. Theconstruction activity of Danish construction firms abroad is counted as output by a foreigninstitutional unit (notional resident unit) owned by the Danish firm, and does not give rise to anyvalue added in Denmark but solely to transfers of wages and salaries and property income to and fromthe rest of the world. The reverse applies to the activity of foreign construction firms in Denmark.

NACE F covers 20 industries at the most detailed DK-NACE level. There is, however, no connectionbetween the industries in the DK-NACE and the national accounts four construction industries.Whilst the breakdown into the 20 industries in the area of construction and civil engineering in theDK-NACE is based on specialisation or trade, e.g. bricklaying or carpentry, the national accountsbreakdown is functional, i.e. based on the final product.

As for all other industries in the economy, the national accounts calculations of value added inconstruction are based on accounting data for the individual, detailed DK-NACE industries andsubsequent aggregation. In the case of construction, however, this aggregation is not to the four sub-industries for construction activity in the national accounts' 130 grouping, but to the single division45000, construction. Output, intermediate consumption and thus value added for all construction andcivil engineering activity in the economy are then distributed over the four function-defined sub-branches: construction of new buildings, repair and maintenance of buildings, civil engineering andconstruction materials.

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The national accounts for construction and civil engineering are the exception in running counter toDanmarks Statistik’s industry grouping, primarily because of the supply and use tables and hence thebalancing of the product balance system. There is, of course, a much closer, technology-drivenconnection between the output of various types of construction and civil engineering and certain kindsof construction materials than there is between the output value of the various specialisations and theinput of construction materials. Building and civil engineering contractors, who are the largest singlespecialisation, may, for example, carry out new building work, repair and maintenance and civilengineering work, and the shares of these three activities may vary considerably over time. It is clearthat, for example, the input of cement per krone of output is very different in the three activitiesmentioned. By using a functional breakdown of construction and civil engineering activity into sub-branches instead of a breakdown by trade or specialisation, the national accounts make effective useof information on the technical connection between construction activity and construction materials inthe balancing of supplies and uses of goods and services.

Industry 450004 is an “artificial” industry, created for reasons of calculation, through whichconstruction materials for own account construction activity are channelled. For example, instead ofbeing allocated directly to the three uses - intermediate consumption in the "dwellings" industry, finalconsumption expenditure in households, or capital formation in housing construction - purchases byowner-occupiers and tenants of construction materials for ordinary repairs and maintenance or majorrepairs (capital formation) count in the product balance system as inputs to an artificial industry,“construction materials”, the output of which is by definition equal to the value of the industry’sintermediate consumption at purchasers’ prices including non-refundable VAT. This output is thendistributed over the three categories of use referred to above.

3.12.2 Statistical sources

As already mentioned, the industry is defined by function and covers all construction and civilengineering activity in the economy apart from ordinary repairs to buildings and structures for ownaccount in other industries. Own-account construction activity for capital formation in producer unitsclassified in industries other than construction is transferred to construction. As always whenbranches are defined by function, the components transferred are output, intermediate consumption,compensation of employees, capital formation and employment. The fact that own-account ordinaryrepairs to buildings and structures in other industries are not transferred to branch 45000,construction, is due to the lack of information on the value of this activity over and above the valueof the materials included, i.e. expenditure on wages and salaries and the value of the owner’s ownwork. Obviously, the lack of any imputation for that share of the value of ordinary repair andmaintenance activity which is in excess of the expenditure on materials does not affect GNI, since thesame value, if there had been one, would simply have been allocated to output value and intermediateconsumption for the economy as a whole. It would simply have been a question of a differentdistribution of value added by industry.

For example, agricultural consumption of paint and wood preservative for the maintenance ofbuildings for own account is treated in the national accounts as an input into a minor, secondaryauxiliary activity in agriculture, which in practice cannot be separated out with any degree ofstatistical certainty. The paint is included as an input in the artificial materials branch 450004, andagriculture receives an input of building repairs corresponding to the expenditure on the paint. Own-account ordinary repairs and maintenance are of minor importance for all industries other thandwellings, where the values concerned are substantial and the same model is used as has just beendescribed using agriculture as an example. Intermediate consumption corresponding to the repair ofbuildings for own account is in this case based on the value of the materials used.

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In all cases other than own-account ordinary repairs to buildings and structures, the national accountsseparate out secondary construction activity and transfer it to construction.

Substantial secondary construction output for capital formation occurs in a number of industries,particularly in the supply industries, transport and communications. There is in this case an output ofcivil engineering for own account, which is capitalised in the companies’ accounts. The value of thematerials used and expenditure on wages and salaries are reported in the companies’ own accounts.

The statistical source for the estimate of value added in genuine construction and civil engineeringenterprises is the questionnaire-based accounting statistics – cf. Section 3.1.2.3. These statistics aregrossed up from the outset to the total population when incorporated into the national accounts. Asalready mentioned, the figures are calculated separately for each of the 20 detailed industries in theDK-NACE.

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Table 58 Statistical sources underlying the calculation of value added for NACE F

National accounts industry Source450001 Construction of new buildings Questionnaire-based accounting statistics450002 Repair and maintenance of buildings Questionnaire-based accounting statistics450003 Civil engineering Questionnaire-based accounting statistics410000 Construction materials No value added by definition

For the national accounts estimate of construction, the secondary construction activity which takesplace in other industries must, as described above, be estimated and transferred to the constructionbranch. Information on such activity is found in the accounting statistics, more particularly instatistics for industries where publicly controlled units predominate - the supply industries (electricityetc.), railways and telecommunications - and where there is substantial output of civil engineeringwork for own account.

Conversely, the activity of Danish construction firms in the economic area of the rest of the world hasto be separated out and subtracted. The main source here is VAT statistics, which provideinformation on the tax-free exports of construction and civil engineering firms. This export income isdivided into the following components: 1) exports of construction materials to the firms’ buildingsites in other countries; 2) payment for construction materials supplied directly from the ROW toconstruction sites in the ROW; 3) the compensation of employees on construction sites in the ROWand 4) gross operating surplus and mixed income (property income from the ROW). This breakdown,which is used for the calculations of construction activity, is also used in the ROW account and inbalance of payments statistics, so that consistency is guaranteed. The breakdown is based on anestimate which in turn is based on the structure of costs in new building work.

The construction activity of foreign construction firms in the Danish economic area is covered viagrossing up, with the relevant wages and salaries and employment recorded in Denmark and thusincluded in the employment to which the accounting statistics are grossed up.

Construction - more particularly, building repair work - is one of the areas in the economy wherethere is most “black” economic activity. In the Danish national accounts, there is a substantialallowance added in for building repairs in the black economy. The sources and methods are describedin Section 7.1. The whole of this black-economy activity is treated in the Danish national accounts as"work in the black economy" of the type "VAT evasion with the connivance of the buyer". Theallowance for work in the black economy does not give rise to any allowance for “VAT fraud inconnection with underreporting”, as in the catering industry, for example. The rationale is that, in thecase of construction, the buyers and sellers negotiate a price for each individual project and that itappears to have become the practice for purchasers to be offered work in either the legitimate (white)or the black economy, i.e. work either with or without an invoice. In every case, the allowance forwork in the black economy is determined on the basis of the prices which the purchasers pay, so thatthe effect on GNI is the same whether the above assumption applies or not.

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3.12.3 Method of calculation

Even though the value added of construction is basically calculated from accounting statistics inexactly the same way as for other industries, there is a crucial difference as regards output andintermediate consumption. In other industries, output, intermediate consumption and value added arecalculated from the same source, namely the processed accounting statistics. In construction, valueadded is first calculated from the processed accounting statistics, output is subsequently calculatedfrom other sources and finally intermediate consumption is calculated as a residual.

The other sources for the estimate of output are firstly those underlying the estimate of capitalformation in construction – cf. the description in Chapter 5. The sources for that share of outputwhich is repairs to buildings and structures for the account of others are the quarterly employmentcensuses for the construction industry and a special run of VAT statistics. In the employmentcensuses, employed workers and master craftsmen are divided up by activity on the census date, adistinction being made between new building, repair and maintenance and civil engineering. Fromthese statistics, a list is compiled of firms engaged mainly in repair and maintenance work. TheirVAT sales are obtained from a special run of VAT statistics. Next, turnover per person inemployment in these firms is calculated and multiplied by total employment in construction and civilengineering repairs as taken from the employment census. In this way, we obtain a figure for the totaloutput of construction and civil engineering repairs. Together with the estimated capital formation inbuildings and structures, a figure is thus obtained for the actual output of construction and civilengineering. In addition, there is the artificial construction materials branch, which is included inoutput and intermediate consumption with the same value. An initial estimate prior to balancing forthis is fixed on the basis of changes in the output of repairs and maintenance for the account of others– cf. above. The construction materials branch is included in the balancing process, and the valuesinitially fixed will generally be amended as part of the balancing of supplies and uses in the productbalance system.

The argument behind the calculation method described above is that, in the absence of exhaustiveproduct statistics for construction, we have to estimate the output of the individual types of building,civil engineering and repair work from other sources. To ensure that value added is firmly anchoredin accounting statistics, intermediate consumption has to be calculated as a residual.

When the output of construction and civil engineering products estimated from these other sources iscompared with output according to accounting statistics corrected for subcontracting, it emerges thatthe former set of statistics has regularly higher figures than the latter. The most likely explanation isthat the output of capital formation in structures is calculated from the expenditure side and willinclude machinery and equipment which is not in all cases purchased and installed by the buildingcontractor but may often be purchased and installed by the client without the contractor’s beinginvolved. One example is machinery in a power station. This problem affects only the dividing linebetween capital formation in machinery on the one hand and construction and civil engineering on theother, and does not affect GNI. The method of calculation chosen for the Danish national accountsmeans that all (or virtually all) capital formation in a power station, for example, is classified as beingin civil engineering, even though the customer has purchased buildings and machinery separately.The consequence in the product balance system is that the relevant quantity of machinery is posted asan input in civil engineering and is included in civil engineering output value.

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In the Danish national accounts, all construction and civil engineering activity carried out in the restof the world by Danish construction firms is considered to be an activity taking place in an ROWquasi-corporation (notional resident unit) owned by the Danish construction firm, and not as an exportof Danish construction and civil engineering activity. The value added therefore arises in the rest ofthe world and not in the Danish economy. This treatment is in line with footnote 4 to paragraph 2.09b) in the ESA 95. In Denmark’s case, the activity in question is almost always one which gives rise togross fixed capital formation in the rest of the world – as opposed to the ordinary repair andmaintenance of buildings and structures. This is the criterion in the relevant paragraph of the ESA 95.In the accounts for construction and civil engineering firms with activity on foreign building sites, theactivity in other countries will, however, be included. To bring the calculation of value added intoline with the geographical delimitation described above, output and intermediate consumptioncorresponding to the activity in the rest of the world have to be extracted from these businessaccounts, as described above. The source for this is VAT statistics information on the tax-free exportsales of construction and civil engineering firms.

The calculation also includes an allowance for self-built or partially self-built housing, i.e. the fairlycommon case in which the customer himself is responsible for some of the painting of a new house,for example. On the output side, the allowance is incorporated into the imputed value of the output ofthe black economy. The calculation provides for a self-built/partially self-built allowance to be addedto intermediate consumption, over and above the figures in business accounts.

The calculation of output, intermediate consumption and value added for the construction industry isshown in the table below:

Table 59 Corrections to the accounting statistics output values, 1995

RS = accounting statistics DKK millionMarket output in RS (plus work in the black economy) 98 044

+ Government non-market output 6 164

- Subcontracts imputed 10 897

+ Construction and civil engineering activity in powerstations

712

+ Own-account structures in telecommunications 1 700

+ Own-account structures in integrated public corporations 687

+ Own-account structures in the “operation of toll bridges” 220

- Tax-free exports according to VAT statistics 5 480

+ Imports of contractors’ services relating to investments inthe North Sea

840

= Output value according to corrected accounting statistics 91 991

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Table 60 Corrections to accounting statistics for the calculation of intermediateconsumption, 1995

DKK millionIntermediate consumption in RS (market) 57 808

+ Intermediate consumption (government non-market) 4 279- Subcontracts imputed 10 897+ Construction and civil engineering activity in power

stations0

+ Own-account structures in telecommunications 1 227+ Own-account structures in integrated public corporations 342+ Own-account structures in “operation of toll bridges” 63- Input corresponding to tax-free exports 3 231+ Allowance for self-build 156+ Imports of contractors' services relating to investments in

the North Sea840

= Intermediate consumption according to correctedaccounting statistics

50 587

Table 61 Determining value added and the initial estimate for intermediate consumption,construction and civil engineering as a whole, 1995

DKK millionOutput value according to corrected RS 91 991

- Intermediate consumption according to corrected RS 50 587= Value added according to corrected RS 41 404

Output according to product balances 114 577of which construction materials branch 12 205

- Value added according to corrected RS 41 404= Initial estimate for intermediate consumption 73 173

- Intermediate consumption after balancing 73 511= Difference between initial estimate and balanced input

total-338

Construction and civil engineering is one of those industries where the initial estimate of intermediateconsumption has traditionally been amended during the balancing process. One reason is that theindustry includes many small enterprises, and thus the grossing up percentage is consequently greaterthan in manufacturing, for example. In addition, the correction for construction materialscorresponding to construction and civil engineering activity in the economic area of the rest of theworld is hedged with a certain amount of uncertainty. For these reasons, the input target total forconstruction and civil engineering is considered to be one of the initial estimates likely to be amendedduring the balancing process.

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3.12.4 Breakdown of output by product

As previously mentioned, there are at present no (direct) product statistics for constructioncorresponding to the industrial commodity statistics, for example. However, accounting statisticsinclude information on purchases of subcontracting, extremely important information in this industry,where the subcontracting of parts of projects is particularly common. In the absence of any directproduct statistics, indirect statistics have been compiled for national accounts calculations, basedmainly on expenditure-side information on kinds of construction and civil engineering work otherthan repair and maintenance. Resources of repairs and maintenance are calculated using the methoddescribed in Section 3.12.3.

For construction of buildings, the output side makes a distinction between housing, private non-residential construction, public construction for commercial purposes (to market producers) andgovernment non-market construction (to non-market producers). Civil engineering is broken downinto private structures, public commercial structures and public non-commercial structures. Each ofthese components (apart from repairs and maintenance) is estimated from the expenditure side asdescribed in Section 5.10. For the repair and maintenance of buildings, the initial estimate prior tobalancing assumes 45% for ordinary repairs and maintenance (intermediate consumption) and 55%for major repairs (gross fixed capital formation). These percentages are based on information onkinds of expenditure on craftsmen and expenditure on materials connected with housing in thehousehold budget survey.

In addition to the above genuine products from construction and civil engineering, the industry, incommon with the other industries in the economy, produces fringe benefits and capital goods,including software for own use. Table 62 below shows the breakdown of output from constructionand civil engineering in 1995. Construction resources come from both industry 450001 New buildingand 450002 Repair and maintenance of buildings. This latter addition is major repairs andimprovements which in the national accounts are considered to be capital formation.

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Table 62 Breakdown by product of output from construction, 1995

Sub-industry

Product Text Value(DKK mill)

450001 F711000 Fringe benefits, free car 68450001 H454010 Housing construction in the black economy 67450001 K450000 Plant and machinery/structures for own use in the

construction industry63

450001 K722000 Own-produced software 17450001 T000005 Licence payments (excl. software) 66450001 U454010 Housing construction 11 571450001 U454011 Private non-residential construction 10 744450001 U454012 Public construction, commercial 1 036450001 U454013 Public construction, non-commercial 4 507450001 U454030 Military construction 47

450001 Total new building 28 185

450002 F711000 Fringe benefits, free car 85450002 H454001 Output in the black economy, building repairs 1 487450002 K450000 Plant and machinery/structures for own use in the

construction industry43

450002 M454001 Building repairs (ordinary) 14 877450002 U454010 Housing construction `450002 U454011 Private non-residential building 4 078450002 U454013 Public construction, non-commercial 1 276450002 U454030 Military construction 742

450002 Repair and maintenance of buildings, total 37 859

450003 F711000 Fringe benefits, free car 30450003 K450000 Plant and machinery/structures for own use in the

construction industry105

450003 K454023 Own output of new structures, public, non-commercial

203

450003 M454005 Repairs to structures 7 935450003 Q454005 Repairs to structures, government non-market 5 765450003 S454005 Repairs to structures, public sales income 131455003 S980990 Internal supplies between public bodies 269450003 U454021 Private new structures 2 532450003 U454022 Public new structures, commercial 16 309450003 U454023 Public new structures, non-commercial 2 935450003 U454030 Military construction 114

450003 Civil engineering, total 36 328

450004 M454001 Building repairs 10 066450004 U454010 Housing construction 2 140

450004 Construction materials, total 12 205

450000 Construction and civil engineering, total 114 577

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3.12.5 Breakdown of intermediate consumption by product

There are no regular costs structure surveys for intermediate consumption in construction. Theinformation which it has been possible to collect over the years from ad hoc surveys has graduallybeen incorporated into the input structure as expressed in the supply and use tables. The industry’sconsumption of energy is available annually from energy statistics.

For subcontracting and services, the input structure is based on information on certain kinds of costssuch as subcontracting and rentals, which are found in accounting statistics. Subcontracting is nettedout – cf. the description of the method of calculation in Section 3.12.3. Intermediate consumptionwhich is counted under the accounting statistics item “other external expenditure” is divided up byproduct on the basis of the structure of costs in certain manufacturing industries and common senseconsiderations about the connection between the number of employees and services such astelephones and cleaning. The construction industry incurs considerable costs for the transport of thebuilding materials used for its output. In the national accounts, this input of services is in principle a“transport margin”, i.e. a margin lying between the basic price of the construction materials ex-producer and the purchase price including margins and taxes which the construction enterprise paysoverall for the acquisition of the materials. In the Danish national accounts, transport margins are notshown explicitly, since this would overload the supply and use tables with a large number of emptycells. Instead, they are included in with wholesale margins. Transport paid by the purchasers ofgoods which is not separately invoiced is allocated in the national accounts first of all to inputs in thewholesaling industry. Next, the output value of wholesaling is increased by the same amount, so thatthe total wholesaling margins are increased by the amount of the transport expenditure on goodswhich is defrayed by the purchasers. In this way, transport is channelled through the wholesalingindustry, without affecting that industry's value added. This way of posting transport margins in theDanish national accounts has traditionally been referred to as “formal transport”, the “formal” beingthe fact that a transport service is involved. The economic reality is, however, that the margin is adistribution margin similar to wholesale and retail margins. The way in which formal transport isstructured means that a substantial share of the input of services in construction is shown in thesupply and use tables as inputs of wholesale services.

In the balanced supply and use tables for 1995, there is a good DKK 11 000 million in wholesalemargins (including formal transport) and a good DKK 900 million retail margins for intermediateconsumption in the construction industry, including the materials branch. These figures illustrate theimportance of distribution services in the total intermediate consumption of the construction industry.

Even though there are no actual costs structure statistics for the composition of intermediateconsumption in the construction industry, the input structure in the industry may be said to beestablished with a reasonable degree of certainty. The reason is the close connection between thetechnical properties of the goods and their use, in this case as inputs in construction. Goods such ascement and prefabricated building components have no real uses other than as inputs in constructionor as exports (or as changes in inventories). When supplies to the domestic market are fixed on thebasis of industrial output statistics, external trade statistics and calculations of inventories, theremaining use is more or less bound to be as inputs in the construction industry. It is precisely in asituation such as that described here that a detailed product balance system really comes into its own,since maximum utilisation of information about kinds of goods is a way of determining the structureof costs indirectly via the compilation and balancing of the supply and use tables.

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3.13 Trade and repair (NACE G)

3.13.1 Introduction

NACE Section G is defined by function and covers nine of the national accounts’ 130 industries, asshown in Table 63, which also shows that this section accounted for 13.6% of value added in theDanish economy in 1995:

Table 63 NACE Section G's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

501009 Sale of motor vehicles, motorcycles, etc. 13 057 3 564 9 493502000 Repair and maintenance of motor vehicles 15 149 10 639 4 511505000 Service stations 1 913 495 1 418510000 Wholesale and commission trade, except of

motor vehicles111 384 47 489 63 895

521009 Retail sale of food etc. 20 740 6 236 14 504522099 Department stores 7 001 3 051 3 949533000 Retail sale of pharmaceutical goods, cosmetic

articles, etc.2 671 594 2 077

524190 Retail sale of clothing, footwear, etc. 6 603 2 383 4 220524490 Other retail sale, repair work 21 274 7 148 14 126Total NACE G 199 792 81 599 118 193Percentage of the economy 12.0 10.3 13.6

NACE G covers all trading activity in the Danish economic area. Secondary trading activity inproducer units classified under other industries is separated out and transferred to the relevant tradeindustry, normally 510000, wholesale and commission trade except of motor vehicles. Secondarytrading activity occurs particularly in manufacturing and transport. All motor vehicle repair activity iscollected together under industry 502000.

This section covers 159 industries at the most detailed DK-NACE level. As for all other industries inthe economy, the national accounts' calculations of value added in trade and repair are based onaccounting data for the individual detailed DK-NACE industries and subsequently aggregated.

3.13.2 Statistical sources

NACE 50, sale and repair of motor vehicles, etc, and NACE 51, wholesale trade and commissiontrade except of motor vehicles, are based on tax accounting statistics.

For 1995, NACE 52, retail trade except of motor vehicles etc., is covered by the questionnaire-basedaccounting statistics, this source being preferred to tax statistics. The sources can be seen in thefollowing table:

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Table 64 Statistical sources underlying the calculation of value added for NACE G

National accounts industry Source501009 Sale of motor vehicles, motorcycles, etc. Tax accounting statistics502000 Repair and maintenance of motor vehicles Tax accounting statistics505000 Service stations Tax accounting statistics510000 Wholesale and commission trade, except of

motor vehiclesTax accounting statistics

521009 Retail sale of food etc. Questionnaire-based accounting statistics522099 Department stores Questionnaire-based accounting statistics533000 Retail sale of pharmaceutical goods, cosmetic

articles, etc.Questionnaire-based accounting statistics

524190 Retail sale of clothing, footwear, etc. Questionnaire-based accounting statistics524490 Other retail sale, repair work Questionnaire-based accounting statistics

3.13.3 Method of calculation

Since the whole of NACE G is covered by the two general accounting statistics systems for urbanindustries, the method of calculation is the standard method for use of these statistics, as described inSection 3.1.2.3. The only particular point to be mentioned is that, in line with the ESA 95, the outputof trade services in wholesale and retail trade is calculated as the sum of the trade margins obtained,i.e. the selling price of goods resold minus their acquisition price. In practice, the consumption ofgoods for resale is calculated from purchases during the period in question plus changes in inventoriesof goods for resale between the start and the end of the period, with the national accounts pricecorrection described in Section 3.3.1.2.

3.13.4 Breakdown of output by product

NACE 50 includes both trade in and repairs to motor vehicles etc, in both the national accountsindustries and at the most detailed DK-NACE industry level. For example, a very large share of thetotal motor vehicle repair activity in the economy is carried out not in producer units classified underNACE class 50.20, maintenance and repair of motor vehicles, but in those classified under DK-NACE 50.10.20, retail sale of motor vehicles. The first stage in the breakdown of products istherefore to divide the output of NACE 50 into the three main components:

1) trade margins on vehicle-related products2) trade margins on consumables sold at service stations3) motor vehicle repairs.

For this, we use special product statistics for the “motor vehicles group”, which were established atthe time with the help of a grant from the EU’s special GNP statistics appropriation. The statistics“Distribution of sales in the motor vehicles branches” break down sales in NACE 50 enterprises.Following this stage, the output of NACE 50 is divided up into trade margins on the one hand andmotor vehicle repairs on the other.

Similarly, the output of NACE 52 has to be divided up into trade margins and repair services. Thisbreakdown is, however, simple, since there is much less overlap between trade and repair activitythan in NACE 50. In practice, producer units in the detailed DK-NACE industries within groups52.1-52.6 are considered to be purely retail enterprises whose output (other than fringe benefits and

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capital goods for own account) consists solely of retail margins, whilst units classified in industrieswithin group 52.7 are considered to be purely repair enterprises whose output is repair services.

The national accounts supply and use tables operate with two types of margin, namely wholesale andretail. The whole of the trade margin in NACE 51 is by definition a wholesale margin and, similarly,the whole margin in NACE 52 is a retail margin. NACE 50 covers both wholesale and retail tradingactivity, and in the national accounts the total trade margin in NACE 50 is divided up into wholesaleand retail on the basis of information in the product statistics for the motor vehicles branches,“Distribution of sales in the motor vehicles branches,” and information on margin percentages atproduct level.

For the compilation of the supply and use tables, the wholesale and retail totals calculated are dividedup over the 2000 or more national accounts goods balances. The breakdown is based on the previousyear’s adjusted wholesale and retail margins. The margin total obtained using the previous year’spercentages is compared in the current year with the margin totals by individual product group for thedetailed trading industries which distribute the product groups in question, and the margins areadjusted to the given totals. This comparison of two independently calculated sets of margins for theindividual product groups is in itself a valuable check on the margins calculated from productstatistics which for the trade industries in most cases are identical with the accounting statistics at themost detailed level of the DK-NACE industry classification.

3.13.5 Breakdown of intermediate consumption by product

There are no regular costs structure statistics for the trade industries other than energy statistics. Theinput structure in these industries is established in the national accounts on the basis of the summarycost specifications in accounting statistics - rentals and repair and maintenance, for example - inconjunction with ad hoc information from branch organisations and the competition authorities. Thebreakdown into the individual products is to some extent based on estimates which are in turn basedon common sense considerations. It should be stressed, however, that a good deal of the costsstructure is determined very reliably from supply information in conjunction with information onmanufacturing. Examples would be packaging and advertising agency services. Once the supply ofthe products in question to the domestic market has been determined, along with their use as inputs inmanufacturing, their use in the trading industries can be worked out reliably via a residual calculation.

3.14 Hotels and restaurants (NACE H)

3.14.1 Introduction

NACE Section H is defined by function and comprises two of the national accounts’ 130 industries.These two industries are illustrated in Table 65, which also shows that NACE H accounted for 1.8%of the value added of the Danish economy in 1995:

Table 65 NACE Section H’s contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

551009 Hotels etc. 7 548 3 938 3 610

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553009 Restaurants etc. 23 256 10 921 12 335Total NACE H 30 804 14 859 15 945Percentage of the economy 1.85 1.87 1.83

NACE H covers all hotel and restaurant activity in the Danish economic area with the exception ofrestaurant activities connected with passenger vessels and aircraft which are not outsourced toanother enterprise. This last activity is an inseparable part of transport activity. The running ofcanteens in other industries is separated out and transferred to 553009 restaurants etc., as areemployers’ subsidies to canteens, an important fringe benefit for employees which is considered tohave been produced in the restaurant industry and included in that industry's value added. In 1995,the amount was DKK 3 223 million.

NACE H covers 15 industries at the most detailed DK-NACE level. As for all other industries in theeconomy, the national accounts calculations of value added in the hotel and restaurant industries arebased on accounting data for the individual detailed DK-NACE industries and subsequentaggregation.

3.14.2 Statistical sources

Coverage is provided by tax accounting statistics, which are the statistical source for all primaryactivity. Secondary canteen activity is calculated from the accounting item “secondary sales” in therelevant accounting statistics and the fringe benefit "canteen subsidies" is calculated from the labourcosts surveys.

Table 66 Statistical sources underlying the calculation of value added for NACE H

National accounts industry Source551009 Hotels etc. Tax accounting statistics553009 Restaurants etc. Tax accounting statistics

3.14.3 Method of calculation

Since the whole of this section is covered by the general tax accounting statistics, the method ofcalculation is the standard method for the calculation of value added from the general accountingstatistics via the intermediate system and the target total module, as described in Section 3.1.2.3.

3.14.4 Breakdown of output by product

In addition to the fringe benefit "free cars" and "own-produced software", output is divided into 16products. The basis for the product distribution is the breakdown of the sales of the two nationalaccounts industries into the detailed DK-NACE industries. The explicit allowances forunderreporting and gratuities plus the VAT fraud associated with them are shown in separate productbalances, so that there is always a complete overview of these explicit allowances, in both nationalaccounts calculation systems and directly in the supply and use tables.

In connection with the breakdown by product, a minor share of sales in units classified as hotels istransferred to restaurant services to take account of the fact that hotels may run their own restaurants.

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3.14.5 Breakdown of intermediate consumption by product

There are no regular costs structure statistics for the catering industries other than energy statistics.The input structure in these industries is established in the national accounts on the basis of thesummary cost specifications in accounting statistics - rentals and repair and maintenance, forexample - in conjunction with ad hoc information from branch organisations and the competitionauthorities. The breakdown into the individual products is to some extent based on estimates whichare in turn based on common sense considerations concerning inputs of cleaning and laundry services,for example. The input of food and beverages, which is, of course, by far the largest input, iscalculated as a residual.

3.15 Transport etc. (NACE I)

3.15.1 Introduction

NACE I is defined on the basis of a grouping of producer units and covers nine of the nationalaccounts' 130 industries. These are shown in Table 67, which also shows that NACE I accounted for7.98% of the value added of the Danish economy in 1995.

Table 67 NACE Section I's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

601000 Transport via railways 10 267 3 095 7 172602100 Other scheduled passenger land transport 6 752 4 967 1 785602223 Taxi operation and coach services 5 262 1 949 3 313602409 Freight transport by road and via pipelines 23 914 11 811 12 103610000 Water transport 41 561 31 071 10 490620000 Air transport 11 858 8 024 3 834631130 Cargo handling etc. 13 436 6 903 6 533634000 Activities of other transport agencies 8 126 3 121 5 005640000 Post and telecommunications 27 340 9 153 18 187Total NACE I 148 517 80 095 68 422Percentage of the economy 8.9 10.1 7.9

This section covers 36 industries at the most detailed DK-NACE level. As for all other industries inthe economy, the national accounts' calculations of the value added of transport, post andtelecommunications are based on accounting data for the individual detailed DK-NACE industriesand subsequent aggregation.

3.15.2 Statistical sources

The most important sources are tax accounting statistics and the accounting statistics for industrieswhere publicly controlled corporations predominate. In addition, there are special industry-specificaccounting statistics for the most important industry, water transport - cf. Section 11.1. Use is also

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made of information from transport statistics on the value of package tours and from balance ofpayments statistics on the expenditure of Danish vessels in the rest of the world.

With two of the national accounts industries, one set of accounting statistics is used for some of thedetailed DK-NACE industries covered and another set for other industries. The following table ofstatistical sources refers in such cases to the national accounts’ most detailed industry grouping andshows the source used for each of the very detailed DK-NACE industries. “RS" stands for"accounting statistics".

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Table 68 Statistical sources underlying the calculation of value added for NACE I

National accounts industries/DK-NACE industries Source601000 Transport via railways RS for industries where public corporations

predominate602100 Other scheduled passenger land transport RS for industries where public corporations

predominate602223 Taxi operation and coach services Tax accounting statistics602409 Freight transport by road and via pipelines Tax accounting statistics

602410 Tax accounting statistics602420 Tax accounting statistics603000 Accounts for DORAS, cf. Section 3.9

610000 Water transport RS for shipping companies, RS for publiccorporations

620000 Air transport RS for industries where public corporationspredominate

631130 Cargo handling, harbours etc.631100 Cargo handling Tax accounting statistics631132 Government non-market output Statistics for general government631200 Storage and warehousing Tax accounting statistics632110 Operation of stations and terminal

facilities for the handling of goodsTax accounting statistics

632120 Operation of parking lots or garages Tax accounting statistics632130 Operation of tollbar stations for roads,

bridges and tunnelsRS for industries where public corporationspredominate

632210 Harbours (traffic and fishing harbours) RS for industries where public corporationspredominate

632220 Yachting harbours (marinas) RS for industries where public corporationspredominate

632230 Lighthouse activities and pilotageactivities

RS for industries where public corporationspredominate

632240 Towing and lifeboat service RS for industries where public corporationspredominate

632300 Airports, etc. RS for industries where public corporationspredominate

633010 Tourist agency activities Tax accounting statistics633020 Travel agencies, tour operators Tax accounting statistics633030 Travel agencies, furnishing tickets Tax accounting statistics633040 Tourist guide activities Tax accounting statistics

634000 Activities of other transport agencies Tax accounting statistics640000 Post and telecommunications RS for industries where public corporations

predominate

3.15.3 Method of calculation

The whole of this section with the exception of the important industry of water transport is covered bythe general accounting statistics, i.e. tax accounting statistics and accounting statistics for industrieswhere public corporations predominate. The method of calculation here is the same as the standardmethod for the calculation of value added based on the general accounting statistics via theintermediate system and the target total module as described in 3.1.2.3 above.

The calculations for 610000, water transport, are, as stated above, based on the accounting statisticsof shipping companies, which cover all private shipowners. The shipping company statistics aresupplemented by accounts for public shipping companies, which are the shipping company owned bythe Danish State Railways, DSB Rederi, and public shipping companies whose accounts are includedin the accounts of central and local government. A correction is made for a single shipping company

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which is included in both the shipping company accounting statistics and the accounting statistics forindustries where public corporations predominate. In addition, the Swedish share of the jointSwedish/Danish-owned company Scandlines is deducted, since this is output in the Swedisheconomic area and not the Danish.

The calculation of output, intermediate consumption and value added can be seen in the followingtables:

Table 69 Calculation of the output value of water transport

RRS: Shipping company accounting statistics DKK millionROS: RS for industries where public corporations

predominateRRS: Gross freight earned with own vessels 15 972

+ RRS: Gross freight earned with chartered vessels 13 827+ RRS: Time charter income – added from the rest of the

world3 366

+ RRS: Rents for chartered vessels (time charter hire) 5 049- RRS: Time charter hire paid for in the rest of the world -4 481+ RRS: Earned from passenger transport, restaurants, etc. 2 611+ RRS: Other gross income 2 272+ ROS: Turnover in public corporations (integrated) 496+ ROS: Turnover in public corporations (non-integrated) 2 955- Correction for Dampskibsselskabet Øresund -267- Correction for the Swedish share of Scandlines -265+ Output of the fringe benefit free cars 17+ Own-produced software 6= Output 41 561

Table 70 Calculation of intermediate consumption, water transport

RRS: Shipping company accounting statistics DKK millionROS: RS for industries where public corporations

predominateRRS: Direct costs excluding fuel 18 267

+ RRS: Expenditure on fuel 2 164+ RRS: Rents for chartered vessels (time charter hire) 5 049+ RRS: Other operating expenditure 3 499+ RRS: Other administrative expenditure 850+ ROS: P.20 in public corporations (integrated) 232+ ROS: P.20 in public corporations (non-integrated) 1 424- Correction for Dampskibsselskabet Øresund 172- Correction for Swedish share of Scandlines 199- Correction for fringe benefits etc. 34= Intermediate consumption 31 080

The initial pre-balancing estimate of the value added of water transport can be seen in Table 67. Withone minor discrepancy, it remains unchanged after the .

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3.15.4 Breakdown of output by product

Apart from the fringe benefit "free cars" and "own-produced software", output is divided into threeproducts, namely freight transport, passenger transport and inland waterway transport. Freight is byfar the most important, with output of around DKK 36 billion of the total output value of the industry(DKK 41.6 billion). The largest share is for exports.

3.15.5 Breakdown of intermediate consumption by product

There are no regular costs structure statistics for the transport industries, but a very large share ofinput is covered by the information found in annual energy statistics on the industries’ consumption ofenergy. By far the largest input in water transport is the expenditure of Danish vessels in ports in therest of the world, expenditure on time charters and on energy. The primary statistics give annualinformation on these major expenditure items.

The breakdown by product of the remaining share of intermediate consumption, on which there is noannual information in primary statistics, is based to some extent on estimates, the starting point beingthe technical coefficients in the supply and use tables from previous years.

3.16 Financial intermediation (NACE J)

3.16.1 Introduction

NACE J is defined on the basis of a grouping of producer units and covers five of the nationalaccounts' 130 industries, as shown in Table 71, which also shows that this section accounted for 4.9%of the value added of the Danish economy in 1995.

Table 71 NACE J's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

651000 Monetary intermediation 36 265 8 985 27 280652000 Other financial intermediation 9 628 3 286 6 343660102 Life insurance and pension funding 4 477 2 664 1 812660300 Non-life insurance 10 306 6 091 4 216670000 Activities auxiliary to financial

intermediation4 353 1 725 2 628

Total NACE J 65 029 22 751 42 279Percentage of the economy 3.9 2.9 4.9

The division covers 24 industries at the most detailed DK-NACE level. Where NACE 65 and 66 areconcerned, the national accounts' calculation system does not exactly match the detailed industries inthe DK-NACE, in that the calculations are based on the grouping in the available sources, primarilythe annual reports of Finanstilsynet [the Danish Financial Supervisory Authority]. One examplewhere the industry grouping in the calculation systems differs from DK-NACE is pension funds,

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where the national accounts' sources make a distinction between non-company-specific pensionfunds and company pension funds, whilst the DK-NACE does not have this distinction.

The calculations of value added for financial intermediation are made in terms of the individualdetailed industries and subsequently aggregated to national accounts' industries.

3.16.2 Statistical sources

The great majority of financial institutions in NACE 65 and 66 are subject to extremely close publicsupervision out of concern for the security of the money belonging to depositors and policyholders.The Danish supervisory authority is Finanstilsynet, which comes under the Ministry of EconomicAffairs. Finanstilsynet’s reports (based on the mandatory submission of standardised accounts) arenormally the preferred source. An important exception is Denmark's mortgage credit institutes inDK-NACE 652230. In this case, the information in Finanstilsynet’s report is much less detailed thanit is for banks and insurance corporations etc. Since there were only 10 mortgage credit corporationsin 1995, Danmarks Statistik decided to base the calculations directly on the 10 annual accounts,which include much more detailed information.

There are minor parts of NACE 65 which are not subject to Finanstilsynet control. One such isfinancial leasing, where the source is statistics for large financial corporations. For consumer credit,the accounts of a single large credit card company were used for 1995 and grossed up on the basis ofemployment to the whole of DK-NACE industry 652200. As from 1997, new statistics are beingused for consumer credit instead of the above single set of accounts. Finally, for NACE 65.23, Otherfinancial intermediation n.e.c., the accounts of Arbejdsmarkedets Feriefond, GrundejernesInvesteringsfond, Lønmodtagernes Dyrtidsfond and Arbejdernes Kooperative Finansieringsfond areused. In addition, information on factoring comes from statistics on large financial corporations,grossed up on the basis of employment to cover the total population.

NACE 67, Activities auxiliary to financial intermediation, is covered not by the sector-specificprimary statistics for financial institutions, but by general tax accounting statistics.

The following table gives an overview of the sources used for the national accounts' calculations forNACE J.

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Table 72 Statistical sources underlying the calculation of value added for NACE J

National accounts industry/DK-NACE industry Source651000 Monetary intermediation

651100 Danmarks Nationalbank Nationalbank annual report and accounts651200 Other monetary intermediation∗ Report from Finanstilsynet

652000 Other financial intermediation652100 Financial leasing Statistics for large financial corporations652230 Mortgage credit institutes Annual accounts for all corporations652240 Other credit institutes Accounts grossed up on the basis of

employment652250 Credit granting by other than credit

institutesAccounts grossed up on the basis ofemployment

652260 Financing companies Accounts grossed up on the basis ofemployment

652295 Other lending activities Accounts grossed up on the basis ofemployment

652310 Unit trusts∗∗ Report from Finanstilsynet652320 Investment companies∗∗∗ Covered by grossing up on the basis of

employment652330 Security dealing activities (own

account)None: not relevant to the production account

632340 Financial holding companies None: no independent value added652395 Other financial intermediation n.e.c. Accounts grossed up on the basis of

employment660102 Life insurance and pension funding Report from Finanstilsynet660300 Non-life insurance Report from Finanstilsynet670000 Activities auxiliary to financial intermediation Tax accounting statistics

3.16.3 Method of calculation

The output of NACE 65 is calculated as the sum of financial intermediation services paid for directly(charges and fees, commissions, margins on the trading of securities and foreign exchange) andfinancial intermediation services paid for indirectly (FISIM) other than in two cases where output isestablished from the costs point of view as the sum of production costs. These two cases areDanmarks Nationalbank and four financial institutions which are non-profit. In these cases, anestimate based on flows of property income for the calculation of their output of FISIM would yieldresults which made no sense in economic terms. Since the whole of the output value of the fourinstitutions consists of FISIM, the convention chosen has no effect on GDP or GNI, provided thatFISIM is not broken down by user sector or industry. The Nationalbank convention has no effect,either. On the other hand, it is clear that if it were later to be decided to break FISIM down by user inthe national accounts for the purposes of the countries’ GNI reports, this neutrality would not apply.In this case, however, the ESA 95 Regulation would be amended so that the Nationalbank would haveto be calculated from the costs point of view in accordance with current Danish practice.

The method of calculation for NACE 65, as regards output, intermediate consumption and valueadded, and the breakdown of output into services which are directly/ indirectly paid for, is illustratedusing the activity which is by far the most important, namely 651200, Other monetary intermediation:

∗ Literally: banks, savings banks and savings and loan associations.∗∗ "Investeringsforeninger" translates "mutual funds" in the ESA 95.∗∗∗ "Investeringsselskaber" translates "investment trusts" in the ESA 95.

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Table 73 Calculation of the output value of monetary intermediation

FPI: Finanstilsynet’s report – monetary intermediation DKK millionNB: Nationalbank annual report

Financial intermediation services paid for indirectly(FISIM)FPI: Interest received 69 285

- FPI: Interest paid 40 340= Net interest received (FISIM) according to report 28 945+ Mark-up for savings banks under 100 million 145+ Mark-up for savings and loan associations under 100

million37

+ ROW monetary intermediation, branches in Denmark 277- Greenland banks 124- Danish monetary intermediation, branches in the ROW 2 009= Net interest received (FISIM), monetary intermediation,

total27 271

Financial intermediation services paid for directlyFPI: Fees and charges 6 410

+ FPI: Commission on guarantees 885+ FPI: Ordinary income 933= Services paid for directly, according to accounts 8 228+ Mark-up for savings banks under 100 million 15+ Mark-up for savings and loan associations under 100

million3

+ ROW monetary intermediation, branches in Denmark 117- Greenland banks 26- Danish monetary intermediation, branches in the ROW 883= Monetary intermediation services paid for directly, total 7 454

FISIM, monetary intermediation, total 27 271+ Monetary intermediation services paid for directly, total 7 454+ NB: Output from the costs side (FISIM) 413+ Own-produced software in industry 651000 1 096+ Output of "free car" fringe benefit, industry 651000 31= Output of the Nationalbank and monetary intermediation,

total36 265

The very small savings banks and savings and loan associations under 100 million in the above tableare institutes with a working capital of under DKK 100 million. They are also covered byFinanstilsynet’s report, which has 100% coverage of legal units. However, the accounting plan forthese small units is less detailed than for other monetary intermediation. It is apparent that theyrepresent a very minor activity.

It can be seen that the estimate of FISIM does not tally with the – now outdated – formula for theestimate of “global” FISIM in ESA 95 paragraph 3.63 J, since there is no correction for the paymentof interest on own funds. But this is not important for GNI as long as FISIM is not divided up by usersector and industry. According to the FISIM Regulation, however, in future FISIM will presumably

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have to be estimated in a way which is different again, namely from the micro point of view, and thefinal decision on sources and methods for FISIM in the Danish national accounts will not be madeuntil there is clarification at EU level, by the end of 2002.

Table 74 Intermediate consumption, monetary intermediation

FPI: Finanstilsynet’s report – monetary intermediation DKK millionNB: Nationalbank annual report

FPI: Other administrative costs 5 234+ FPI: Other operating expenditure 3 598+ FPI: Fees etc. paid 837+ Mark-up for savings banks under 100 million 46+ Mark-up for savings and loan associations under 100

million11

+ ROW monetary intermediation, branches in Denmark 110- Greenland banks 49- Danish monetary intermediation, branches in the ROW 921= Intermediate cons. excl. Nationalbank before software 8 977+ NB: Intermediate consumption, Nationalbank 131- Correction for software purchased by industry 651000 123= Int. cons., Nationalbank and monetary intermediation, total 8 985

The method of calculation for NACE 66 is shown for both of the national accounts industries, sincethere are essential differences in the estimates for life insurance and pension funds on the one handand non-life insurance on the other.

For life insurance and pension funding, output value is calculated from the costs point of view, andnot using the formula in the ESA 95 paragraph 3.63 J, but with the addition of a profit element for netoperating surplus of 1.5% of own funds. This percentage is low because the total return on ownfunds in life insurance corporations, in addition to net operating surplus, consists of property incomeand holding gains etc. which are not allocated to insured persons and are not included in bonusequalisation provisions. Bonus equalisation provisions in life and pension insurance are the funds ofthe policyholders and not part of the corporation’s own funds. In contrast to life insurance provisions,they are not broken down by policyholder but are owned by the policyholders jointly. Their functionis to avoid major fluctuations in the corporations’ “account interest”, i.e. the percentage interest whichthe policyholders receive in a given year on the funds they have saved with the corporation.

The reason for choosing this method of calculation is that the insurance corporations achieve verylarge holding gains on the funds invested, which are largely allocated to the accounts of insuredpersons in the form of life assurance provisions or to the policyholders jointly in the form of bonusequalisation provisions. Given that that share of the increase in provisions which comes from theallocation of holding gains cannot be identified and shown separately in the accounts, use of theformula in the ESA 95 paragraph 3.63 J would produce results which were economicallymeaningless, at least if the insurance corporations' portfolios included shares. Where shares areconcerned, the major part of returns to investors often come in the form of revaluation gains ratherthan dividends. Insurance corporations and pension funds take this into account when devising theirpolicy for the allocation of earnings to their customers.

It would seem that this complication was not taken into account in the wording of paragraph 3.63 J ofthe ESA 95. This point should be taken up with the next revision of the ESA and the SNA.

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With output value determined from the point of view of costs, the result is presented below in theform of the calculation formula in the ESA 95 paragraph 3.63 J, with an extra element added,“Revaluation gain added to reserves”. This latter is calculated as a residual, to tally with output valueas estimated from the point of view of costs. Table 75 illustrates the estimate for life insurancecorporations. An identical estimate is made for pension funds and burial funds. The property incomeallocated to the policyholders is calculated from the corporations’ net interest and dividend incomemultiplied by the share of the total reserves, bonus equalisation provisions and the corporations’ ownfunds accounted for by insurance technical reserves plus the bonus equalisation provisions.

Table 75 Output of life insurance and pension funding

FLI: Finanstilsynet’s report – life insurance corporations DKK millionLife insurance corporationsFLI: Premium income 26 071

- FLI: Insurance claims 20 382- FLI: Change in life insurance provisions 20 386- FLI: Change in bonus equalisation provisions 2 226+ FLI: Revaluation gain increasing provisions 1 177+ FLI: Imputed interest from the corporation’s income side 18 791+ FLI: Reinsurance commissions 800= Output of life insurance corporations 3 845

(excl. own-produced software and fringe benefits)+ Corresponding calculation for general pension funds 537+ Corresponding calculation for company pension funds 56+ Corresponding calculation for burial funds `+ Own-produced software 32+ Output of the "free cars" fringe benefit 5= Output of industry 660102 4 477

Table 76 estimates the intermediate consumption of life insurance corporations. For pension fundsand burial funds, the estimates are made in exactly the same way.

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Table 76 Intermediate consumption of life insurance and pension funding

FLI: Finanstilsynet’s report – life insurance corporations DKK millionLife insurance corporationsFLI: Administration fees 1 122

- FLI: Other ordinary income 69+ FLI: Rentals 49+ FLI: Other staffing expenditure 738+ FLI: Costs associated with investment activity 162+ FLI: Other acquisition and administrative costs 698+ FLI: Commissions to own sales staff 171+ FLI: Other ordinary expenditure 67- FLI: Wages and salaries 911- FLI: Contribution to dividends (R44) from wages and

salaries and fees5

- Purchase of computer software 12+ Government fees which are sales of services 17+ FLI: Commissions to other insurance corporations 127+ FLI: Reinsurance premiums 455- Reinsurance share of insurance claims 419- Reinsurance share of increase in life insurance provisions 62+ Grossed up supplementary premium 75= Intermediate consumption in life insurance corporations 2 202+ Corresponding calculation for general pension funds 422+ Corresponding calculation for company pension funds 39+ Burial funds 1= Intermediate consumption in industry 660102 2 664

Wages and salaries are deducted from the estimate of intermediate consumption because they arealready included in certain other cost components. The rules for this are laid down unambiguously inFinanstilsynet’s rules on reporting.

For other insurance (non-life), output value is calculated in accordance with the rule in the ESA 95paragraph 3.63 J. In this case, those problems which the rule runs up against in the case of lifeinsurance and pension funding do not apply to any noticeable extent, since the corporations do notnoticeably increase insurance technical reserves as share prices rise. Property income allocated topolicyholders (supplementary premiums) is calculated here (in contrast to life insurance and pensionfunding) by calculating the return on the corporations’ portfolio of bonds and then using thispercentage for the insurance technical reserves.

Where the calculation for life insurance and pension funding is a pro rata calculation based on theassumption that the policyholders’ funds and the corporation’s own funds are invested in the sameportfolio of securities, this is not the case with the calculation for other insurance. Here, it is assumedthat the insurance technical reserves are invested in (safe) bonds, whereas more risky investments inshares are considered to be financed by the corporations’ own funds. There is therefore a differentlink between financial assets and insurance technical reserves on the one hand and own funds on theother. The reason is that the investment of insurance technical reserves has a much shorter timehorizon for non-life than for life insurance.

The calculation of the output value of other insurance is illustrated in Table 77.

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Table 77 Output, other insurance

FLI: Finanstilsynet’s report – non-life insurancecorporations

DKK million

FLI: Premium income 30 491- FLI: Expenditure on claims 26 453- FLI: Increase in equalisation provisions 277+ Supplementary premiums 3 135+ Grossing up addition to supplementary premiums 590- Grossing up addition to increase equalisation provisions 52+ FLI: Reinsurance commissions 722+ Other ordinary income (deconsolidation) 1 488+ Own-produced software 626+ Output of the "free cars" fringe benefit 35= Output of industry 660300 10 306

Intermediate consumption is calculated as shown in the table below:

Table 78 Intermediate consumption, other insurance

FLI: Finanstilsynet’s report – non-life insurancecorporations

DKK million

FLI: Administration fees 588

+ FLI: Rentals 427

+ FLI: Other staffing expenditure 4 556

+ FLI: Costs connected with investment activity 67

+ FLI: Other acquisition and administration costs 932

+ FLI: Commissions to own sales staff 1 005

+ FLI: Other ordinary expenditure 117

- FLI: Wages and salaries 4 126

- FLI: Contributions to dividends (R.44) from wages andsalaries and fees

25

- Purchases of computer software 21

+ Public fees which are sales of services 161

+ FLI: Reinsurance premiums 4 830

- Reinsurance share of claims 4 140

+ Grossing up addition to supplementary premiums 590

- Grossing up addition to increase in equalisation provisions 52

+ Commissions to other insurance corporations 1 183

= Intermediate consumption of industry 660300 6 091

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3.16.4 Breakdown of output by product

In the supply and use tables, the output of NACE J is divided into 13 products, one of which is own-produced software and another the output of the fringe benefit free cars. The product breakdown isbased on the breakdown of the financial corporations sector into subsectors and of the producer unitswhich belong to them into industries. Industry 660300, non-life insurance, produces servicesconnected with life insurance and pension funding, since non-life insurance corporations carry outadministrative services for life insurance corporations and pension funds.

3.16.5 Breakdown of intermediate consumption by product

There are no regular costs structure statistics for the financial industries other than the summary costsstructure included in the accounting plan in Finanstilsynet’s Order on Accounting. The inputstructure in the financial industries has been based on this. The breakdown into individual products isto a certain extent based on estimates which in turn are based on common sense considerations. Forthe current year, an initial estimate is worked out for the input structure on the basis of the technicalcoefficients in the supply and use tables from previous years.

3.17 Real estate, renting and business activities (NACE K)

3.17.1 Introduction

With the exception of industries 702009, dwellings, and 702040, the letting of non-residentialbuildings, NACE K is defined on the basis of a grouping of producer units. The above two industriesare the exception, being defined by function and combining all letting of real estate, i.e. dwellings ornon-residential premises, regardless of the legal or producer units in which the activity takes place.NACE K covers 14 of the national accounts’ 130 industries, as can be seen in Table 79, which alsoshows that in 1995 NACE K accounted for 18.5% of the value added of the Danish economy.

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Table 79 NACE Section K's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

701109 Real estate agents etc. 4 112 1 843 2 269702009 Dwellings 92 554 14 666 77 888702040 Letting of non-residential buildings. 25 009 6 906 18 103710000 Letting of machinery and equipment etc. 7 492 2 566 4 925721009 Computer activities excluding software

consultancy and supply8 637 3 799 4 838

722000 Software consultancy and supply 12 354 5 254 7 101730001 Research and development (market ) 563 207 357730002 Research and development (other non-

market)2 785 976 1 810

741100 Legal activities 5 034 936 4 098741200 Accounting, book-keeping, auditing etc. 8 374 1 440 6 934742009 Consulting engineers, architects, etc. 24 954 11 153 13 801744000 Advertising 13 264 9 665 3 599747000 Industrial cleaning 6 493 1 508 4 985748009 Other business activities 17 364 7 202 10 162Total NACE K 228 989 68 120 160 869Percentage of the economy 13.8 8.6 18.5

The section covers 72 industries at the most detailed DK-NACE level. In all cases bar one thecalculations are made at that detailed level. The exception is the letting of dwellings, where thenational accounts calculation system lumps three detailed DK-NACE industries together andcombines the calculation with the calculation of the imputed rental value of owner-occupied housing.

3.17.2 Statistical sources

Apart from the two major industries, dwellings and the letting of non-residential buildings, wherespecial sources and methods are used, the primary statistics source is in the vast majority of cases taxaccounting statistics. Table 80 shows the primary statistics used.

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Table 80 Statistical sources underlying the calculation of value added for NACE K

National accounts industries/DK-NACE industries Source701109 Real estate agents etc. Tax accounting statistics702009 Dwellings Housing censuses, rent surveys, the accounts of

housing corporations, consumer surveys702040 Letting of non-residential buildings Calculated from the expenditure side: the

sources underlying the calculations for all otherindustries

710000 Letting of machinery and equipment etc. Tax accounting statistics721009 Computer activities excluding software

consultancy and supplyTax accounting statistics

722000 Software consultancy and supply Tax accounting statistics730001 Research and development (market ) Tax accounting statistics730002 Research and development (other non-

market)Central and local government accounts

741100 Legal activities Tax accounting statistics741200 Accounting, book-keeping, auditing etc. Tax accounting statistics742009 Consulting engineers, architects, etc. Market: tax accounting statistics

Government non-market: central governmentaccounts etc.

744000 Advertising Tax accounting statistics747000 Industrial cleaning Tax accounting statistics748009 Other business activities Tax accounting statistics

Government non-market: central governmentaccounts etc.

3.17.3 Method of calculation

In all cases where the statistical sources are either tax accounting statistics or general governmentaccounts, the standard method is followed for the estimate of output, intermediate consumption andvalue added, on the basis of these general sources. Below, we therefore describe only the two special,but exceptionally important, calculations for dwellings and the letting of non-residential buildings.

The calculations for dwellings comply with the method set out in Commission Decision 95/309/EC,Euratom with the exception of the changes brought about by the transition from the ESA 79 to theESA 95, which include the symmetrical treatment of repairs and maintenance in rented and owner-occupied dwellings, which has in any case always applied in the Danish national accounts. As Table79 shows, in 1995 dwellings accounted for 8.9% of the total value added of the Danish economy. It istherefore clear that the reliability of the estimate of value added in this industry is crucial for theoverall accuracy of the GNI estimate.

The most important principle in the Commission Decision is that the countries have to use thestratification method to calculate the imputed rental value of owner-occupied dwellings. Denmarkhas always used this method. In short, it means that the total housing stock is divided into a numberof strata on the basis of various stratification criteria. The criteria which are mandatory under theabove Decision are size and location. First of all, the average actual rent is calculated for renteddwellings in each stratum and this average stratum rent is then used for owner-occupied dwellingswithin the same stratum to estimate the imputed rental value of owner-occupied housing.

The Decision requires countries to operate with a minimum of 30 strata generated by at least threestratification criteria, of which the two mandatory ones are size and location. In addition, at least

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three size classes and two kinds of location are required. In Denmark’s case, the sources enable amuch more detailed calculation to be made. For the 1991 benchmark calculation, 1 408 strata wereused, and for the 1995 benchmark calculation, 896.

To estimate the output of both rented dwellings and owner-occupied dwellings in the Danish nationalaccounts, a very thorough and detailed calculation of levels is made every 4-5 years, when large-scalerent surveys are carried out. The levels are projected during the intervening period using appropriateprice and quantity indices. Thanks to the unique Bygnings- og Boligregister (BBR) annualinformation is available on the total housing stock divided according to numerous criteria. It istherefore not the quantity component in the price x quantity calculation formula which is missing onan annual basis but the price component. The large-scale 4-5 yearly housing surveys – cf. Section11.1 – are an extremely robust statistical source. They are carried out to provide an objective basis inthe form of price information for the public assessments of real estate values. These publicassessments are used both for the calculation for tax purposes of the rental value of owner-occupiedhousing, which is subject to income tax, and as a basis for the collection of property taxes. The rentsurveys cover all property which is let comprising three or more tenancies. They therefore have anextremely high degree of coverage of rented housing in blocks of flats and of terraced, linked andsemi-detached houses, whereas the degree of coverage for detached, single-family houses which arelet is much lower. Compared with the information on rents which is available from the populationand housing censuses used in Denmark until 1970, and which are still an important source of data inmany countries, the quality of rent survey data must be assumed to be much higher because theinformation is collected from professional landlords as opposed to households which rent property,which are presumably more likely to misunderstand what has to be included in answers to questionsand what should be omitted – for example, heating bills etc. which are included with actual rents.The rent survey covers only dwellings which are occupied all year round.

For the 4-5 yearly calculations of levels, rentals (actual and imputed) are compiled using thestratification method as a price x quantity calculation. Since the rent survey does not have 100%coverage, the figures have to be grossed up to the total population of rented dwellings. The grossingup also uses the stratification method. For each stratum, the average annual stratum rent according tothe rent survey is multiplied by the annual average number of dwellings let in the stratum in question.At the same time, the imputed rental value of owner-occupied housing is calculated by multiplyingthe annual average number of owner-occupied dwellings in each stratum by the same annual averagestratum rent. Finally, a separate calculation is made for holiday homes (weekend cottages etc.) andgarages, carports, etc.

The estimate of output in "dwellings" in the Danish national accounts for 1995 is based on anestimate of levels for 1991 projected to 1995. Subsequently, i.e. after the national accounts figureswere final, this estimate was validated against a new, comprehensive benchmarking based on the rentsurvey for 1995.

Below, we show the main principles behind the calculation of levels for 1991 before discussing theprojection to 1995 and, finally, the validation against the new survey of levels for 1995.

The Danish estimate of levels for 1991 uses the following stratification criteria:

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Table 81 Stratification criteria for the calculation of levels, 1991

Factors Factor levels

Location: degree of urbanisation 1. HT- area 12. HT- area 23. HT- area 34. Århus5. Other towns with at least 100 000 inhabitants6. Towns with 10 000-99 999 inhabitants7. Towns with 1 000-9 999 inhabitants8. Other areas

Rental status 1. Rented2. Used by owner, owner-occupied flats3. Used by owner, other dwellings4. Not known

Type 1. Farmhouses and detached houses2. Terraced, linked and semi-detached houses3. Dwellings in blocks of flats4. Other

Quality 1. Group 12. Group 23. Not known

Size 1. –49 m2

2. 50-59 m2

3. 60-79 m2

4. 80-99 m2

5. 100-119 m2

6. 120-139 m2

7. 140 m2 and [over]8. Not known

Year of construction 1. –19392. 1940-19593. 1960-19694. 1970-19745. 1975-19796. 1980-19847. 1985-8. Not known

The following should be noted as regards the individual stratification criteria:

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Where the location factor is concerned, special attention should be paid to the HT [CopenhagenTransport Corporation] area. Around one-third of the population of Denmark lives in the regionaround Copenhagen, which for practical reasons is delimited as the geographical area covered by HT,which serves the actual city, the suburbs and other municipalities with a large number of commutersto and from the capital. This HT area consists of the Copenhagen municipality [KøbenhavnsKommune], the Frederiksberg municipality and all municipalities within Copenhagen county[Københavns Amt], Frederiksborg county and Roskilde county. For stratification, the area is dividedinto three sub-areas, HT-1, HT-2 and HT-3, since it was assumed that there was a significantdifference in the average level of rents, HT-1 being the most expensive and HT-3 the least expensive.The breakdown is based on the breakdown used by the country’s leading estate agents andnewspapers for the marketing of owner-occupied housing. There is no doubt that this breakdown issignificant for the prices at which owner-occupied dwellings change hands, and it is assumed that thesame applies to the levels of rent in rented housing. HT-1 consists of the following districts:Birkerød, Dragør, Gentofte, Hørsholm, Lyngby-Tårbæk, Søllerød and Værløse. HT-2 consists of:Allerød, Ballerup, Brøndby, Farum, Fredensborg, Frederiksberg, Gladsaxe, Glostrup, Greve,Helsingør, Herlev, Hillerød, Hvidovre, Karlebo, København, Ledøje, Lejre, Roskilde, Rødovre,Solrød, Stenløse, Tårnby and Vallensbæk. HT-3 comprises: Albertslund, Bramsnæs, Frederikssund,Græsted-Gilleleje, Gundsø, Helsinge, Hundested, Hvalsø, Høje-Taastrup, Ishøj, Jægerspris, Køge,Ramsø, Skibby, Skovbo, Skævinge, Slangerup, Valsø and Ølstykke.

The calculation confirms that there is a significant difference in the levels of rents in these three sub-areas in and around Copenhagen.

Århus, the country’s next largest city, is a factor level on its own, because rent levels in the city andits suburbs are noticeably different from the level in the other provincial towns in Denmark and aremore or less on a par with rents in the Copenhagen area.

As regards the quality factor, quality group 1 comprises dwellings with water, drainage, own toilet,own bath, district heating or central heating from their own system and, for single family houses, withelectric stoves or electric panel heating. Quality group 2 comprises dwellings which do not have oneor more of the above facilities.

As regards the year of construction, the smaller intervals during the period 1960-1979 are due to thefact that there was a great deal of new housing built during that period, which, in view of therelatively high inflation at that time, had very different nominal construction costs. Since there issignificant inertia in the establishment of rents, in which the nominal construction costs play a part, itis appropriate to work with smaller intervals of time during that period.

In the housing census, there are a small number of dwellings where the rental status, type and qualitygroup are not known. These are divided over the other groups in the light of the remaininginformation on the dwellings in question. In this connection, all dwellings where the type is notknown are assumed to be in blocks of flats. All dwellings built after 1970 are also assumed to belongto quality group 1, i.e. have all facilities. Thus the number of factor levels for the type criterion hasbeen reduced from 4 to 3 and for the quality criterion from 3 to 2.

Disregarding rental status, which is not a significant stratification criterion for the actual calculationof total rents, we then have the following theoretical number of strata: 8 x 3 x 2 x 8 x 8 = 3 072.However, the rent calculation assumes that all dwellings constructed after 1970 belong to qualitygroup 1, and therefore the number of significant strata is reduced by 8 x 3 x 1 x 8 x 5 = 960 from3 072 to 2 112. In addition, as discussed below, rents for detached dwellings are put at 1.02 times the

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rent for corresponding flats, and thus one of the three factor levels for type of dwelling is in facteliminated from the final estimate. Thus the number of significant strata in the calculation is cutdown to 1 408.

The calculation of total rents is based on the above stratification with a simple price times quantitycalculation for all-year-round dwellings other than farmhouses and detached houses, with a separatecalculation for owner-occupied and rented dwellings. For farmhouses and detached houses, theinformation in the rent survey is relatively sparse, and there is some doubt about the extent to whichrented houses which stand on their own are representative of the stock. In 1991, a large number ofdetached houses were repossessed by building societies under forced sales. These houses, which werepossibly somewhat neglected, and let under special circumstances, may have artificially depressed therent levels of the detached houses observed. It was therefore decided not to base the calculation fordetached houses on the relatively scanty material on the rents of detached houses which are let out,but instead to base it on the firm observations for dwellings in blocks of flats, which had verydifferent coverage. In this connection, a regression analysis was carried out to take account of thesignificance of the fact that a dwelling was detached. The result was that, on the basis of the 14 000or more observations of detached houses which were let in 1991, there was no statistically significantrental difference (at the 95% level).

This calculation is supplemented by a calculation of total rents for holiday homes etc, which wascarried out in exactly the same way as for all-year-round dwellings, but on the assumption that therent for a holiday home in a given stratum was half of the rent for an all-year-round dwelling in thesame stratum. Finally, a calculation was made for garages, carports, etc, covering garages which werenot part of the actual dwelling and therefore included in the area of the dwelling. This latter (minor)share of garages is already covered by the calculation of rents for all-year-round dwellings.

The calculation for (external) garages, carports etc. for 1992 was as follows: the average constructioncosts per m2 for garages and carports were calculated together with the corresponding constructioncosts for single-family houses. The ratio of these two figures multiplied by the ratio of the averagesize of garages etc. on the one hand to single family houses on the other and again multiplied by theaverage rent in single family houses was the calculated rental value of garages, etc.

The rent survey for 1991 refers to the level of rents in September 1991. The quantity variable, i.e. thehousing survey, relates to the housing stock as at 1 January 1992. In order to obtain an estimate oflevels for 1991 (and the first half of 1992, as a basis for the projection), the result of the above levelcalculation has to be corrected for both changes in rents between the first and the second halves of1991 (second half of 1991 and first half of 1992), and for changes in the stock of housing during 1991(and the first half of 1992) as a result of new buildings which came into use on the one hand anddemolitions on the other.

After the corrections referred to above, we have total rents for 1991 (and the first half of 1992) for alldwellings in the economy, based on the average level of rents for the period and the average numberof dwellings. To obtain the national accounts estimate of total rents, however, there have to bevarious additional corrections for items included in the rents observed in the rent survey, which arenot to be considered as rents. In addition, the total rents calculated must be reduced by the total whichin the price times quantity calculation was allocated to dwellings which stood empty during the periodand therefore did not produce any actual or imputed dwelling service. Corrections are made to therents observed for the following items which were included in rents:

• payments for water and water rates• drainage charges

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• refuse collection• chimney sweeping• insurance.

These amounts are instead counted as household consumption expenditure under the items inquestion. Where insurance is concerned, only the services element in the gross premiums is included.

There is also a correction for vacant dwellings. In accordance with the principles in the CommissionDecision on dwellings, no output value is assigned to dwellings which are standing empty.

The figures thus calculated for total rents in the housing stock as at 1 January 1992, in terms of rentallevels for September 1991, are first projected to the first half of 1992. This projection takes accountof:

• changes in rents between the second half of 1991 and the first half of 1992• new buildings first occupied between 1/1/92 and the average for the first half of 1992• dwellings demolished between 1/1/92 and the average for the first half of the year.

The level thus calculated for the first half of 1992 constitutes the benchmark which is then projectedusing a price and a quantity index until the next level calculation can be incorporated into the nationalaccounts. The next time this happened was for reference year 1996. During the intervening period,we use the percentage distribution of total rents into actual rents and imputed rents in the benchmarkcalculation to distribute total rents into these two categories . This does not, of course, have anyeffect on GNI but is important as regards the calculations of household consumption expenditure,since actual rents and imputed rents in owner-occupied dwellings are in two different consumptiongroups in the national accounts’ detailed grouping of consumption.

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The benchmark for the first half of 1992 has the following values:

Table 82 Total rents for the first half of 1992 divided by type of dwelling – calculation oflevels

DKK 1000All-year-round dwellings 38 926 562

of whichrented dwellings 14 276 593owner-occupied dwellings 24 649 969

Holiday homes 1 214 999Total rents for actual dwellings 40 141 560

Garages etc. 1 214 653

Total rents 41 356 213

The total rent is then projected from one six-month period to the next, starting with the projectionfrom the first to the second half of 1992. The projections are made on a six-monthly basis becauseDanmarks Statistik’s rent surveys which are used for the calculation of the housing item in, forexample, the consumer price index are six-monthly surveys. The projection from the first to thesecond half of 1992 is shown in Table 84 for all-year-round owner-occupied dwellings. Theprojection for the other types of rent is exactly the same. The value for garages etc. is projected onthe basis of the calculated change in total rentals for all-year-round owner-occupied dwellings.Danmarks Statistik’s small-scale six-monthly rent surveys which are used for the consumer priceindex in particular cover a sample of around 4 200 rented dwellings.

Table 83 Projection of the calculation of levels from the first half of 1992 to the second half of1992, owner-occupied dwellings, all-year-round dwellings

DKK 1000

(1) Rents for stock in first half-year before correction for water, drainage,etc.

26 343 993

(2) Rents for stock in first half-year after correction for water, drainage,etc.

24 649 969

(3) Six-monthly increase in rents (first half of 1992 – second half of 1992) 0.895 %(4) Rents for the second half of 1992of stock in previous half-year

(1)x(1+(3))26 579 791

(5) Addition for new dwellings coming into use 147 134(6) Dwellings demolished 15 876(7) Total growth in the half-year (5)-(6) 131 258(8) Rents, stock in the second half of 1992 before correction for water etc.

(4) +(7)26 711 049

(9) Water paid for via rents 493 283(10) Drainage charges paid for via rents 1 049 193(11) Deduction for vacant dwellings 152 957(12) Pure rents in the second half of 1992 (8)-(9)-(10)-(11) 25 015 616

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The projection to 1995 uses exactly the same method as that shown in Table 83.

The level for total rents in 1995 thus obtained was subsequently validated against a new estimate oflevels based on a new large-scale rent survey for September 1995 combined with an estimate of thehousing stock as at 1 January 1996.

For the benchmarking based on the 1995 rent survey, the number of strata was reduced somewhatcompared with the 1991 calculation. A statistical analysis of the figures showed that the optimummethod was to aggregate over the factor levels for the stratification criterion type of housing asregards dwellings constructed from 1970 onwards. The reason was that the rent figures for 1995 forthe newer dwellings in certain strata appear to be affected by changes in the legislation on rents andby work on urban renewal projects. It is generally the case that there are many more owner-occupiednewer dwellings than rented ones. Abnormally large rent increases in relatively few newer renteddwellings could, under these circumstances and if stratification remained unchanged, work through toa very lsrge number of owner-occupied dwellings, with implausible results. The statistical analysisshowed that the figures were robust, however, if detached, terraced, linked and semi-detached houseswere aggregated along with dwellings in blocks of flats as regards that share of the figures whichrelates to dwellings constructed in 1970 or later. This reduces the significant strata in the calculationfrom 1 408 in the 1991 benchmark to 896 in the 1995 calculation.

However, even with the reduction in the number of strata needed for the 1995 calculation, thiscalculation of levels is still much more finely meshed and thus robust as regards the aggregation biasthan is required by the Commission Decision on dwelling services. The Decision requires, as alreadymentioned, a minimum of 30 strata.

The result of the validation showed that the rent level extrapolated back to the average level for 1995was around DKK 1 billion greater than the level projected from the first half of 1992 to 1995 from theprevious benchmarking. The two estimates tally as well as can reasonably be expected. Against thisbackground, a level was fixed for 1996 which was 1 billion higher than the level which would haveemerged if the projection model had been used for the reference year 1996. A new direct estimate oflevels based on the rent survey for September 1995 and the housing stock as at 1/1/1996 is, in otherwords, included in the national accounts as from reference year 1996. The next large-scale surveyrelates to September 1999 and is expected to be included directly as regards levels for the estimate ofthe final 1999 national accounts.

The DKK 1 billion adjustment in the output value for 1996 compared with the results of a continuedprojection is not considered as a major revision issue in the national accounts, partly because it isrelatively small and partly because the calculation of levels based on the 1995 rent survey in fact usesthe housing stock as at 1/1/1996 as the quantity component, rather than the average stock in 1995. Ittherefore cannot be excluded that the 1995 value for total rents produced by the projection model,which was incorporated into the 1995 national accounts, in fact tallies with the newly calculatedbenchmark value. It is possible that the difference in level is solely attributable to the inaccuracy ofthe extrapolation of the price and quantity component from the average values for the year to themonth of September and 1 January of the following year respectively.

It was therefore decided to consider the benchmark calculation based on the rent survey for September1995 and the housing stock as at 1 January 1996 as a new calculation of levels compatible with thefigures projected for 1995. It was incorporated into the national accounts as a direct estimate of levelsas from reference year 1996 inclusive.

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The intermediate consumption of dwellings is calculated separately for owner-occupied and renteddwellings. The calculation uses four sub-groups:

1. (ordinary) repair and maintenance expenditure2. other intermediate consumption apart from stamp taxes and financial intermediation

services paid for directly3. stamp taxes4. financial intermediation services paid for directly.

Expenditure on ordinary repair and maintenance in dwellings which are let refers solely to theexpenditure defrayed by landlords. The tenants’ expenditure on repairs and maintenance is countedas private consumption expenditure in consumption group 4300, and is normally limited to certaininternal maintenance work such as painting and floor polishing when there are changes of tenants.The source for the calculation of landlords’ repair and maintenance expenditure is accounts from thenon-profit (social) housing associations, which represent in total around half a million renteddwellings and can reasonably be considered to be representative of the rental sector as a whole.

For owner-occupied housing, expenditure on minor, routine repairs and maintenance is counted asprivate consumption in the households under group 4300, by analogy with the treatment of thecorresponding expenditure of tenants. Major expenditure items, which in the case of rented dwellingsshould normally be defrayed by the landlord, are considered to be intermediate consumption when thedwellings are owner-occupied. Major repair and improvement work is not included in the estimate ofintermediate consumption but counts as capital formation in housing construction. For owner-occupied dwellings, the source for the estimate of repair and maintenance expenditure is thehousehold budget survey (FU) – cf. Section 11.3.

For other intermediate consumption apart from stamp taxes and financial intermediation servicespaid for directly, the sources are the same as for expenditure on repair and maintenance. In the natureof things, this item is a minor one in the case of owner-occupied dwellings, where it must include, forexample, administrative expenditure relating to owners’ associations in owner-occupied flats. Fordwellings which are let, it is much larger and includes, in particular, substantial administrationservices.

Expenditure on refuse collection, chimney sweeping, insurance services etc. will normally beincluded in the rent demanded. For the national accounts calculations for dwellings, the calculatedtotal rental is reduced by the amount of these items, which are transferred to private householdconsumption of the services in question, instead of being considered as the private consumption ofrents. Consequently, the expenditure in question is not included in the estimate of intermediateconsumption for dwellings. Counting the figures this way in accordance with the internationalclassification of the consumption of households, COICOP, does not, of course, affect the estimate ofGNI, but relates solely to the breakdown of private consumption into consumption groups.

Stamp taxes, which count as intermediate consumption in dwellings, relate to loans for the financingof investments in housing and thus the output of dwelling services. Like other transaction costsconnected with the transfer of real estate, stamp taxes on the transfer of property rights (deeds etc.)are treated - in line with ESA 95 paragraph 4.20 b) - as gross fixed capital formation. Stamp taxes onloans for the financing of investments in housing are estimated on the basis of the stamp tax rates laiddown in the legislation, statistics for monetary financial institutions and the total revenue from stamptaxes taken from general government statistics.

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The financial intermediation services paid for directly which are included in intermediateconsumption in dwellings are fees etc. connected with mortgages taken out to finance purchases ofdwellings and thus output of dwelling services. In Denmark, the vast majority of housing loans are“realkreditlån” [mortgage loans] granted by a special type of monetary financial institution known asa “realkreditselskab” [mortgage corporation]. These monetary financial institutions are fundedalmost entirely by the issue of bonds and take mortgages on the property for which they issue loans.The institutions demand “contributions” from borrowers, typically a percentage of the remaining debt.These contributions, which are invoiced to the borrowers, are treated as financial intermediationservices paid for directly. In addition, there are financial intermediation services on the bank loanscustomarily taken out to finance housing purchases. The amount allocated to intermediateconsumption in the "dwellings" industry is calculated on the basis of the total contributions tomortgage credit institutions and the total amount paid for bank services in the light of the outstandingdebt on dwellings.

The figures for industry 702040, the letting of non-residential buildings, are calculated as describedfrom the expenditure point of view. The industry's output is estimated as the sum of non-residentialrent expenditure in all other industries in the economy. These figures are estimated separately in theintermediate system at the most detailed DK-NACE level and are available separately in the targettotal module under code 2020, cf. the table of the functional target total module in Section 1.3.9.1.1.

This ensures that the output of non-residential rentals and rentals which are posted as inputs in otherindustries are consistent. It is difficult to ensure this if output is calculated from the supply side,owing to the widespread secondary activity connected with the letting of non-residential premises, onwhich there is no direct information available in the detailed accounting information from thecorporations involved. From the point of view of GNI, an expenditure-based estimate is best, sinceany measurement errors in the estimate of the input of non-residential rentals are thus neutralised asregards GDP/GNI.

Intermediate consumption is calculated from the ratio of intermediate consumption to output in the"letting of dwellings" industry. The reasoning is that the aggregate accounting figures underlying thecalculations for the letting of dwellings are on the whole more representative of the letting of non-residential premises than the available accounts from corporations whose primary activity is non-residential letting. But since the letting of dwellings and of non-residential buildings are closelyrelated activities, the input percentage, i.e. the ratio of intermediate consumption to output , may beconsidered to have been determined with a good degree of certainty. Once Danmarks Statistik’squestionnaire-based accounting statistics have been expanded as from reference year 2000 to includethis industry as well, it will be appropriate to consider using the accounting information for theindustry directly to fix the input percentage, since by that time it will be much more comprehensive.

3.17.4 Breakdown of output by product

For the industries in NACE K other than dwellings and the letting of non-residential buildings, outputis primarily broken down by product in such a way that products are defined on the basis of the mostdetailed industries in the DK-NACE so that the total output value in one of these detailed industries isallocated to a product with the same name as the industry.

The output of the "dwellings" industry in 1995 was divided by product as shown in Table 84.

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Table 84 Breakdown of output in the "dwellings" industry by product

Product number Text Value DKK 1000F702000 Fringe benefits, free housing 104 680F711000 Fringe benefits, free car 11 409K722000 Own-produced software 2 507T702001 Letting of dwellings 31 812 488T702002 Imputed rental value of owner-occupied

dwellings57 907 858

T702003 Garages etc. not an integral part of thedwellings

2 715 987

Total dwellings 92 553 987

The output of the "letting of non-residential buildings" industry covers two products. All non-residential letting is one product and there is also a small amount of output of the fringe benefit "freecar" in the relevant product balance.

3.17.5 Breakdown of intermediate consumption by product

Industries other than dwellings and the letting of non-residential buildingsThere are no regular costs structure statistics for these industries other than the summary costsstructure included in the SLS-E accounting plan. The input structure is based on this. Thebreakdown into individual products is to a certain extent based on estimates which in turn are basedon common sense considerations. For the current year, an initial estimate of input structure is workedout from the technical coefficients in the supply and use tables from previous years.

DwellingsThe breakdown by product is self-evident in three of the four expenditure categories referred to inSection 3.17.3. The fourth – other intermediate consumption apart from stamp taxes and financialintermediation services paid for directly – is broken down by product on the basis of information inthe accounts of non-profit housing corporations and, if this is not sufficiently detailed, on the basis ofcommon sense considerations concerning, for example, the input of cleaning services in blocks offlats.

Letting of non-residential buildingsThe same applies to this industry as to dwellings.

3.18 Public administration, defence and social security (NACE L)

3.18.1 Introduction

NACE L is defined on the basis of a grouping of producer units. It covers four of the nationalaccounts’ 130 industries. In Denmark in 1995, virtually the whole group consisted of government(other) non-market output, the exception being national accounts industry 752000, which in addition

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to non-market activity covers rescue services which are market. As shown in Table 85, NACE Laccounted for 7.7% of the value added of the Danish economy in 1995.

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Table 85 NACE L's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

751100 General (overall) public service activities 24 167 6 889 17 279751209 Regulation of public service activities exc.

for business19 285 4 175 15 110

751300 Regulation of and contribution to moreefficient operation of business

20 246 6 542 13 704

752000 Provision of services to the community∗ 32 603 11 539 21 064Total NACE L 96 302 29 145 67 157Percentage of the economy 5.8 3.7 7.7

NACE L covers 11 industries at the most detailed DK-NACE level, at which the calculations aremade in every case. Here, this level of breakdown is less obviously an advantage, however, sincegovernment non-market output is 100% covered by accounts.

3.18.2 Statistical sources

In all cases other than the market output of rescue services etc. in DK-NACE industry 752500, whichis included in national accounts industry 752000, the source is the accounts in Databasen forIntegrerede Offentlige Regnskaber (DIOR) [the database for integrated public accounts] – cf. Section11.1. This database covers central government, local government and social security fund accounts,plus all other units included in national accounts S.13. The source for the calculations of the marketactivity of rescue services etc., national accounts industry 752000, is the tax accounting statistics – cf.Section 3.1.2.3.

Table 86 Statistical sources underlying the calculation of value added for NACE L

National accounts industry/DK-NACE industry Source751100 General (overall) public service activities Central government account, local government

accounts, etc.751209 Regulation of public service activities exc.

for businessCentral government account, local governmentaccounts, etc.

751300 Regulation of and contribution to moreefficient operation of business

Central government account, local governmentaccounts, etc.

752000 Provision of services to the community Central government account, local governmentaccounts, etc.

3.18.3 Method of calculation

The calculations use the standard methods for general, transversal sources in the form of Databasenfor Integrerede Offentlige Regnskaber (DIOR) and the tax accounting statistics.

∗ Literally: Defence, police and the administration of justice.

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3.18.4 Breakdown of output by product

The output of government non-market services is divided up by product on the basis of the varioususes of the products. For each national accounts branch, a distinction is made at least between theoutput of government non-market services for government consumption, for external sales incomeother than from canteen sales, sales income relating to canteens and sales income relating to internalsupplies between public institutions. In addition, there is own-produced software. The market outputin 752000 is for a single product, namely rescue services.

3.18.5 Breakdown of intermediate consumption by product

The input structure for general government is generally based on the breakdown in the central andlocal government accounts, which was much more detailed in the mid-1980s than it is now. Thisdetailed breakdown of intermediate consumption was originally based on these detailed accountingplans combined with special information on defence, for example. For the major revision of thenational accounts, the input structure was analysed in detail in the light of activity in the individualgovernment industries. This was in the nature of a plausibility check, since, as already mentioned,there had been no fresh, detailed statistical information on the structure of public purchases of goodsand services since the mid-1980s. In the current year, input structure is estimated on the basis of thetechnical coefficients from previous years.

3.19 Education (NACE M)

3.19.1 Introduction

NACE M is defined on the basis of a grouping of producer units comprising five of the nationalaccounts' 130 industries. In Denmark in 1995, virtually the whole group consisted of government(other) non-market output, the exception being national accounts industry 804001, which coversmarket output in DK-NACE industries 804100 and 804290. In Denmark, what are known as “privateschools” for children are without exception part of S.13, and are thus government non-marketproducers in that over 50% of production costs are met by public funds and the public authorities to alarge extent control these institutions via the rules for award of grants. As shown in Table 87, NACEM represented 5.4% of the value added of the Danish economy in 1995.

Table 87 NACE M's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

801000 Primary education 28 568 5 675 22 893802000 Secondary education 14 575 4 160 10 415803000 Higher education 10 159 2 394 7 765804001 Adult and other education (market) 1 704 512 1 193804002 Adult and other education (non-market) 6 954 2 082 4 872Total NACE M 61 960 14 822 47 139Percentage of the economy 3.7 1.9 5.4

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NACE M covers 24 industries at the most detailed DK-NACE level, the level at which allcalculations are made. However, this degree of detail is not such an advantage here, sincegovernment non-market output is 100% covered by accounts.

3.19.2 Statistical sources

In all cases other than market output in industry 804001, the source is the accounts in Databasen forIntegrerede Offentlige Regnskaber (DIOR), - cf. Section 11.1. This database covers centralgovernment, local government and social security fund accounts, plus all other units included innational accounts S.13. The source for the calculations of the market activity in 804001 is the taxaccounting statistics – cf. Section 3.1.2.3.

Table 88 Statistical sources underlying the calculation of value added for NACE M

National accounts industry/DK-NACE industry Source801000 Primary education Central government account, local government

accounts, etc.802000 Secondary education Central government account, local government

accounts, etc.803000 Higher education Central government account, local government

accounts, etc.804001 Adult and other education (market) Tax accounting statistics804002 Adult and other education (non-market) Central government account, local government

accounts, etc.

3.19.3 Method of calculation

The calculations use the standard methods for general, transversal sources in the form of Databasenfor Integrerede Offentlige Regnskaber (DIOR) and the tax accounting statistics.

3.19.4 Breakdown of output by product

The output of government non-market services is broken down by product on the basis of the varioususes of the products. For each national accounts branch, a distinction is made at least between theoutput of government non-market services for government consumption, for external sales incomeother than from canteen sales, sales income relating to canteens and sales income relating to internalsupplies between public institutions. In addition, there is own-produced software. The market outputin 804001 covers two products, namely driving schools etc. and other market education.

3.19.5 Breakdown of intermediate consumption by product

The input structure for general government is generally based on the breakdown in the central andlocal government accounts, which was much more detailed in the mid-1980s than it is now. Thisdetailed breakdown of intermediate consumption was originally based on these detailed accountingplans combined with special information on defence, for example. For the major revision of thenational accounts, the input structure was analysed in detail in the light of activity in the individualpublic industries. This was in the nature of a plausibility check, since, as already mentioned, therehad been no fresh, detailed statistical information on the structure of public purchases of goods and

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services since the mid-1980s. In the current year, input structure is estimated on the basis of thetechnical coefficients from previous years.

3.20 Health and welfare institutions∗∗ (NACE N)

3.20.1 Introduction

NACE N is defined on the basis of a grouping of producer units. It covers seven of the nationalaccounts' 130 industries. As Table 89 shows, it accounted for 10.7% of the value added of the Danisheconomy in 1995.

Table 89 NACE N's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

851100 Hospital activities 35 970 10 898 25 072851209 Medical, dental, veterinary activities etc. 17 953 4 508 13 445853109 Social institutions etc. for children 21 778 3 920 17 858853209 Social institutions etc. for adults 41 297 9 537 31 759900010 Sewage removal and disposal 4 553 2 038 2 516900020 Refuse collection and sanitation 5 777 3 462 2 315900030 Refuse dumps and refuse disposal plants 1 403 803 600Total NACE N 128 731 35 166 93 565Percentage of the economy 7.7 4.4 10.7

NACE N covers 35 industries at the most detailed DK-NACE level, and all the calculations arecarried out at that level.

3.20.2 Statistical sources

For government, non-market output, the source is the accounts in Databasen for IntegreredeOffentlige Regnskaber (DIOR), cf. Section 11.1, which covers central government, local governmentand social security fund accounts, plus all other units included in national accounts S.13. For marketoutput, the source is either accounting statistics for industries where public corporations predominateor tax accounting statistics. The sources can be seen in the table below:

Table 90 Statistical sources underlying the calculation of value added for NACE NNational accounts industry/DK-NACE industry Source851100 Hospital activities Public accounts (DIOR)

851101 Private market Tax accounting statistics851102 Government non-market Public accounts (DIOR)

851209 Medical, dental, veterinary activities, etc.851202 Government non-market output Public accounts (DIOR)

Other DK-NACE industries in 851209 Tax accounting statistics853109 Social institutions etc. for children Public accounts (DIOR)853209 Social institutions etc. for adults Public accounts (DIOR)

∗∗ The Danish wording here is not the same as in the NACE Rev. 1.

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900010 Sewage removal and disposal RS for industries where public corporationspredominate

900020 Refuse collection and sanitation RS for industries where public corporationspredominate

900030 Refuse dumps and refuse disposal plants RS for industries where public corporationspredominate

3.20.3 Method of calculation

The calculations use the standard methods for general transversal sources in the form of Databasenfor Integrerede Offentlige Regnskaber (DIOR), accounting statistics for industries where publiccorporations predominate and tax accounting statistics.

3.20.4 Breakdown of output by product

The output of government non-market services is divided up by product on the basis of the varioususes of the products. For each national accounts branch, a distinction is made at least between theoutput of government non-market services for government consumption, for external sales incomeother than from canteen sales, sales income relating to canteens and sales income relating to internalsupplies between public institutions. In addition, there is own-produced software. The output ofmarket producers in NACE N is divided into nine products plus fringe benefits and own-producedsoftware.

3.20.5 Breakdown of intermediate consumption by product

The input structure for general government is generally based on the breakdown in the central andlocal government accounts, which was much more detailed in the mid-1980s than it is now. Thisdetailed breakdown of intermediate consumption was originally based on these detailed accountingplans in the central and local government accounts, combined with special information on defence,for example. For the major revision of the national accounts, which was completed in 1997, the inputstructure was analysed in detail in the light of activity in the individual public industries. This was inthe nature of a plausibility check, since, as already mentioned, there had been no fresh, detailedstatistical information on the structure of public purchases of goods and services since the mid-1980s.In the current year, input structure is estimated on the basis of the technical coefficients from previousyears.

3.21 Organisations, recreational and cultural activities etc.∗ (NACE O)

3.21.1 Introduction

NACE O is defined on the basis of a grouping of producer units and consists of four of the nationalaccounts’ 130 industries. As Table 91 shows, it accounted for 10.1% of the value added of theDanish economy in 1995.

∗ The wording is again different from the NACE Rev. 1 wording.

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Table 91 NACE O's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

910000 Activities of membership organisations 14 676 3 477 11 199920001 Recreational, cultural, sporting activities(market)

19 515 7 263 12 252

920002 Recreational, cultural, sporting activities(non-market)

6 476 2 832 3 644

930009 Other service activities 5 625 1 724 3 900Total NACE O 46 292 15 296 30 995Percentage of the economy 2.8 1.9 3.6

NACE O covers 43 industries at the most detailed DK-NACE level, and in virtually all cases thecalculations are made at that level, the exception being 910000, where the whole of the nationalaccounts industry is lumped together but with private institutions and government non-marketproducers shown separately.

3.21.2 Statistical sources

The statistical sources underlying the national accounts calculations for NACE O can be seen in thetable below:

Table 92 Statistical sources underlying the calculation of value added for NACE O

National accounts industry/DK-NACE industry Source910000 Activities of membership organisations

910001 Private institutions Statistics on wages and salaries, trade unionaccounts

910002 Government non-market Government accounts (DIOR)920001 Recreational, cultural, sporting activities

(market)921100 Motion picture and video production Tax accounting statistics921200 Motion picture and video distribution Tax accounting statistics921300 Motion picture projection Tax accounting statistics922000 Radio and television activities RS for industries where public corporations

predominate923110 Live theatrical presentations, concerts

and opera productionTax accounting statistics

923120 Activities of individual artists Statistics on wages and salaries, numbers ofartists, statistics on culture

923200 Operation of arts facilities Tax accounting statistics923300 Fair and amusement park activities Tax accounting statistics923400 Other entertainment activities n.e.c. Tax accounting statistics924000 News agency activities Tax accounting statistics925200 Museum activities etc. Tax accounting statistics925300 Botanical and zoological gardens Tax accounting statistics926110 Sports centres and public swimming

bathsTax accounting statistics

926190 Other sports facilities Tax accounting statistics926210 Sports clubs Tax accounting statistics926290 Other sporting activities n.e.c. Tax accounting statistics927100 Gambling and betting activities RS for industries where public corporations

predominate

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927200 Other recreational activities n.e.c. Tax accounting statistics930002 Recreational, cultural, sporting activities (non-

market)RS for industries where public corporationspredominate

930009 Other service activities Tax accounting statistics

All the activity in NACE group 9251 is government non-market output which is covered underNACE L..

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3.21.3 Method of calculation

The calculations for all DK-NACE industries other than 923120 comply with the standard methodsfor general transversal sources in the form of Databasen for Integrerede Offentlige Regnskaber(DIOR), tax accounting statistics and the questionnaire-based accounting statistics. For industry923120, activities of individual artists, the calculation is divided into two. First of all, the output ofpaintings, lithographs and sculptures etc. is calculated using a price x quantity calculation. Next, themuch greater value of royalties and artistic originals is calculated from the information on royalties instatistics on culture.

The calculation of the output value of paintings, lithographs and sculptures etc. is based on averageearnings per employee in the whole of NACE 92 taken together, as found in the ERE statistics. Thisfigure is multiplied by the total number of members of Billedkunstnernes Forening [the PictorialArtists Association], the association of Danish designers and the association of Danish craftsmen-designers. It is thus assumed that the artists’ average sales correspond to the earnings of an employeein the same field. It has to be borne in mind that part of the income (mixed income) may be taxed inthe same way as earned income.

For the output of royalties (services output) the information in statistics on culture which refers toroyalty payments for art and culture is used directly. In the absence of statistics on the value oforiginal works produced, in each period this is considered to be equal to the royalty income for theperiod. This calculation convention has no statistical basis but is based on economic growth theory.The lack of primary statistics on the value of original works presumably applies to the great majorityof countries.

Intermediate consumption is calculated using an input percentage derived from SLS-E figures.Creative artists constitute a field which, by its very nature, will almost always have scant coverage inthe form of accounts. In Denmark’s case, many fall below the turnover threshold of DKK 500 000 forthe SLS-E returns. There is not considered to be any intermediate consumption corresponding toroyalties and the output of artistic originals in branch 923120. The intermediate consumptionconnected to those product transactions is assumed to be included as expenditure in publishers, musicpublishers, recording companies, film and video production companies etc. which have madefacilities available to the artists with whom they are working.

3.21.4 Breakdown of output by product

The output of the national accounts industry is divided into 42 products, 33 of which represent marketactivity and nine government non-market output.

3.21.5 Breakdown of intermediate consumption by product

There are no regular costs structure statistics on the market output of these industries other than thesummary costs structure included in the SLS-E accounting plan and in the accounting statistics forindustries where public corporations predominate. The input structure is based on those statistics.The breakdown into individual products has to a certain extent been based on estimates which in turnwere based on common sense considerations. For the current year, an initial estimate is made for the

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input structure on the basis of the technical coefficients in the supply and use tables from previousyears.

The input structure for general government (non-market output) is generally based on the breakdownin the central and local government accounts, which was much more detailed in the mid-1980s than itis now. This detailed breakdown of intermediate consumption was originally based on these detailedaccounting plans combined with special information on defence, for example. For the major revisionof the national accounts, the input structure was analysed in detail in the light of activity in theindividual public industries. This was in the nature of a plausibility check, since, as alreadymentioned, there had been no fresh, detailed statistical information on the structure of publicpurchases of goods and services since the mid-1980s. In the current year, input structure is estimatedon the basis of the technical coefficients from previous years.

3.22 Private households with employed persons (NACE P)

3.22.1 Introduction

NACE P, which is defined on the basis of a grouping of producer units, consists of only one of thenational accounts' 130 industries. As Table 93 shows, it accounted for 0.1% of the value added of theDanish economy in 1995.

Table 93 NACE P's contribution to the gross value added of the economy

Industry Output Intermediateconsumption

Value added atbasic prices

950000 Private households with employed persons 1 235 0 1 235Total NACE P 1 235 0 1 235Percentage of the economy 0.1 0 0.1

3.22.2 Statistical sources

All the activity in this industry is linked to tax-free income either in the form of genuine work in theblack economy or because the persons involved have income which falls below the income tax limitand who therefore do not report any income to the tax authorities. Regular economic activityconsisting of work in private homes is either included under "industrial cleaning" or under generalgovernment. The latter applies if, for example, a local authority employs someone to look afterchildren in the children’s own home, pays the person in question and then reclaims that payment fromthe parents.

The level is calculated on the basis of a one-off survey, which for 1992 consisted of extending theEU-harmonised labour force survey (LFS), which in Denmark is now calledArbejdskraftundersøgelsen (AKU), to include various questions on activity in the black economy. Thequestions covered information on both the number of hours worked and the relevant income. One-third of the LFS respondents (some 6 000) took part in the ad hoc survey, which was partly financedby the EU. The survey was grossed up to the total population.

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The level established for 1992 was projected for the following years, using the consumer price indexfor cleaning assistance minus taxes (the "net price index”), assuming that the volume remainedunchanged.

Table 94 Statistical sources underlying the calculation of value added for NACE P

National accounts industry/ DK-NACE industry Source950000 Private households with employed persons One-off survey, net price index

3.22.3 Method of calculation

The 1992 benchmark is projected using the price index and assuming that volume remainsunchanged.

3.22.4 Breakdown of output by product

The output value is allocated to a single product.

3.22.5 Intermediate consumption by product

By definition, there is no intermediate consumption in this industry.

3.23 Treatment of international organisations

International organisations within the borders of the Kingdom of Denmark are not part of Denmark’seconomic territory. The output of these organisations is not included in Danish GDP. The wages andsalaries which they pay to Danish residents are included in Denmark’s GNI via the balance-of-payments items for wages and salaries from the rest of the world.

3.24 Taxes on products excluding VAT

3.24.1 Introduction

Table 95 Taxes on products excluding VAT, 1995

DKK million To generalgovernment

To the EU Taxes on productsexcluding VAT,total

Taxes on products excluding VAT 58 617 2 320 60 937Percentage of GDP 6.0

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3.24.2 Principles underlying the estimation and periodisation

As required by the ESA 95 paragraphs 4.26-4.27, taxes on products are recorded when the activitiesetc. occur as the amount which the general government sector or the EU has a claim on, i.e. taxliability or tax assessed. Tax assessments are recorded by Told&Skat with an indication of the periodof the transactions to which they relate. Taxes on products excluding VAT are thus recorded on anaccrual basis.

Denmark thus bases its figures on tax assessments and does not need to have recourse to correctionsfor “cash data”, i.e. figures for taxes actually paid compiled on the date of payment.

In contravention of the fundamental principle of accruals in the SNA 93 and the ESA 95, in 2000 theCouncil approved an amendment to the ESA 95 Regulation which prevents countries from includingthe tax revenue which gives rise to provisions for losses on bad debts or is written-off as a result ofbankruptcies, etc. in the estimate of the “government deficit”, i.e. net lending/net borrowing ofgeneral government. This approved amendment gives countries a certain amount of flexibility asregards the way in which uncollectable taxes are accounted for in the accounting system, provided theeffect on the “government deficit”, i.e. the net lending/net borrowing of Sector S.13, generalgovernment, remains the same. The least radical solution, which Denmark intends to apply, is simplyto count the tax revenue which has not been collected in as a capital transfer from general governmentto the debtor sectors. In this way, the change in the national accounts may be limited to a simple entryin the capital account and the accrual principle remains intact in all other respects.

The Regulation on the recording of taxes and social contributions in the national accounts(2516/2000) does not, however, in any way affect the fact that those taxes on products which areincluded in the estimate of GNI have to be estimated on an accrual basis and included regardless ofthe possibility of their remaining unpaid as a result of bankruptcy. As from 2000, Denmark hascontinued to comply with the logical and system-consistent accrual principle and has chosen toimplement the Regulation by means of a single entry in the capital account.

All in all, the Danish national accounts therefore continue to treat taxes and contributions to socialsecurity schemes as they have always done with the exception of a single extra entry in the capitalaccount. The Regulation on the treatment of taxes, etc. has no special consequences for the supply anduse tables or the symmetrical input-output tables.

3.25 VAT

3.25.1 Introduction

Table 96 VAT 1995

DKK million To generalgovernment

To the EU Taxes on productsexcluding VAT,total

VAT 96 317 0 96 317Percentage of GDP 9.5

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3.25.2 Principles underlying the estimation and periodisation

As required by the ESA 95 paragraphs 4.26-4.27, VAT is recorded when the activities etc. occur asthe amount which the general government sector or the EU has a claim on, i.e. tax liability or the taxassessed. Tax assessments are recorded by Told&Skat with an indication of the period of thetransactions to which they relate. VAT is thus recorded on an accrual basis.

Denmark thus bases its figures on tax assessments and does not need to have recourse to correctionsfor “cash data”, i.e. figures for taxes actually paid compiled on the date of payment.

In contravention of the fundamental principle of accruals in the SNA 93 and the ESA 95, in 2000 theCouncil approved an amendment to the ESA 95 Regulation which prevents countries from includingthe tax revenue that gives rise to provisions for losses on bad debts or is written-off as a result ofbankruptcies, etc. in the estimate of the “government deficit”, i.e. net lending/net borrowing ofgeneral government. This approved amendment gives countries a certain amount of flexibility asregards the way in which uncollectable taxes are accounted for in the accounting system, provided theeffect on the government deficit remains the same. The least radical solution, which Denmark intendsto apply, is simply to count the tax revenue which has not been collected in as a capital transfer to thedebtor sectors in the capital account.

The Regulation on the recording of taxes and social contributions in the national accounts(2516/2000) does not, however, in any way affect the fact that those taxes on products which areincluded in the estimate of GNI have to be estimated on an accrual basis and included, regardless ofthe possibility of their remaining unpaid as a result of bankruptcy. As from 2000, Denmark hascontinued to comply with the logical and system-consistent accrual principle and has chosen toimplement the Regulation by means of a simple entry in the capital account. Those countries whichbase their figures on “cash data”, i.e. information on taxes actually paid, must, on the other hand,include an allowance to ensure that the taxes on products to which general government is entitled butwhich are not paid are included in their estimate of GDP either as taxes on products or as an additionto value added at basic prices.

All in all, the Danish national accounts therefore continue to treat taxes and contributions to socialsecurity schemes as they have always done with the exception of a single extra entry in the capitalaccount. The Regulation on the treatment of tax, etc. has no special consequences for the supply anduse tables or the symmetrical input-output tables.

As mentioned in Section 1.1.3, the Danish national accounts differ from the ESA 95 as regards thetreatment of the EU’s own resources from VAT, the “third own resource”. According to the ESA 95,paragraph 4.14, this income should be counted as a tax collected directly by the EU from residents inMember States (D.211). In the Danish national accounts it is counted differently in that the total VATrevenue is considered to be paid to the national general government sector S.13. The EU's VAT-basedown resource is then counted as a current transfer (D.74) from central government to the EU.

This difference has no effect on the estimate of GNI as based on the definitions in the ESA 79, wheretaxes on production and imports minus subsidies to and from the rest of the world are not included inthe transition from GDP to GNP. It does, however, affect GNI as estimated on the basis of the ESA95 definitions. When the reports under the GNP Directive switch to being based on the ESA 95, acorrection will be made to the GNI questionnaire for this definitional difference.

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3.25.3 Comparison and analysis, theoretical versus actual VAT resources

Compared with some countries, the Danish VAT system is very simple in that there are only tworates, a standard rate of 25 % in 1995 and a 0% rate for certain product groups such as passengertransport and newspapers. In addition, some activities (producer units) do not have to register forVAT, i.e. they do not collect outgoing VAT on their sales and conversely cannot deduct incomingVAT from their purchases. The only significant case of this for market output is financial services andproperty administration. In practice, all non-financial market activity has to register for VAT inDenmark.

One standard way of validating the degree of coverage in the national accounts is to compare thetheoretical VAT resources as established in the national accounts with actual VAT revenue. Thischeck works particularly well when there is a simple VAT structure as there is in Denmark, wherethere is virtually no uncertainty resulting from the use of differential rates. Theoretical VAT resourcesare defined as the VAT revenue which would be produced if all actors in the economy paid VAT asthe legislation states that they should. The calculation is as follows: the rate for non-deductible VATwhich would apply if everybody complied in full with the VAT legislation is linked to each individualuse of each of the 2 750 or so products in the (supply and) use tables. Actual VAT revenue is equal toVAT assessed on an accrual basis, as described in Section 3.25.2. VAT in the Danish nationalaccounts is adjusted to this amount. The total VAT actually in the cells of the supply and use tableswith around 2 750 product balances is equal to actual VAT resources.

When theoretical VAT resources are estimated, it is often the case that the statutory rate is used as thetheoretical rate. This is not, however, the actual theoretical rate if, for the estimate of VAT liability,VAT is deductible in the case of bad debts. The Sixth VAT Directive allows such deductions, whichapply in Denmark and, presumably, in various other countries. The deduction is as follows: anenterprise which is registered for VAT may, for the estimate of outgoing VAT, deduct the outgoingVAT imputed during previous periods but which has never been paid to the enterprise by its debtorsas a result of bankruptcy, for example. The actual theoretical rate is therefore lower than the statutoryrate.

The tax authorities do not know the size of the deduction for outgoing VAT connected with baddebts. Based on, inter alia, banks’ provisions and losses, Denmarks Statistik has cautiously estimatedthose bad debts at just under 2 % of VAT revenue. This percentage remains unchanged year after yearfor the calculation of theoretical VAT resources. For product groups with the statutory standard rateof 25 %, a rate of 24.54% is used, a cautious estimate about which there is a substantial degree ofuncertainty. Actual deductions may well be much greater, in which case the theoretical rate in thecalculation should be lower. The central government credit risk involves not only VAT revenue butthe gross amount of outgoing VAT, which is much greater. Bad debts may arise anywhere in the chainfrom the original producer to the final purchaser.

To make the following comparison of theoretical and actual VAT comparable with the results in othercountries, which normally use the statutory rates and not actual rates for this calculation, thecomparison has been made using the theoretical rate calculated both as the statutory rate and as theestimated actual theoretical rate following legal deductions for bad debts. In the following table, thefirst calculation of the percentage discrepancy is marked I and the second as II.

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Table 97 Comparison of theoretical and actual VAT revenue, 1992-97

Year TheoreticalVAT revenue,with statutory rate(1)

TheoreticalVAT revenuewith deduction fordebtors

(2)

Actual VATrevenue (VATassessments)

(3)

Percentagedifferencebetweentheoretical andactual VATI((1)-(3))/(3)-1)x 100

Percentagedifferencebetweentheoretical andactual VATII((2)-(3))/(3)-1)x 100

1992 90 733 289 89 063 796 84 216 510 7.74 5.761993 92 681 000 90 975 670 85 777 027 8.05 6.061994 100 115 021 98 272 905 93 019 195 7.63 5.651995 104 916 436 102 985 974 96 317 002 8.93 6.921996 110 429 776 108 397 868 103 320 000 6.88 4.911997 117 543 388 115 380 590 109 340 000 7.50 5.52

In 1995, the difference between theoretical and actual VAT was greater in percentage terms than theaverage for the years shown, but it was smaller in 1996. This is possibly due to the accession ofAustria, Sweden and Finland to the EU on 1 January 1995, which may have led to a shift in the periodfor VAT on imports from those countries with the change from the rules for VAT on imports fromthird countries to the general VAT on goods imported from the three countries in question. With thechange from one tax system to another, there is a change in the transaction date on which the centralgovernment claim arises, from the date of import to the date of sale of the final product. In 1995,Austria, Sweden and Finland together accounted for a good 16% of Denmark's imports of goods. Inany event, this would appear to be a one-off phenomenon. Over the six-year period as a whole, thepercentage difference between theoretical and actual VAT has remained reasonably constant.

The Commission Decision (98/527/EC, Euratom) on the treatment for national accounts purposes ofVAT fraud (discrepancies between theoretical VAT receipts and actual VAT receipts) obliges theMember States to compare theoretical and actual VAT and to analyse the difference to ensure thatthe effect which the treatment of VAT fraud has on GNP is the correct one. In all cases where anenterprise registered for VAT has collected VAT from the customer but does not remit it to the taxauthorities (for example, when sales do not pass through the cash register), with output-based GDPthere has to be an allowance for this fraudulently retained VAT to ensure that the estimate includes allvalue added. The expenditure-based estimate in principle records the purchaser's actual payment andthus in principle automatically includes the VAT withheld (the evasion). The problem here, ofcourse, is to observe such purchases in practice. In the Commission Decision, VAT which is notremitted is referred to as "evasion without complicity". The opposite is "evasion with complicity",e.g. work done in the black economy and not invoiced. In this latter case, of course, there should beno allowance for VAT not remitted, since the price the purchaser has paid does not include any VAT.

The total difference between theoretical VAT when the rates required by law are applied, ignoringdeductions for VAT connected with bad debts, and actual VAT revenue was DKK 8 599 million in1995. The national accounts estimate of deductions for bad debts of just under 2% may account forDKK 1 930 million of this difference. In addition, VAT corresponding to the explicit allowances forwork in the black economy and underreporting etc. account for DKK 1 287 million. Of theseDKK 1 287 million, DKK 617 million is explicit allowances for VAT fraud connected withunderreporting - what the Commission Decision refers to as "evasion without complicity". In suchcases, the Danish national accounts add an allowance to value added in the industries in question

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(including the imputed underreporting) to take account of further underreporting by producers whofraudulently collect VAT and fail to remit it.

After deduction of the above amounts, there was a difference of DKK 5 382 million for 1995. Thereare several possible reasons for this residual amount:

• larger deductions for bad debts than estimated;• timing differences (shift in the period), in particular for 1995;• less work in the black economy and underreporting than estimated;• VAT evasion in industries where hidden activity is covered indirectly by a price x quantity

calculation;• implicit correction for VAT evasion in certain sole proprietorships;• inaccuracies in the national accounts supply and use tables;• inaccuracies in the national accounts interpretation of VAT legislation.

It is important to note that the residual should not be interpreted as meaning that the allowances addedin for VAT fraud without complicity are insufficient. The criterion for deciding what should beincluded in the estimate of GNP is the amounts which the purchasers have actually paid. There are nogrounds for claiming that the explicit allowances made for the underreporting of sales in retail trade,restaurants, hairdressers, etc., have been undervalued.

Below, we discuss the above factors individually.

1) As already stated, we cannot rule out the possibility that the deductions for bad debts are largerthan the estimated just under 2%, particularly in years when the economy is depressed. But 1995 wasa boom year, and it is not likely that this factor is one of the reasons for the residual.

2) As already mentioned, the difference between theoretical and actual VAT revenue was larger in1995 than for the period as a whole. One possible explanation is a shift in the period in which theVAT falls due on goods imported from Austria, Sweden and Finland. This time difference maypossibly explain up to DKK 1.5 billion of the residual. 1995 was known to be a year of substantialstock-building, whereas 1993, when the Single Market came into force for EU 12, was a year whenstocks were very much run down.

3) The possibility that the national accounts allowance for work in the black economy andunderreporting, etc. is too large because the activity has already been included in regular "legitimate"output may be one reason for the residual. It is possible that a share of the untaxed activity isgenuinely exempt according to the VAT legislation, and that it is therefore legally tax-free. In thiscase, the calculated theoretical VAT percentages on products - before the allowance - are too high. Itseems unlikely, however, that this factor is one of the main reasons, since there are very fewexceptions in the VAT legislation where the industries in question are concerned.

4) In a few industries, underreporting and work in the black economy are not covered via explicitallowances but are implicitly included in that the output is estimated as price times quantity. The mostimportant examples are agriculture etc. and the letting of dwellings, but the latter is not liable forVAT, and so it is only agriculture that is relevant here. The black economy in agriculture etc, which isimplicitly covered in the national accounts, may help to explain part of the residual.

5) In addition, in industries where there are explicit allowances for the black economy, it may happenthat the national accounts implicitly capture some of it if, for example, the owners of businesses routesome of their private consumption through the business’s accounts so that it appears to the tax

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authorities to be intermediate consumption. This kind of tax swindle must be assumed to occurprimarily in small, one-man businesses. The incentive is obvious, since in such cases the owneravoids both income tax and VAT on part of his own private consumption. The tax accounting figures(SLS-E), which are typically used as a basis for the calculations for small enterprises, do not coverthose which have annual turnover of under DKK 500 000 or those which have not been operatingthroughout the year. According to the tax legislation, such enterprises do not have to submit the SLS-E form. In the national accounts calculations, these exempt businesses are represented via a grossingup of the accounts of enterprises in the same stratum. To the extent that intermediate consumption ismore likely to be overstated in those enterprises for which there is grossing up than in those for whichthere are accounts available, the national accounts implicitly capture this tax swindle and give anaccurate picture of the value added created. It seems likely that this factor is one reason for theresidual.

6) Inaccuracies in the national accounts supply and use tables may in principle be another reason forthe residual difference. This may happen if, for example, the values for the most important privateuses on which VAT is payable, namely private consumption in households and the construction ofdwellings, are too high, so that the theoretical VAT imputed is too high as well. In the revisednational accounts as published in 1997 and later years, the calculations for both private consumptionin households and housing construction are based on robust statistical sources, however, and there isno other indication that the two demand components have been over-estimated. But it is clear thatthere is a certain amount of statistical uncertainty about the square metre prices used for thecalculation of the value of new housing construction. The possibility that these prices are too highcannot altogether be ruled out. The square metre prices used are estimated centrally on the basis offairly comprehensive price figures collected in 1993-1994 and projected with the help of productivity-corrected indices of construction costs.

7) The national accounts supply and use matrices include separate VAT matrices which arethoroughly analysed and balanced every year. When these matrices, which are used as a basis for thecalculation of theoretical VAT revenue, are worked out, a great deal of care is taken to ensure that thecalculation reflects VAT legislation right down to the smallest detail. In doubtful cases, DanmarksStatistik has consulted the Ministry of Taxation about the interpretation of special rules in thelegislation. But the possibility cannot be ruled out, of course, that there are subtleties in the VATlegislation of which the national accounts statisticians have simply been unaware, and which maygive rise to inaccuracies in the calculation of theoretical VAT revenue. However, the special rules inthe VAT legislation relating to expenditure on the acquisition, running and maintenance of privatevehicles are implemented in full and at the most detailed level in the national accounts.

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3.26 Subsidies on products

3.26.1 Introduction

Table 98 Subsidies on products 1995

DKK million From generalgovernment

From the EU Subsidies onproducts, total

Subsidies on products 9 673 9 168 18 840Percentage of GDP 1.9

The table below shows subsidies on products in the national accounts for 1995.

Table 99 Subsidies on products, 1995, by scheme

Subsidy scheme DKK million

EU-schemes, total 9 168Export subsidy schemes 4 137Net loss on products, connected withintervention

121

Subsidy on the production of skimmed milk,etc.

808

Aid per hectare 4 101

Danish schemes, total 9 673Municipal housing for pensioners, etc. 6Refuse disposal and incineration 179Municipal theatres, orchestras, cinemas, etc. 350Statsskovvæsenet [Danish ForestryCommission]

226

DSB (De Danske Statsbaner) [Danish StateRailways]

5 603

Telestyrelsen [National Telecom Agency] 12Municipal buses and other transport 704Other subsidies on products to publicenterprises

681

Central government subsidies to regionaltheatres

56

Consultants to associations, agriculture 138“Housing package” – subsidies for repairs andmaintenance

405

Other subsidies on products to privateenterprises

1 312

Subsidies on products, total 18 840

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3.26.2 Recording principles and periodisation

Subsidies on products are recorded as required by the ESA 95 paragraph 4.39 on an accrual basis, i.e.when the product transaction which gives rise to the subsidy occurs.

Under an EU recommendation, hectare support is counted as a product subsidy, even though this runscounter to the logic underlying the breakdown of subsidies into subsidies on products and othersubsidies on production. One characteristic of hectare aid is precisely the fact that it is not linked to aproduct. Consequently, the sales value of the crops covered by such aid schemes is increased by theamount of the aid when output is valued at basic prices.

Under the ESA 95 paragraph 4.35 c), government subsidies to public corporations to cover theirdeficits are treated as subsidies on products. According to the previous national accounts system, theSNA 68 (ESA 79), such subsidies were considered not to be linked to a product, i.e. they were otherproduction subsidies.

For the calculation of subsidies to public corporations such as De Danske Statsbaner (DSB), anestimate of the consumption of fixed capital is included, to arrive at the deficit covered by centralgovernment. This deficit coverage is not directly observable in central government accounts, sincetotal central government payments to the DSB include both a subsidy (D.31) and an injection ofcapital into a quasi-corporation (F. 513) to finance capital formation etc. To pick out the subsidyshare, therefore, we have to calculate the net operating deficit, i.e. take account of depreciation on thecapital stock as well as imputed pension contributions of civil servants. The latter also represent asubsidy to public corporations with this type of employees. Whereas there is a certain amount ofuncertainty about the estimate of the subsidy as a result of the assumptions made when theconsumption of fixed capital and the imputed pension contributions of employees having the status ofcivil servants are calculated, there is no corresponding uncertainty about GDP/GNI, which dependssolely on estimates of the income from tickets etc, about which there is virtually 100% certainty.

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4. GDP by the income approach

4.0 Introduction

For 1995, the calculation of income-based GDP can be summarised as in the table below:

Table 100 GDP, income approach, 1995

Value, % ofDKK million GDP

Compensation of employees 534 094 53+ Gross operating surplus and mixed income 338 010 33+ Taxes on production and imports 173 270 17- Subsidies 35 618 4

GDP 1 009 756 100

With a highly developed and integrated system of national accounts such as the Danish, where thegross operating surplus component of income-based GDP comes from the same accounts at firm levelas are used for the output-based estimate, the description of sources and methods will obviouslyoverlap to a large extent. The description of the income-based estimate in Chapter 4 is much shorterthan the output-based description, but this should not be taken as an indication of the relativeimportance of the two estimates in the Danish national accounts. Much of what has been said inChapter 3 about business accounts is equally relevant to the income-based estimate and could intheory simply be copied into Chapter 4. Such repetition is not, however, desirable. Instead, it wasdecided that Chapter 4 should refer to the relevant sections of Chapter 3 where business accounts areconcerned, and concentrate on the other parts of the estimate, i.e. first and foremost the compensationof employees.

4.1 Reference framework

4.1.1 Reference framework – the business register, the central populationregister and the salary information register (COR)

Since the compensation of employees as a component of income-based GDP equals total wages andsalaries in domestic (resident) producer units, it is in principle the population of domestic producerunits as registered in the business register which is the directly relevant reference framework for boththe compensation of employees and gross operating surplus and mixed income when GDP iscalculated using the income approach. Danmarks Statistik’s business register was discussed inSections 1.3.1. and 3.1.1.

The other two components, taxes and subsidies on production and imports, have an additionalreference framework, namely general government and the EU institutions as recipients/payers.Central government authorities and the EU are, of course, covered by the statistics, and this section

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will therefore not dwell on the statistical units for the administration of taxes and subsidies onproduction and imports.

In theory, individuals need not come into the picture when GDP is calculated using the incomeapproach, but in practice the main advantage of having an estimate based on the income whichindividuals have received alongside the output- and expenditure-based estimates lies in the very factthat it is based on individuals rather than enterprises. It is thus a robust and independent check on theestimates which use the other two approaches. The major difference between income- and output-based estimates is that for the latter the compensation of employees is worked out as expenditure forbusinesses and is based on business accounts whereas using the income approach it is worked outfrom the point of view of the income recipients, namely as the wages or salaries which employeeshave received according to tax statistics and other sources. Since personal information has been usedas a starting point, it is appropriate to look at the reference framework constituted by those personswho, during a given period, have earned the income created during the same period in the residentproducer units, i.e. on the economic territory.

Individuals may be either resident or non-resident. The problems arising with non-residents are dealtwith in the discussion on the rest-of-the-world account. Here, we simply need to note that non-residents employed in Danish producer units and receiving wages or salaries from their employmentare allocated for the purposes of the information forms an identification number which is thecounterpart of the "person number" for Danish residents. For residents in Denmark, the referenceframework is Det Centrale Personregister [the Central Population Register], compiled underlegislation dating from 1967. All persons with a residence permit in Denmark are entered in thisregister and have a personal identification number ("person number") used by the public authoritiesfor all administrative purposes. Asylum-seekers who have not received a residence permit are notallowed to be economically active and are not relevant in this connection. It is theoretically possiblefor persons living illegally in the country without a personal identification number to be earningsubstantial incomes from trade or industry, but in practice the widespread use of the identificationnumber system means that we can rule out the possibility that anyone could earn income for anylength of time from anything other than hidden economy or criminal activities without beingregistered in the CPR. If it does happen, the incomes thus acquired are considered to have beencovered by the allowances for the hidden economy – cf. Section 1.7 – or to be criminal activity whichfor the time being is not supposed to be included in the estimates of GNI.

The wages and salaries etc. which employers in Denmark pay to their employees must, according totax legislation, be reported annually on an “information form”. There are no exceptions to this rule,and there is no lower limit for the amounts involved. Income below the threshold for general incometax has to be reported on the information forms and a special, proportional “state participation tax” iscollected on all earned income as from the first krone of earnings. In 1995, it was 6%. Told&Skat[the Central Customs and Tax Administration] records the information forms centrally in the salaryinformation register (COR) on the basis of personal identification numbers. Along with the CPR, thisregister is the reference framework for the estimate of the compensation of employees in Denmarkapart, of course, for the allowances for the hidden economy.

The subsections of Section 4.1 below outline the main features of the Danish system of statistics onpersons which are relevant to the national accounts estimate of the GDP component "compensation ofemployees". These sections - with a few, mainly stylistic changes - have been taken from the book"Statistics on Persons in Denmark: A register-based statistical system", published by DanmarksStatistik in 1994, available in Danish and English. Below are extracts from those sections which aremost relevant to national accounts.

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Of particular importance for the estimate of this component divided by industry is the WorkplaceModule, which is one of the six classification modules in the system. The description is also relevantto the estimate of the population of households for use in the Household Budget Survey (FU) which isan important source for the estimate of GDP from the expenditure side, as described in Chapter 5below.

Sections 4.1.2 – 4.1.16 discuss the evolution of the combined statistical system, from the raw data vialinkages to the end product in the form of a system of statistical registers. They discuss factors whichhave made it possible to use administrative registers for statistical purposes, the Act on DanmarksStatistik and the Central Population Register. The combined statistical system, consisting of registersof persons, property and businesses, is described, along with classification modules.

Below we describe the processes - linkages - by which administrative registers are converted intostatistical registers. This section is largely a technical description which ties in with the concepts andmethods of analysis which are established principles in the work of Danmarks Statistik.

4.1.2 Structure of statistics on persons

4.1.2.1Basic information, statistical registers and classification modules

The basic information in the form of extracts from administrative source registers or other materialcollected is processed and organised into a number of statistical registers and classification modules.

The individual statistical register is subject-related to the extent that it forms the basis for statisticswithin a certain field. This means that we work on the basis of registers which are clearly defined interms of content and in which there is a clear connection between the source of the key informationand the statistical register in question. The usual method is to collect subject-specific statistical datafrom a single source and to add to them a range of background information, often from otherstatistical registers. This combination of information then constitutes the register for the statisticalarea in question.

This clear connection between the basic register and the statistical register is still the dominantprinciple, but the need to view things in a broader context (horizontal integration) has meant thatmore recent statistical registers are increasingly derived from linked statistical registers. The registersmay still be said to be subject-related, but the subject fields have taken on a somewhat differentcharacter. Similarly, for the purposes of longitudinal studies, versions of the same register fordifferent years form the basis for the creation of a new register. This is called vertical integration.

In certain cases the basic information is processed centrally and stored in the classification modules.These modules serve as a resource for the creation of statistical registers and play a part in the linkingof statistical registers for the purpose of generating anonymous data sets for individual specialprojects.

The statistical registers and classification modules together make up the complete personal statisticsregister system of Danmarks Statistik. The system is illustrated schematically in Figure 5, in whichstatistical register 1 is the unique and very direct form in which a statistical register is created, andstatistical register 2 has a more complex source basis in a partially integrated process requiring thecreation of a classification module, while statistical register 3 is an integrated register based on other

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statistical registers. The individual elements can be used in isolation or in conjunction with oneanother. The connection between them is as a general rule provided by the person number and inindividual cases by the address code.

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Figure 5 System of personal statistics

Adm. reg.Adm. reg.Adm. reg.Adm. reg.

Classificationmodule

2

Statisticalregister

3

1

Selection Selection,linkage

Selection,linkage

Selection,linkage

Statisticalregister

Statisticalregister

1 2 3 4

The Register of real estate statistics is one element in the system of personal statistics. It contains akey linking the owner's person number to the property identifier and this can be used to extractinformation on immovable property for use in personal statistics. In addition the Register of statisticson workplaces provides a link with business statistics through the workplace identifier (cf. Section4.1.2.4). Using this identifier, information contained in the Business Register can be transferred topersonal statistics to assist in the classification of persons according to their employmentcircumstances.

4.1.2.2Classification modules

A small number of data sets are included in many different statistics and thus have the character ofbasic data. Examples would be the basic information on family circumstances, education and labourmarket experience of individuals. These data are processed centrally and are fed into the statisticalsystem in the form of classification modules. A new version of the classification modules is normallyproduced each year. They are in the nature of statistical registers whose purpose is to supplementother statistical registers and other statistical functions, providing certain relevant backgroundinformation for general use by the direct transfer of module information to a statistical register or bythe processing of data already contained in statistical registers according to particular rules, typicallyby the use of conversion keys. If the information merely has to be incorporated into an anonymousstatistical product, the module in question will be fed into the linkage process by which the basis forthe product is created.

The following six classification modules are used in the statistical system:

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– The Population/Date Module defines the population on a given date and forms part of thePopulation Statistics Register.

– The District Coding Module defines geographical areas on the basis of address codes.

– The Household and Family Module groups persons into families and households in accordancewith the definitions applicable.

– The Educational Classification Module (UKM) is used to classify persons in terms of the highestlevel of education attained or, where appropriate, in terms of vocational training completed oreducation in progress.

– The Employment Classification Module (AKM) classifies individuals in terms of their mostrelevant employment (employment status, occupation and branch of their main place ofemployment) and the extent of their employment or unemployment in the course of a calendaryear.

– The Workplace Module identifies the individual employment relationships of employees with aperson number and workplace identifier, thus making it possible to classify persons in terms ofindividual enterprises and to classify enterprises in terms of workforce composition. In addition,the address code of the workplace can be compared with the home address of the employee, thuscreating a basis for commuter statistics.

The function of the classification module as a general basis for information for frequent use indifferent fields of statistics presents a number of advantages. The main ones are: better data quality,greater effectiveness and consistency of different statistical presentations.

The statistical concepts must as far as possible accord with the world described by the statistics. Thequality of the statistical information is evaluated with reference to this criterion. Information drawnfrom administrative systems may, taken in isolation, be inadequate as statistical data to meet specificneeds. From the available administrative information, the most relevant data that can be transferreddirectly to the classification module are selected. Some data, however, are combined with others toform new variables which are considered better able to describe the characteristics of interest. Oftenthe data to be combined in a new variable come from several different source registers. In order toform combined variables, data must be processed in accordance with a fixed set of rules which areformulated in terms of the definition of the concepts. This process makes for a high level of quality inthe use of the information. The module must be managed so that necessary changes in theadministrative basic data are taken into account, and the necessary investigations carried out, applyingthe rules for the processing of the data in such a way that concept definitions as far as possible remainconsistent with those for previous years, provided, of course, that they are still relevant.

In the establishment and management of the module, those procedures are applied which arenecessary to create the desired background variables once and for all, which makes for greaterefficiency in the production of statistics. In this way the often very complicated and demanding dataprocessing associated with these procedures only has to be carried out once instead of every time datafrom the classification modules have to be used for a given set of statistics.

Use of the modules' standard classifications ensures that the various statistical reports of whichclassifications of the type in question form part remain consistent. Definitions, times of updating after

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changes etc. will be the same. The consistency achieved is of very great importance for the usabilityof the statistics. It also has the advantage of facilitating documentation, since reference can be made tothe module. In addition, users of the statistics are better able to familiarise themselves with theconcepts involved.

Classification modules must be so designed as to provide the broadest possible coverage with regardto the use of the classifications. This means that there must be flexibility in the classifications of themodules, so that adjustments specific to the task in hand can be made. It also becomes possible toensure, to a certain extent, that application of the modules does not lead to a rigid system forcingusers to adopt classifications which perhaps do not entirely suit their purpose. The demand forflexibility may seem incompatible with the concern for consistency from one statistical report toanother, but there is a wide range of fields in which a selected standard classification both can andshould be used. Where that is not relevant, it should be possible to use elements of the module,provided such use is compatible with the purpose of the report.

An example here is the use of the Employment Classification Module (AKM) in the labour forcestatistics. In the standard classification of the AKM, employee groups are defined on a whole-yearbasis, taking into account what their main activity was in the course of a year, whereas in the labourforce statistics (statistical register) employees are defined in accordance with rules relating to a givendate. This difference in the definition of employees does not prevent the AKM job classificationsfrom being transferred to and used in the labour force statistics. Job classifications are created for allpersons for whom the basic material allows this to be done, both employed and non-employedpersons. This information is therefore also available for employees defined differently.

The balance between consistency and flexibility must be such that the same standard classification isalways used in different statistics, unless there are material grounds for using a different classificationfor particular statistics. In such cases it must be possible to account for the differences.

4.1.2.3Statistical registers

The sources for the data content of the statistical registers may be administrative registers,classification modules, other statistical registers or data collected directly through interviews or postalquestionnaires.

As already stated, the individual statistical register is defined in relation to a particular subject area, sothat the definitions of the content and population of the register take account of what is relevantwithin this particular area. Up to a point, the subject definition of the administrative registerscoincides with the classification of the combined statistical basis in the statistical registers, whichmeans that in the case of many statistical registers there will be one main source and one or moreother sources providing supplementary information. The registers defined in terms of subject areas orcase types in the local authorities' joint computer systems and their use, especially within the variousfields of social statistics, are examples of this.

The apparently clear connection between the main source and the statistical register does not mean,however, that the administrative information can be used straightaway. Problems may arise, forexample, where time-related information is concerned. In administrative practice, the time referencemay be determined by administrative action which takes place after the time of the event orobservation to which the statistics in question relate. Furthermore, concept definitions in theadministrative system may differ from the statistically relevant concepts in a way that directly reducesthe quality of the statistics, in certain cases to an unacceptable degree if the administrative

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information is used in its raw form. Finally, there are instances of inadequate updating, withconsequent errors and defects in the source information. This is observed in administrative systemswith mixed automatic and manual reporting, or where errors in the information supplied do not haveadministrative consequences.

An example of the latter is the income tax system, in which it has hitherto been of no administrativeimportance how a person's basic income ("A-income") is specified. The tax assessment will give thesame result.

It is thus often necessary, when setting up and updating a statistical register, to draw on severalsources, in order to ensure the correct timing of events, to achieve the most relevant conceptdefinitions and, as far as possible, to compensate for errors and deficiencies.

Statistical information is collected directly in connection with surveys of representative sections of thepopulation, either by postal surveys in which the respondents themselves fill in a questionnairereceived by post and return it to Danmarks Statistik, or by computer-assisted telephone interviews.Examples of interview surveys are the Labour Force Survey, the Household Budget Survey (FU) andthe Omnibus Surveys. Postal surveys are not used today within the field of personal statistics but arethe main method of collecting business statistics. In the production of statistics of this type, use ismade, where possible, of information which already exists in various statistical registers. Of course,this involves an assessment of the quality of the register information, since the purpose of directcontact may be to compensate for inadequate register data. Statistical registers have a special role toplay in connection with estimation procedures, the purpose of which is to correct skewness caused bynon-response in interview surveys.

The need to investigate causal connections between different phenomena has led to the establishmentof registers with horizontally related content. The subject-based structure of the register system meansthat new linkages must be made if a specific need arises to see subjects in relation to one another, andhence to obtain data compilations beyond what is offered by the individual register. Tasks of thisnature have been and are still being performed on the basis of anonymous data sets derived fromlinkages, but the possibilities of analysing processes which the system now offers have arousedconsiderable interest, especially in research circles, and this has led to the creation of "integratedregisters". Registers of this type are, on the one hand, part of the general statistical apparatus and, onthe other, a consequence of special data needs arising from particular service assignments.

A special form of basic data in the statistical register system consists of supplied data sets. Forresearch projects conducted outside Danmarks Statistik, data may have been collected which it isdesirable to link with information in the registers of Danmarks Statistik to make for a betterunderstanding of a particular subject. If person numbers are included in the primary material, suchlinkage is possible and the research material can be supplemented by other information orclassifications. The product of the linkage does not, however, form part of the register system, since itwill be rendered anonymous. Hence it can only be used in isolation for analyses connected with thespecific research project in Danmarks Statistik or for special data processing operations.

Having a number of statistical registers divided according to subject or designated for particularpurposes is open to question from a structural point of view. The immediate consequence of such asituation is a considerable degree of redundancy in the system. The same information on a given unitwill appear in more than one register and, in the case of certain information, in a good many registers.The expediency of this must be viewed from a number of angles. From a technical/economic point ofview, it is obvious that a given item of information should only be recorded in one place. This willsave space and documentation and management will be simplified. Availability for use is somewhat

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more difficult to assess, since it will depend on the technical solution chosen and the conditions ofaccess. The latter are a particularly important element in the argument favouring the present system.One consequence of dividing the system up into a number of registers is that it has to be specifiedwhat each of them may contain, what it may be used for and who may use it. Restricting access to aregister, in particular, ensures that the circle of users is small and that the same person does not haveaccess to many registers. Different statistical registers can only be linked after a formal decision hasbeen taken, and particular rules must be followed. This makes for transparency in the use of differentinformation in a statistical context and minimises the possibility of breaches of security. At the sametime availability is good, since the individual register is immediately usable within the area it covers.All things considered, Danmarks Statistik takes the view that the organisation of registers by subjectis most appropriate and should be maintained. The concern for data protection is, of course, alsocrucial to this assessment.

4.1.2.4Structure of the combined statistical system

The basic element in the statistical system is the person number, which is the common identifier forstatistical units in the registers of personal statistics. Using this number it is possible in principle tocombine any information. In practice this does not happen, since the linkage of information coversonly those data which are relevant to specific statistical tasks. There are limits to what can becombined, since combinations of information must be objectively justified and it must not be possibleto acquire knowledge of individual persons through the statistics.

As already stated, the system also includes keys to property/housing units and workplaces via theaddress code and the workplace code. It is thus possible to transfer statistical information on housingand business circumstances to personal statistics, and personal information can be transferred tohousing and business statistics. Figure 6 shows the combined statistical system in diagram form, withan indication of the identifiers which link elements of the system together.

Figure 6 The combined statistical system

Personstatistik

Ejendomsstatistik Erhvervsstatistik

Registre

Moduler

Bygning/boligEjendomme

LandbrugErhvervsstat.register

Personnummer

Ejendomsnummer Virksomhedsnummer

EjerpnrAdresse

Adresse

Arbejdsstedkode

Ejerpnr

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Key to Figure 6

Personnummer = Personal identification number (PNo)Personstatistik = Statistics on personsRegistre = RegistersModuler = ModulesArbejdsstedkode = Workplace code (identification number)Ejerpnr = Owner's PNoEjendomsstatistik = Statistics on real estateErhvervsstatistik = Statistics on businessesBygning/bolig = Building/dwellingEjendomme = Real estateLandbrug = AgricultureErhvervsstat. register = Register of business statisticsEjendomsnummer = Identification number of real estateVirksomhedsnummer = Business identification number

Address codes link personal statistics to real estate statistics and real estate statistics to businessstatistics. There is a person number link between real estate statistics and personal statistics in thecase of owners of immovable property. Similarly, there is a link between the business statistics andpersonal statistics for business owners. Finally, there is a connection between employees and businessenterprises through the workplace code, so that information on persons employed can be linked toinformation on places of employment.

4.1.3 Linkage of registers

The linkage of registers is the process or method by which information from different statisticalregisters on a particular statistical unit is linked together or by which information on different unitswhich have particular relationships is linked together. Linkage is also called integration.

The purpose of this interlinking of information is to acquire new knowledge on the units we areinterested in. By means of the linkage, existing information is processed and this enhances the valueof the information.

The linkage of statistical registers is of inestimable value as an alternative to traditional data-gathering. For linkage to function satisfactorily, however, the identification of persons and other unitsin the data extracted from the source registers in question must be clear and well-defined. If there aredeficiencies in this respect, the cost of correction can be considerable.

Linkage will also reveal errors and inconsistencies in other information, and a decision must be madeas to what corrections are needed.

In decisions regarding the correction of errors, it is important to be clear about the objective of thelinkage, i.e. what the linkage must help to elucidate. Error correction will aim in the first instance tolocate combination errors which arise in the process of linkage itself. It is not necessarily the casethat this will provide edited data which will automatically be suitable for any other linkage that mightbe contemplated.

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Linkage or integration may arise in many different physical/logical manifestations; it may notnecessarily result in any permanent physical linkage. Four different types can be distinguished:

– Logical linkage. This refers to the situation in which it is decided, on the basis of a logicalanalysis, that it is possible to integrate two registers. The result of logical linkage is a diagramshowing the relations between the logical units.

– Ad-hoc linkage. In order to compile a particular set of tables containing information from morethan one register, the registers in question are linked in a single operation for the purpose in hand.A variation of this arises where a permanent facility exists for the compilation of tables of acertain type from a given set of registers. In both cases, physical integration exists only while thedata processing is in progress. Two statistical service systems, the Local Authority Annual Service(KÅS) and Market Statistics, are examples of this.

– Permanent linkage. All relevant information on the units in question is linked once and for all in apermanent register. The Register of Statistics on Hospitalisations is an example of this.

– Creation of a database. If the registers which are to be linked are set up along the lines of arelational database, further physical linkage may become superfluous, since only logical linkage isnecessary (see above). The required relationships between units are determined across theregisters by logical linkage with the inclusion of relevant keys which can then be used for searchesof the database. Of course, this means that the registers must be set up in formats which areaccessible for the relevant query language. One variation of this form of integration would bethose cases in which registers are described in a common meta-information system - where theyare defined in terms of logical linkage and information is provided on their physical storage.

What type of linkage is to be preferred depends on the objective of integration in specific instances,the quantity of data involved, facilities required, resources, machines, software, etc. Ad-hoc andpermanent linkage are the most widely used forms today, but databases are likely to be moreextensively used as costs associated with physical storage media come down and database toolsbecome more effective.

4.1.4 Content analysis

Some important concepts relating to content analysis are discussed below.

Figure 7 Illustration of a statistical unit

PNosexdate of birthmarital status

Unit Characteristics

Person

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Units are the persons or objects about whom or which we wish to present statistics, i.e. enumerationunits. A unit is represented graphically by a rectangle - cf. Figure 7.

Characteristics or variables are used to describe the unit, e.g. age or magnitude. A distinction is madefirstly between characteristics that identify the individual unit, the key or identifier (e.g. personnumber), and secondly characteristics that describe the unit in other respects, descriptivecharacteristics. Characteristics can be qualitative, e.g. sex (male, female) or quantitative, e.g. income(DKK 200 234) or age (29 years).

The key is shown in the diagram in bold (e.g. PNo) and descriptive characteristics in italics. If wewish to compare information on a unit from a number of different sources, it is the key that we use toestablish the link. A collection of units with particular characteristics is referred to as a unit group orpopulation. If we wish to investigate links between different units, i.e. relations, we use the keys fromthe units involved.

A relation characterises a link between two or more units, for example "a person resides in adwelling" or "a person owns a bicycle". A relation is identified by the combination of the keys of theunits in question, e.g. "person: PNo owns bicycle defined by STELNR' (STELNR stands for "framenumber". In Denmark, every bicycle sold is registered with the owner's name and the bicycle framenumber). A relation is represented graphically by a rhombus as shown on the left in Figure 8. Theidentification of the relation consists of the identifiers of the units involved in it, in this case PNo andSTELNR.

Figure 8 Illustration of relations and relational units

PNoSTELNR

PNoSTELNRdate ofpurchase

Relation Relational unit

OwnerOwner

In addition to the keys, a relation may contain specific information on the nature of the relation. In theexample above, the relation contains information - shown to the right - on the date of purchase of thebicycle. If a relation contains information additional to the keys involved, it is referred to as arelational unit and is represented graphically as a rectangle with a rhombus inside it.

The logical connection between units, characteristics and relations is illustrated in Figure 9.

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Figure 9 Illustration of a unit diagram

PNo PNosex addressageN 1

addresstypesizeyear ofconstr.no of roomsm2

many-to-one-relation

Person Lives in Dwelling

Relations between units are often divided into the types "one to one", "one to many" and "many tomany". This indicates how the units relate to one another numerically. One person may have at mostone spouse, whereas one person can own several bicycles. Many secondary schools offer manysecondary education courses. "One" and "many" relations are denoted by 1 and N.

The figure, which shows the link between persons and dwellings, may be read thus: persons live indwellings; many persons may live in one dwelling, and one person can only have one domicile; thespecific persons who live in specific dwellings are determined by the PNo and address code.

4.1.5 Creation of statistical registers

Almost all person-related statistical registers at Danmarks Statistik are, as already stated, producedon the basis of administrative registers maintained by central or local government departments,possibly supplemented by information collected manually from other sources (e.g. statistics on livebirths: CPR and registrations of births).

The administrative source registers may be functional registers used on a day-to-day basis, which aredynamic registers in the sense that they continuously receive transactions (updates) of information onevents affecting the register units, so that the register at any given time reflects administrative reality.The source register may, however, also be a centrally integrated register that periodically receivesinformation from the functional registers. For example, the National Patient Register is a register ofthe Department of Health which regularly receives extracts from the patient registers of individualhospitals.

From the source register, Danmarks Statistik receives extracts for statistical processing, which inmany cases (for practical reasons, among others) only reflect the state of the source register on aparticular date or for a particular period. Danmarks Statistik typically receives an extract one or moretimes a year from the administrative source register which contains the relevant information. Theextract thus represents the content of the source register only on the date in question or for the periodin question. Three main types of extract may arise:

– extracts for the status of the population on a given date (e.g. persons drawing a social pension andthe amount of the pension in January);

– extracts for the status of the population on a given date, supplemented by information on thetrends in key characteristics over a period (e.g. Social Assistance Act statistics in the year 1992);

– extracts for transactions covering all relevant units over a period (e.g. use of hospital services).

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The extract is edited, and often compared with other information and registers, finally ending up asthe completed statistical register. This is an elaborate and complex stage in the process.Figure 10 From the phenomena of reality to statistics

The world

Administrative sources

Data extracts

Statistics Other sources

The statistical register must be able to describe part of "the world". As we can see from Figure 10, it isa long way from "the world" to the statistical register and there may be many slips along the way.

One frequent problem is that we have information only for given periods or dates. The task may be

– to describe a continuous process on the basis of two status extracts by way of additions andwithdrawals, or

– to compare status data from a single date with continuous data over a period.

4.1.6 Administrative data as a source of statistics

The rest of Section 4.1 discusses the requirements which have to be met to enable official statisticsproviding information on society to be based successfully on administrative registers, what types ofdata must be considered key data and how different types of data can be included in the basicstatistics. We also discuss a few practical problems arising with corrections to register-based statisticsand how they may be solved. Alternative solutions are also discussed, for when the informationrequired is not directly available in the administrative registers.

The requirements which must be made of the basic data, i.e. the administrative registers, have in partto do with the coverage of the data in terms of content and in part with qualitative aspects. It isimpossible to lay down very precise requirements which should be met in all circumstances if

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worthwhile statistics are to be produced on the basis of administrative registers. It is also clear thateven isolated individual administrative registers can be used, and are being used all over the world, asa basis for statistics, and some of the oldest statistics in Denmark were based on records such aschurch registers.

In the following sections some requirements are set out which must be met if there is to be anypossibility of creating a coherent, comprehensive system of personal statistics based mainly onregisters, i.e. a system of the kind developed in Denmark.

4.1.7 Content

First and foremost, the registers must contain data which cover the most important subjects in astatistical system, to elucidate patterns and trends in society.

In addition, there are many different units which it may desirable to study through statistics, but threecentral units are essential to the structuring of the statistics: persons, enterprises and dwellings. Inpersonal statistics, persons are, of course, at the centre, but the other two units are also relevant to thisfield of statistics. This is shown, for example, by the fact that a traditional population and housingcensus also records data on the homes in which the people live and the enterprises (workplaces) inwhich they work. A large proportion of users of statistics, in both the public and the private sectors,need information on precisely these relationships.

Figure 11 Identification relationships

Person

WorkplaceDwelling

There are, of course, many other units of which it is important to have records. Some of these unitsare events which relate to persons, for example traditional demographic events (births, deaths, etc.) or

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developments of various kinds in social circumstances. Among the other units of significance, motorvehicles feature prominently.

For statistical use, it is important for the units to be well defined. This is not a problem for "natural"units such as persons or motor vehicles which, compared with other units, more or less definethemselves. In addition, the concept of a home or dwelling is fairly easy to deal with, although thereare some borderline cases in which the existence or specification of a dwelling can only bedetermined on the basis of detailed rules. Some units manifest themselves as combinations of naturalunits, e.g. families and households.

It quickly becomes more problematic when other types of unit are considered, and here business unitsare a good example. An enterprise or workplace is an abstract concept. Its existence can only beestablished and its nature defined in accordance with very precise rules. Lack of clarity anddisagreement over such definitions have for decades rendered difficult the use of registers in businessstatistics, and these problems were not solved until the start of the 1990s, with the compilation of thepresent business register.

Registers should, ideally, contain information on all units in the country of the types specified, i.e.they must be exhaustive. Incomplete coverage will often be systematic. For example, if certainmunicipalities are not covered, the statistics produced on such a basis will immediately be affected byskewness, for which it may be difficult to compensate.

One of the great strengths of register-based statistics, as compared with traditionalquestionnaire-based statistics, is that it is often possible to achieve total coverage, or something veryclose to it. In questionnaire surveys, a representative sample of the population usually has to suffice,and a degree of non-response is inevitable. More often than not, this skews the results in such a waythat those who are covered by the survey differ systematically from those who are not. The rate ofnon-response is often significant, typically from 15 to 50%, when participation is voluntary and thesurvey is conducted among private individuals. In some surveys in other countries, rates ofnon-response ranging up to 80% have been observed, which in most contexts make the results entirelyworthless.

An important precondition if statistics based on registers are to give comprehensive coverage is thatthe data contained in administrative registers should be extensive and should cover many variablesrelating to the relevant units. Gaps either necessitate the additional collection of information usingtraditional methods, or limit the content of the statistics.

4.1.8 Identifiers

Identifiers play a very considerable role in both the maintenance of administrative registers and theirstatistical use. For statistics, it is particularly important that it should be possible to employ thecommon identifiers used in more than one register, in order to link information on a given unit whichcomes from various sources. Since the administrative registers are not set up for statistical purposesand therefore do not usually contain the desired data combinations in directly accessible form, animportant part of the production of almost any register-based statistics is to link data from differentregisters by means of common keys.

The most important key in this connection is, of course, the person number. The street address andworkplace number are also essential in determining relationships between persons, dwellings andworkplaces.

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4.1.9 Time references

The time dimension plays a very special role in statistics revealing patterns and trends in society, andin all areas of coverage it has to be possible to make comparisons over time. In statistical publicationsor databases, the time dimension is, broadly speaking, ever-present. It is therefore vital for statisticalusability that reliable information on various dates be included in the registers.

This applies first and foremost to the dates of changes or events. Among the main events of interesthere are the "births" and "deaths" of units, but it is also important to date other changes affectingunits. What we are concerned with here is the actual date on which an event leading to a change in anitem of data took place, e.g. the date of a change of address or of the branch of an enterprise.

It may be extremely difficult in practice to pinpoint the real date of an event. The branch within whichan enterprise operates is a variable which may change gradually, as the activities of the enterprise shifttheir emphasis, and it is perhaps not possible to determine exactly when a new activity becomesdominant. But in the case of many other variables, too, which in principle can be observed at anygiven time and in which a change can therefore be dated with reasonable accuracy, problems arise inpractice in the recording process. This may be because the time when a particular value becameeffective may not necessarily concern the administration using the data: all it needs to know is themost up-to-date value at any given time. In other cases problems may arise because it is not possibleor practicable to record events in real time: it may only be possible to ascertain data changes fromresponses to enquiries, for example once a year in connection with a tax return.

If it is not possible to record accurate dates, approximations remain an option, of course, and aremuch better than nothing at all.

In addition to dates of events or changes there is a need for registration dates, i.e. an indication ofwhen the data value in question was entered in the register. This is of crucial importance when theregister has to function as a statistical model of the reality the statistics are to describe - see Section4.1.10.

The ideal situation, therefore, is that any item of information in the administrative register should beaccompanied by two dates: the date of an event or the date on which a change took effect and a dateof registration. Registers in reality often deviate significantly from this ideal.

Delays in the updating of administrative registers mean in many cases that several editions of thefigures have to be published: provisional figures, which have to be issued because of the need forcurrent figures but which lack precision due to inadequate updating, and final figures, which are moreextensive but do not appear until some time later. Sometimes there may be a number of interimversions. The existence of several versions of the figures may, however, cause great confusion andinconvenience to users and should for that reason be avoided if at all possible.

4.1.10 The register as a statistical model

When a register system is to be used as a basis for statistics, it must be possible to view the register asa model of the group of units the statistics are to describe,

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In some cases, the data changes recorded in the register may also need to be viewed as models ofevents described in the statistics. This applies, for example, to population statistics, where it should bepossible for reports of events in the population (when people move house, marry etc.) to be derivedfrom data changes in the Central Population Register (CPR). Registers must therefore be set up insuch a way that reports on the population covered by the register and on movements in it can bepinpointed with respect to the dates on which the events actually took place.

For statistics on movements, it must be possible to make a distinction in the register between realevents and corrections and data changes of a more technical nature. The content of this latterrequirement can best be illustrated by certain problems which have actually occurred in the use of theCPR for population statistics, even though the CPR must be said to meet the needs of statisticsproduction to a very high degree.

Actual corrections of wrongly reported data pose a problem for statistics, however, even though it ispossible to distinguish them from real events. Corrections have to be regarded in many cases asmodifications of events reported earlier: an address correction may be a correction to a report on aremoval. A correction may also cancel an event reported earlier, which occurs in the CPR system, inparticular, when people who have notified the population register that they are to emigrate changetheir minds and remain in the country.

Corrections to events are difficult to manage because, in reality, they can be reported with randomtime-lags. In the population statistics, it has been decided to exclude them entirely from reports ofmovements, but this procedure is only feasible because the number of corrections is small comparedwith the number of events.

4.1.11 Stability

An important property of any statistics is that they can describe a process over time, i.e. can show howa particular magnitude develops from month to month and from year to year. It is also of greatimportance, therefore, that concepts in the administrative registers should remain constant over thelonger term. Otherwise, major problems can arise in securing comparable figures from one period tothe next. In some cases, but far from all, it is possible to adjust for changes with greater or lesserprecision. There are also examples of situations in which it was found necessary to abandon thepublication of certain statistics in a particular period because it was impossible to adjust for theconsequences of changes in registers.

4.1.12 Quality

The quality requirements imposed by statistical use coincide to some extent with the requirementswhich must be met if the primary purpose of the registers is to be served.

The first quality requirement to be met by basic data is that they must be relevant to the statistics, i.e.the data must relate to the concepts on which the statistics are to provide information. It is mucheasier to check for relevance in traditional statistics which are based on data specially collected for thepurpose. When the statistics are to be based on data collected for a different purpose, whatever isnecessary or desirable for that purpose usually has to suffice. In favourable cases, however, thestatistician may be fortunate enough to exert an influence on the content of registers.

It is also possible to let different data sources supplement one another through linkage, so that thedesired information is provided by a comparison of a number of data from different registers which

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document the subject more or less well. The use of several data sources is covered in more detail inSection 4.1.13.

On the subject of relevance, it must also be borne in mind that a statistical system which isexclusively or to a very large extent based on the registers of public authorities may end up giving apicture of the world as seen through the eyes of those authorities. Concepts or groups of personswhich do not exist in the frame of reference of the tax authority or social affairs administration mayalso not show up in the statistics. One example might be homeless persons.

To exclude this risk, it is important that there should be certain basic registers, such as the CPR,whose task is to record all units without reference to any specific administrative purpose. We alsoknow for certain that many records from different authorities can be linked so as to provide statisticswhich are not tied to any single administrative viewpoint. At the same time, it is important to bear inmind that the registers cannot or must not give us a complete picture of society, and that it is thereforenecessary to collect data specifically in order to reveal aspects which are not covered by the registers.These additional data can be collected through interview or questionnaire surveys, and they shouldideally include identifiers which make it possible to compare them with the register data.

The next requirement to be met by basic data for statistics concerns reliability. This applies whetherthe data come from questionnaires or registers. One must be as certain as possible that the recordeddata faithfully reflect the circumstances investigated. If a person is stated to be a painter and is in facta government statistician, there is a risk that incorrect conclusions will be drawn from the finalstatistics.

It can, of course, be argued that, as long as the errors are not systematic, they will not result in skewedboundary distributions, since errors in opposite directions have a tendency to cancel one another out.But when, as is often necessary, we look at statistical links between several variables, such errorsbecome a problem, since they can distort the assessment of those links.

If the errors tend systematically in a particular direction, the problems are immediately magnified, buttheir systematic nature may make it easier to correct them.

Finally, it is important that data be recorded with a degree of precision suited to the needs of thestatistics, i.e. the scale used should be sufficiently detailed. For example, the degree of specification inthe occupational information must be fairly detailed if the information is to be used forepidemiological studies, where the risk of disease is to be viewed in terms of job-related effects.

The need for precision remains even when the information is not to be used in statistical reports at therecorded level. In many cases, groups are formed on the basis of variables derived from discrete itemsof data. The definition and application of such variables in statistical contexts depend crucially on theprecision of the basic material.

4.1.13 Use of multiple sources

When data are collected for statistical purposes using traditional collection methods, the questionsand guidelines for answering them are formulated in such a way that information is obtained whichaccords with the definitions used in the statistical field concerned. The information-gathering can bedriven, so to speak, in such a way that we obtain precisely the information we need.

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The use of administrative registers as a basis for statistical data does not provide the same scope forcontrol. It is possible to search the information available and select those items which best suit theintended purpose. It will often be the case, however, that even the most suitable information does notcover the immediate need to a sufficient degree, since there may be divergent definitions, limitedcoverage, errors or inadequate updating. In such a situation, one possibility is to draw on informationfrom several administrative sources.

Where the need for a specific item of information for one or more statistical functions cannot becovered immediately by direct reference to the information available, the problem may in certaincases be solved by the formation of "derived variables". Such a variable is obtained by chainingtogether different items of information which, together, provide the information required, if not withabsolute precision at least with good approximation.

When a derived variable is to be set up, the starting point is to establish a definition of the conceptone wishes to use in the statistics. Administrative information is then sought - possibly informationwhich is already used for statistics - which can help to meet the definitional requirements. Adistinction can be made between three types of variable formation: creation of a new variable,prioritisation of information for a given variable and adjustment or correction of specificinformation.

The creation of a new variable may be the solution if enough of the information required is availablebut is not contained in a single item of administrative data. Several items of information, collectedand processed in accordance with administrative rules, can each contribute to providing an overalldescription of individuals in terms of the desired statistical concept. The process can be comparedwith a jigsaw puzzle in which each piece forms part of the total picture but in isolation does not givean impression of the complete picture.

One example of a new variable of this kind is the employment status code, which forms part ofDanmarks Statistik's Employment Classification Module. This classifies persons according to theirmain form of employment in the course of a calendar year and comprises the following groups: soleproprietors, assisting spouses, wage- and salary-earners, pensioners and other persons noteconomically active. Information such as this is clearly of a statistical nature and will not be found inthe same form in administrative registers. It includes, for example, income received in a breakdownby type and, where appropriate, the obligation to submit accounts, derived from the registers of theincome tax system, and possible details of business ownership derived from the Central BusinessRegister. Such information is suitable for use in forming an overall assessment of the main form ofemployment for a given individual during the course of a particular year. It provides a number ofindicators which are weighted by means of a set of rules, resulting in the classification of persons interms of employment status.

In most cases this classification is quite uncomplicated. All indicators will point to the same group. Itmay be, for example, that the only classifying income consists of wages received and that the personconcerned is not the owner of a business. This person will be classified as a wage-earning or salariedemployee, provided the wages or salary received are of a certain amount. Otherwise, the person isclassified as being not economically active.

It becomes more complicated when more than one classification is possible. It may be that a businessowner has received salary and pension payments in the year in question. In this case, the informationwill be weighed up carefully. Ideally, the duration of the individual situation should decide theweighting, but this is not possible. The best approximation to the ideal is to weight according to thevolume of the relevant types of income: business profits, wages/salaries and pension payments. That

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is in fact the procedure followed up to a point, but it can give rise to serious misinterpretations whenthe amount of work performed by a self-employed businessman is assessed on the basis of thebusiness's profit or loss in a single year, since a loss can arise despite considerable labour input.Substantial weight is therefore assigned to information on business ownership from the CentralBusiness Register when self-employed persons are defined. This is done by classifying the businessowner as self-employed unless any salary drawn is greater than the profit of the business and the ATPcontribution indicates full employment over the entire year as a wage- or salary-earner or if the profitof the business is zero or less and the person in question received a pension. These two exceptionsgive rise to classification as an employee or pensioner, respectively.

When a new variable is formed, it is essential for the necessary components to be present for allpersons, and that, for the intended purpose, quality is good. In the examples quoted, the informationon business ownership can be found only for persons who, according to the rules, must be included inthe Central Business Register. These are employers and persons subject to VAT. A small group ofbusinesspeople are not included in this population - for example, persons operating within the field ofpassenger transport and providers of certain health services. In this case, information on the obligationto submit accounts is used, and greater significance is attributed to profits or losses recorded by thebusiness. The separation of wage and salary income from other types of income taxed in the sameway is influenced to some extent by the fact that the distinction is of no great relevance to theassessment work of the tax authorities, so that a certain degree of uncertainty arises here. It may beconcluded, however, that, despite the deficiencies indicated, the result is in good agreement with thedefinition laid down.

The use of information from multiple sources may be the solution when the desired information is notimmediately available in a form suitable for the statistical purpose. It must be realised, however, that,even if we take as our starting point a definition fixed on the basis of the statistical requirements, thedata available and the processing which can be given to them may very easily lead to departures fromthis definition. When selecting information and determining the rules for its processing, it isimportant to take great care to ensure that the deviations are not too wide. The result of this could bethat the statistics convey something other than what they are believed to convey.

The actual definitions associated with the derived concepts may often be somewhat ingenious, sincethey reflect the set of rules applied. This may create unnecessary confusion in the minds of the users,which is why they appear in a more simplified form in their presentation, as is also the case withtraditional data collection. When information from multiple sources is used, a more differentiatedpicture of the individual's circumstances can be obtained. For example, the COR may provideinformation on wages earned by a particular individual and the Business Register may show that thesame person has been active as a business owner. The set of rules must determine how theinformation should be weighted when such a person is classified in terms of employment status as anemployee or as a self-employed businessman.

These differences in information also arise in the interview situation, but they are known only by theinterviewee, so it is left to him or her to choose the classification and hence the weighting of theinformation. This choice can be highly subjective, since it is impossible to indicate the precisedelimitation of individual groups in a classification. A person is classified as an employee if he or shehas indicated as much in answer to a question.

For presentation purposes, register-based employment status is defined as a person's main activityduring a given calendar year. Further details can, of course, be made available if special investigationscall for an analysis of the demarcation lines between different groups.

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4.1.14 Integrated data collection

When an administrative authority obtains information on behalf of another authority at the same timeas it collects information for its own use, this is called integrated data collection.

This means that an administrative authority collects information from firms, institutions etc. which itwill itself use to perform its own tasks, while at the same time collecting information which it doesnot itself need but is to be used by another authority, such as Danmarks Statistik. The two data setsare collected in one and the same integrated operation.

The purpose of integrated data collection is to limit the costs of data-gathering. The total cost tosociety is reduced because it is far cheaper to gather information in a combined process than inseveral processes. This applies, in particular, where the source information does not exist incomputerised registers and where resource-intensive data collection methods using questionnaires orinterviews therefore have to be used.

An added advantage is that integrated data collection helps to ensure that the information gathered isconsistent and covers the same units, which would not necessarily be the case if collection had beenundertaken by two institutions in separate processes.

4.1.15 Legal basis

The Act on Danmarks Statistik contains provisions on what data may be collected by the institutionbut gives no guidance as to collection methods. Thus the Act specifies what information or types ofinformation can be collected from business enterprises, institutions etc., but it does not state whetherthe information is to be collected by means of questionnaires, whether data which institutions orbusinesses have in their possession are to be supplied directly to Danmarks Statistik by electronic datatransfer, whether information is to be collected by another authority using integrated data collectionor, indeed, whether some entirely different method is to be used.

The Public Authorities' Registers Act contains provisions on the processing of personal informationon electronic media. The Act aims to ensure that the public authorities set up and use computerisedregisters containing personal information in such a way that the legal rights of individual citizens withregard to the protection and integrity of their data are not violated, but without any loss of efficiencyfor the administration. Under the Act, registers to be kept by a government authority may only be setup after approval by a minister. Before a register is brought into use, rules must be drawn up for itsstructure and operation. For registers to be kept by a local authority, decisions on its establishmentand the formulation of the rules governing it are normally taken by the local authority concerned.Rules governing registers must be approved by Registertilsynet [the Data Surveillance Authority].

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Part 3 of the Public Authorities' Registers Act contains provisions on the recording and storage ofinformation. Subsection 1 of Section 9 states: "Only such data shall be registered as are clearlyrelevant to the purposes of the authority concerned. Other data relevant to the purposes of anotherauthority may be registered provided the register is blocked in such a manner that these other data canbe used only by that other authority." This will normally be the case where an authority collects arange of information from citizens (or business enterprises, on employees for example) for future usein its own administration, whereas the other authority has to use a particular item of information inmuch the same area.

4.1.16 Examples of integrated data collection - the Workplace Project, theERE statistics

In a number of cases Danmarks Statistik needs both information collected for its sole use, which mustnot therefore be used by the collecting authority, and information which the administrative authoritycollects for its own use. In these cases, the combined set of information will make up the datasupplied to Danmarks Statistik and included in its statistical registers. This applies in the followingexample, which is particularly relevant from a national accounts point of view, since it refers to theproduction of the basic figures for one of the most important sources for the income-based estimate ofGDP, the ERE statistics∗.

The aim of the Workplace Project - which, somewhat misleadingly, is called a "project" for historicalreasons, even though for many years now it has not been a development project, but an ongoingoperation - is to produce a list of all workplaces and to assign all employment relationships to thecorrect workplace. Information for the Workplace Project is obtained by integrated data collectionusing the information sheets which employers have to submit each year to Told&Skat in respect ofeach employee. The information sheets contain details of wages, pensions, fees, allocations fromfunds etc. for the individual employee or recipient of public benefits. The latter is identified by his orher person number while the employer is identified by the SE number, which is supplemented in theWorkplace Project by a code for the place of employment if the employer in question has more thanone workplace. The information sheet also provides information on the period of employment, ATPcontributions and income tax deducted at source ["A-tax"], along with certain other forms of incomefrom which tax is not deducted at source.

The Workplace Project is carried out once a year by Told&Skat and Danmarks Statistik working incooperation. Told&Skat sends out the blank information sheets in November/December each year,together with guidelines for enterprises on data to be reported for the year. These forms areaccompanied by workplace lists for enterprises that have more than one workplace. The workplacelists are produced by Danmarks Statistik and contain a list of the workplaces which DanmarksStatistik has recorded for the enterprise in question as they appear in Danmarks Statistik's businessregister. The lists contain the name, address and branch (branch name and code) of each workplace.Finally, they contain the code for the workplace, which must be indicated on the information sheet foreach individual employee. Employers must update the list with appropriate information on theindividual workplace, should there be errors or inconsistencies in the list. They must also add newworkplaces and indicate others which have closed so that, after any corrections needed, the listcontains complete information on all workplaces which have been active during the course of theyear.

∗ Erhvervsbeskæftigelsesstatistik, EBS in Danish, translated in Danmarks Statistik's "Declarations of content" as"establishment-related employment (ERE) statistics".

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Information on wages and salaries is collected by Told&Skat for the purpose of payment demands andverification and for use in assessment work, which is carried out in coordination with the assessmentauthorities at local government level.

The workplace codes are collected for use by Danmarks Statistik. Information is also collected on theemployee's period of employment during the year in question for the exclusive use of DanmarksStatistik.

Danmarks Statistik receives a copy of all data on the information sheet, both the information collectedby Told&Skat for use by Danmarks Statistik alone and the information collected for the administrativeuse of Told&Skat itself.

For Danmarks Statistik, the information is complete in itself. If it were to collect the informationitself, the administrative information would be just as meaningful as the information on workplacesand periods of employment. The interpretation of the information collected for Danmarks Statistikalone depends on the value of the other information.

As far as the public sector is concerned, information on workplaces etc. is to a large extent alreadyrecorded in the computerised wage and salary payment systems of central and local government. TheWorkplace Project therefore uses information drawn directly from these systems which, however,must first be supplemented and systematised. This is a laborious process.

Information from the Workplace Project is used by Danmarks Statistik for statistical reports. In thefirst instance, it provides the basis for individual data in the personal statistics system covering labourmarket information for a whole year and for a single point in time (end November). This informationis thus included in the classification basis of the personal statistics system.

However, the information also contains the crucial link between personal statistics and businessstatistics, since the SE number, with its associated workplace code, provides information on linksbetween persons and specific enterprises and workplaces. This provides a basis for updating units inthe business register, and the aggregate personal data update the employment information in thebusiness register at workplace level.

Information at the personal level thus provides scope for business classifications at the level ofindividuals and, by way of the associated person numbers, the business information makes it possibleto link personal variables from the personal statistics register system to business units.

The Register-based Labour Force Statistics (RAS) include workplace information. The RAS describethe population's links with the labour market at a given point during the year, i.e. end November,corresponding to the information on period of employment from the information sheet. The basic dataare provided by the basic information from the Workplace Project, together with extracts from anumber of administrative registers and statistical registers, information from which is processed toindicate labour market involvement in the last week of November of the year in question for allpersons resident in Denmark on 1 January the following year.

The material from the Workplace Project and the information sheets is also used to produce the ERE,the purpose of which is to show employment from the point of view of business units. Workplaces areclassified, inter alia, on the basis of their employment levels at the end of November. The EREstatistics were first produced for 1990 using the method described here. The definitions used are thesame as for the RAS, and the two sets of statistics are coordinated. A basic register is compiled fromwhich extracts are taken for both register-based labour force and ERE statistics. The latter give details

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of both primary and secondary employment, i.e. a person can be recorded with two employmentrelationships.

One way of looking at it is that the RAS detail labour market status and employment seen from thepoint of view of the individual, whereas the ERE statistics show employment from the point of viewof enterprises. This latter view is the one relevant to the estimate of the compensation of employees asa component of GDP in the generation of income account, which in the national accounts is a"domestic" concept, i.e. total wages and salaries in all resident producer units, regardless of whetherthis income goes to residents in Denmark or non-residents, whereas the compensation of employees inthe allocation of primary income account is a "national" concept, i.e. total wages and salaries whichDanish residents have earned in a given period, regardless of whether they come from Danish orforeign producer units.

4.2 Valuation

Both the compensation of employees and gross operating surplus and mixed income are by definitionestimated at factor cost. Gross operating surplus and mixed income are calculated from an estimate ofvalue added at basic prices as calculated in the target total module (MTM). Consequently, there areno valuation problems specific to the income-based estimate in the Danish national accounts, onereason being the integrated estimate of gross operating surplus based on business accounts. It wouldhave been a different matter if this estimate had instead been based on corporation tax and personalincome tax returns. The tax concepts of income used for these returns are often very different fromnational accounts concepts.

4.3 Transition from accounting and administrative concepts to ESA 95national accounts concepts

The main statistical source for the estimate of the compensation of employees is the ERE, theestablishment-related employment statistics. The "wages and salaries" concept in these statistics is notthe same as the "compensation of employees" concept in the national accounts. Section 4.7 discussesthe transition to national accounts concepts as part of the discussion of the processing of primarystatistics. Table 101 shows the result of the transition from primary statistics to the national accountscalculation.

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Table 101 Connection between the ERE and the national accounts

Wage/salary component DKK millionCompensation of employees in the national accounts 534 094

Total wages and salaries in the ERE 490 966of which employer-administered capital pensions 7 209

- Tax value of fringe benefits 2 862+ Long-service gratuities and severance pay 1 905+ Gifts in kind 12+ Wages from the black economy (1 660 + 1 235) 2 895+ National accounts calculation of fringe benefits 6 788+ Employer contributions to the ATP 4 906+ Employer contributions to pension schemes etc. 26 284+ Industrial accident insurance 1 631= Corrected total wages and salaries for the ERE 532 525

Percentage discrepancy 0.29%

For gross operating surplus and mixed income, reference should be made to Section 3.3, whichdiscusses in detail the change from business accounting concepts to national accounts concepts for thecompilation of the intermediate system and the target total module.

4.4 Direct versus indirect methods of estimation

All income components other than that part of gross operating surplus for which figures are imputed(surplus on the imputed rental value of owner-occupied housing, consumption of fixed capital relatingto non-market output, etc.) are in principle estimated directly as income created by the productionprocess.

4.5 Direct estimates of levels as opposed to projections

With the exception of allowances for the hidden economy, income-based GDP is in no case estimatedusing projections, but is a direct estimate of levels based on total coverage of wages and salaries in theprimary statistics.

4.6 Most important allowances for exhaustiveness

As Table 19 in Section 1.7 shows, there are explicit allowances for fringe benefits and the blackeconomy.

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4.7 Compensation of employees

4.7.1 Statistical sources

By far the most important statistical source for the estimate of the compensation of employees is theERE statistics, employment and payroll statistics based on various administrative and statisticalregisters.

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The ERE statistics give detailed information on the number of workplaces, the number of jobs andtotal annual wages and salaries divided by geographical area and industry. The statistical unit is theworkplace, i.e. the local kind-of-activity unit. The most important basis for the statistics is theinformation form which all employers have to submit every year to Told&Skat for each wage- orsalary-earner employed. The information form for 1995 is reproduced in Annex 7. These formscover all employees without any lower limit whatsoever for amounts or length of employment, andboth Danish and foreign residents. This makes them a virtually ideal source for the calculation ofincome in the form of wages or salaries other than that which comes from the hidden economy, whichis, of course, withheld from the tax authorities.

A brief description of this key source in the form of a "declaration of contents" can be found inChapter 11. Below is a detailed description of the source, taken from the publication of statistics inthe series Statistiske Efterretninger (with a few stylistic changes in the Danish).

The ERE statistics are annual and give information on:

− the number of workplaces and employment relationships as at the end of November;− full-time employment and total wages and salaries during the year.

The ERE statistics are an extension of the workplace statistics produced for the period 1980-1989.The extension consists in the fact that:

− workplaces at the end of November are those of all enterprises where people are employed –including those where only the owner is employed;

− employment relationships at the end of November include the self-employed and assisting spousesas well as employees;

− employment relationships at the end of November can be described in terms of the followingvariables: employment status, sex, age and education.

The 1995, ERE statistics were compiled from the same basic material as was used for the register-based labour force statistics (RAS) on 1 January 1996, and the two sets of figures are coordinated.

Those on leave of absence as at the end of November 1995 are considered by the RAS to be inemployment, but are not so considered by the ERE statistics. Of the self-employed, the ERE statisticscount only those who are either liable for VAT in connection with their primary link with the labourmarket or are employers.

The basic data are derived from various administrative and statistical registers - primarily informationgiven by employers to Told&Skat on wages and salaries paid out and ATP-contributions paid in(Salary Information Register) - from the business register and from the employment classificationmodule. For further processing and definitions, information from various registers is added.

Since the ERE statistics provide detailed information on the number of workplaces and the number ofemployment relationships divided by geographical area and branch group, updated information isrequired on all employment units right down to workplace level. The statistics are updated annually inconnection with the Workplace Project.

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For employment relationships with private employers, the Workplace Project is based on theinformation forms which all employers have to send in each year to Told&Skat for each wage- orsalary-earner employed.

The forms identify both the employee (person number) and the employer (employer number). Foremployers with more than one workplace, a workplace code is used to mark which of the workplacesthe information form refers to.

Every year, Danmarks Statistik sends out with the information forms to each employer who has morethan one workplace an “Arbejdsstedsfortegnelse” [workplace list] showing which workplace codesthe employer has to use for the individual workplaces. The workplace list is based on informationfrom Told&Skat on active enterprise code numbers, combined with information on workplaces fromthe business register.

Employers are asked to update the workplace list to add workplaces which have been set up or deletethose which no longer exist, so that the enterprise’s corrected list includes those units which, duringthe information period in question (the year) have had employees linked to them (employmentrelationships). For each employment relationship, the employer then inserts the relevant workplacecode.

In the case of government employers, the Workplace Project is not based on the information form.The individual employment relationships and their links with the employer are reported to DanmarksStatistik from the government wage and salary systems, together with information for wage andemployment statistics.

The workplace information is collected directly from public employers. A special “workplace list” issent out, which includes the administrative codes under which the workplaces are registered in thewage and salary systems. The workplace list is used to update the information on the publicworkplaces in Danmarks Statistik’s business register.

The necessary, thorough error-check on the information from the various sources begins as soon asthe basic data are available, around four months after the end of the statistical year. Errors arecorrected.

This process includes:

− checking and correcting for changes in the data structure in the donor registers;− a computerised preliminary check on the validity of the information reported;− a probability check, inter alia by comparing figures with previous years’ figures;− contact with some employers for further details and correction of the information reported;− checks on the information from the statistical registers used, both for validity and to ensure that all

the information refers to the same date.

In some cases where firms have more than one workplace, there is no information as to whichworkplace the individual employment relationship should be linked to. If it is not possible to collectinformation on this point via the error correction process described above, the employmentrelationship is automatically allocated to the most probable workplace, on the basis of informationsuch as the size of the workplaces in question and their distance from the municipality of residence.

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A workplace is defined as part of a firm which is strictly delimited in terms of organisation, located ata given address and produces one - or one main - type of good or service. It corresponds to theproducer units (local kind-of-activity units) in the national accounts.

The number of workplaces at the end of November is taken to be the number in which there isemployment at that time. A workplace may have one or more paid employees or a self-employedperson.

In certain cases, the employees do not work at any of the employers' registered workplaces but workfrom home or near their home or at more than one workplace. This happens with cleaning, forexample, or with insurance or social or healthcare work (childminders, health visitors). In thesecases, the employment relationships are assigned to "notional workplaces", which are not, however,included in the estimates of the number of workplaces.

The starting point is a common definition of the number of persons in employment as at the end ofNovember, for both the ERE and the RAS statistics.

A given person may have links with the labour market at the end of November in one or more of thefollowing ways: as a self-employed person, assisting spouse, employee in employment, on leave fromemployment, unemployed, on bridging benefit [overgangsydelse] or receiving early retirement pay∗.The gross figure (stock of persons) for employees and the unemployed is divided according towhether they are on the labour market full time or part time.

First of all, the gross stocks are delimited and a decision is taken on the group (stock) to which eachindividual should belong as at the end of November.

If an individual could be placed in more than one stock, the order of priority for the ERE statistics isas follows:

1. Persons on leave

2. Unemployed

3. Persons receiving early retirement pay, persons on bridging benefit

4. Employers

5. Employees on the labour market full time

6. VAT-payers

7. The self-employed who are insured against unemployment

8. Employees on the labour market part time or where there is no information on whether they are part timeor full time

9. Other self-employed persons

10. Assisting spouses.

The two most important employment relationships are then chosen. The ERE statistics estimates atthe end of November include the employment relationship which is a person's most important or nextmost important link with the labour market. The RAS includes only the most important link.

The final ERE statistics at the end of November include 4, 5, 6, 8 and 10 above.

∗ Efterløn, sometimes translated as "post-employment wage". It is paid, under certain conditions, to employees whoretire voluntarily (and not for health reasons) between the ages of 60 and 66.

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Below is a brief run-through of the reasons why a person is linked to one or more of the relevantpopulations as at the end of November.

In the case of employees, the first decision is whether or not they were actually in employment at theend of November, but this decision is taken only for employees who meet the following requirements:

− During the course of the year, they must have received in total wages or salaries corresponding toat least 80 hours at the guaranteed minimum wage, i.e. DKK 6 302;

− They must not be registered with Arbejdsformidlingen [Job Centre] as totally unemployed duringthe last week of November;

− They must be registered as resident in Denmark at the end of the year.

In order to investigate whether a person was in employment at the end of November, informationfrom the unemployment register is assessed. If the persons in question have unemploymentinsurance, they are included.

Information from the Salary Information Register is also analysed. If there is a mark in the date fieldsfor employment at the end of November, or if the amount of the ATP contribution corresponds to theamount for a full-time/full-year employee, the employment relationship is also included.

Finally, a few employment relationships are included which are drawn by lot from those in respect ofwhich there is some doubt about validity at the end of November.

For persons who were employed in more than one place at the end of November, only the mostimportant (primary) and next most important (secondary) employment relationships are included inthe gross population.

However, for a person to be included as an employee in employment in his/her secondary link withthe labour market, the requirements are firstly that it is explicitly stated that the person was employedon the reference date in the relationship which is considered as the secondary one, and secondly thatin that relationship a wage/salary above the limit of DKK 6 302 was earned. If these conditions arenot met, the secondary employment relationship at the end of November is not counted.

The self-employed population is divided into two groups:

− employers, defined as those who own or are joint owners of an enterprise employing at least oneperson in the gross population of employees in employment. If a firm has more than one branch,the owners and any assisting spouses are assigned to the main department;

− those who pay VAT, defined as persons who in their primary link with the labour market areowners or joint owners of an enterprise which had been set up and had not been removed from theregister at the end of November, and who had reported for the VAT register in at least one quarterduring the year.

Assisting spouses are those who earn the key share of their income during the year as assistingspouses and are married to a person included in the gross population of the self-employed. Thedefinition of assisting spouses is linked solely to cases where income is transferred to the spouse. Ifthere is a wage/salary agreement instead, the spouse is considered to be an employee in employmenton a par with any other employees.

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In 1994, information on persons on leave or on bridging benefit was included in the ERE statistics forthe first time.

Information on persons on leave comes from the quarterly AMFORA [labour market policymeasures] statistics. Persons on leave are not included in employment relationships in the ERE.

Persons on bridging benefit are treated in the same way as those receiving early retirement pay and arethus not included as being primarily in employment in the ERE statistics.

This measure should be seen as an expression of the total volume of labour performed by theemployees in the enterprise, regardless of whether they work full time or part time or whether theyhave been employed for the whole year or only part of it.

The number in full-time employment is calculated as follows: the sum of payments to the ATP schemefor all employees at a given workplace divided by the annual ATP contribution for a full-timeemployee.

Persons under 16 or over 66 years are not included in the ATP scheme, but, on the basis of theamount of their wage or salary, a notional ATP amount is calculated and this is added to theworkplace's other ATP payments.

The ATP contribution varies according to the length of time worked for a single employer. Thecontribution rates are divided into four groups:

− under nine hours' work a week - no ATP;− 9-17 hours' work a week, 1/3 full contribution;− 18-26 hours' work a week, 2/3 full contribution;− 27 hours or more per week, full contribution.

This means that those with under nine hours' work per week are not included in the estimate of thenumber in full-time employment.

Certain foreign nationals employed on a temporary basis do not pay ATP, either. They are thereforenot included in the number of full-time employees.

N.B: Changes in the ATP scheme as from 1993 mean that the number in full-time employment in1993-1995 is not comparable with the figures for previous years. The above hourly limits for the fourgroups are one of the changes, since the limits prior to 1993 were 10, 20 and 30 hours of work aweek.

The end-November estimate covers, as already mentioned, only persons resident in Denmark at theend of the year. This delimitation does not apply to the estimate of full-time employment andwages/salaries.

Total annual wages and salaries are defined at workplace level as the sum of employees' A-incomes,from which labour market contributions have to be paid, and total contributions, if any, to capitalpension schemes administered by employers.

A-income comes from heading 13 of the salary information form, and covers:

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− Wages and salaries, fees and the like. It includes: holiday bonuses, wages or salaries paid duringsickness or maternity leave, grants of any kind on which A-tax is payable, fees paid to members ofboards, committees, etc. and payments of pensions or the equivalent to former employees.

All the amounts under this heading are gross, i.e. they include the labour market contribution. Long-service gratuities, severance pay and contributions to pension schemes (including ATP) are notincluded.

Information on the total contributions made by individuals to employer-administered capital pensionschemes is derived separately from Told&Skat's central pensions system.

Information on employment status is linked to each person. This is taken to be a reliable descriptionof their primary employment relationship. If there is secondary employment as an employee, however,the status information is considered to be less reliable and these employment relationships aretherefore recorded separately without any further details.

The figures on which the status information is based have changed over the past few years, inter aliaas a result of the introduction of information on type of work in the statistics on wages and salarieswhich are based on Danmarks Statistik's new classification of occupations, DISCO-88. It is no longerpossible to continue using the previous classification, which was last used in this edition of the EREstatistics.

At the same time, Danmarks Statistik's new socio-economic classification is introduced into the EREstatistics. This new classification, which will also be used for all person-related statistics during1997, divides the population up on the basis of their link with the labour market and corresponds tothe previous classification where most groups are concerned, i.e. there is a breakdown into self-employed, assisting spouses, employees (wage/salary earners), unemployed, students in furthereducation, pensioners, etc.

The breakdown of employees is totally new, however, since the previous breakdown has beenreplaced by one based on skill level, which in turn is based on DISCO-88. The level of skill inquestion can be achieved via formal education and through training and practice.

Like the former information on status, the new socio-economic status is considered to describeprimary employment relationships accurately. In the present article, primary employees are dividedinto the following groups:

• Senior managers in enterprises, organisations and the public sector;• Employees in a job which requires skills at the highest level;• Employees in a job which requires skills at the intermediate level;• Employees in a job which requires skills at the basic level;• Other employees.

Group 1 covers management work at the highest administrative level in enterprises and organisations- regardless of their size and of the level of skills required for the job. The work consists in makingdecisions, planning, managing, etc.

Group 2 covers work requiring the highest level of skills, and here persons are classified by job title,such as physicist, actuary, construction engineer, architect, doctor, midwife, teacher, lawyer, auditor,librarian, journalist, actor, musician or priest.

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Group 3 covers work demanding an intermediate level of skills. In consists in technical work inproduction and transport and assistance with trade and administration, educational and care work inday centres and residential institutions, nursing and work as an assistant in the health sector.Examples might be laboratory assistant, programmer, photographer, master on a ship, nurse,kindergarten teacher, estate agent, customs or police officer.

The common requirement for work in group 4 is a basic level of skills. This group covers generaloffice work, customer service, personal services, security and rescue work, work in agriculture,horticulture etc., craft work and work which consists in operating and/or monitoring plant and otherstationary machinery.

Group 5 is a remainder group, covering work not included in the other groups. An example of tasksin this main group might be cleaning work, messenger services, guard duties and packaging andtransport work not involving the use of machinery.

Information on the socio-economic status of persons employed by central government, counties andmunicipalities comes from the register of wages/salaries and staffing statistics for public employees,and for seamen from Dansk Internationalt Skibsregister. For other employees, the information comeseither from statistics on earnings in the private sector, from a conversion of information onunemployment funds in the register of unemployment statistics or a conversion of the information onthe education of the persons in question in the educational classification module.

Information on the highest level of education completed is taken from the basic figures in educationalstatistics and more detailed information on education can be found in the ERE basic data. It can besupplied via special data runs.

This information is grouped into various major categories:

No occupational training covers general basic education and basic vocational education such as theEFG [basic vocational education] basic year, courses leading to commercial examinations and basiccourses in agricultural colleges and colleges for merchant seamen.

If there is no information on education, the persons concerned are allocated to this category.

Vocational training covers completed EFG education, apprenticeship training and basic educationleading to examinations in, for example, commercial colleges, technical colleges, agriculturalcolleges, domestic science colleges.

Short-term further education covers, inter alia, teachers in kindergartens/youth workers, child welfareworkers, basic training in languages for business, further education leading to examinations intechnical colleges etc., training in hospital laboratory work etc.

Medium-length further education covers, inter alia, training for primary school teachers, domesticscience teachers, journalists, librarians, welfare officers, the HA, HD, ED, and EAcommercial/language examinations, technical engineers, Danmarks Ingeniørakademi, midwives,physio/occupational therapists and nursing training.

Finally, long-term further education covers separately all university education, bachelor degrees fromschools of business education, Landbohøjskolen [Danish Veterinary and Agricultural College], dentalcolleges, Danmarks Tekniske Højskole, colleges of architecture, colleges of music, officer schools etc.

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Information on ownership gives the legal ownership of the firm to which the workplace belongs.

Since 1994, when a new classification was introduced, it has been possible to draw a dividing linebetween the sectors Corporations and Households plus NPISHs on the one hand and the generalgovernment sector on the other, in accordance with the international agreements laid down in theSNA (System of National Accounts).

General government, which consists of central, county and municipal authorities and social funds, isdefined as those institutions which produce public services. Public services are understood to bethose which are not sold on the open market but are made available to the general public either free ofcharge or against payment which does not depend on costs.

Publicly owned corporations and public quasi-corporations producing and selling goods and servicesat market prices are not included in the general government sector . If they are grouped together withgeneral government, the result is the public sector , meaning the total area over which governmenthas active control and influence.

The delimitations are based on a classification of workplace units in Danmarks Statistik's businessregister. This means that the breakdown into sub-sectors within general government is not exactly thesame as the delimitation used for statistics on public finance, which is based on a classification ofexpenditure items in government accounts.

Branch allocation is decided on the basis of the branch code in the business register which applies tothe specific workplace at which the employee or the self-employed person is employed. This appliesto both private and public workplaces. In the industry grouping annex, the breakdown by branch isdefined by reference to the six-digit branch number in Danmarks Statistik's Dansk Branchekode 1993(DB93).

The activities of shipping companies connected with long voyages are allocated in the geographicalbreakdown to the "abroad" category.

The age of the persons in employment is calculated as at 30 November 1995. The basic data includedetailed information on age which can be supplied by special data runs.

There are no periodisation problems with use of the ERE. Incomes are reported on a calendar yearbasis, since this is the basis with which the income tax system works.

4.7.2 Methods of calculation

Since the ERE statistics cover all producer units in the economy, the statistics do not have to begrossed up for national accounts purposes. However, they do not cover all components of thecompensation of employees as defined in the ESA, and various conceptual corrections therefore haveto be made. Firstly, imputed employer contributions to social security schemes are not included, andtherefore have to be added in. Secondly, not all types of income in kind have to be reported on theinformation forms. Consequently, the information on the forms is in this case replaced by thenational accounts value of fringe benefits etc. Thirdly, employer premiums for industrial accidentinsurance are not included in the income in the form of wages and salaries which is reported to the taxauthorities, but have to be calculated and added in from other sources. Finally, for obvious reasons,the information forms do not include wages and salaries from hidden activity, which therefore have tobe calculated separately and added in.

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For government non-market activity, the ERE-based calculation is replaced by the compensation ofemployees as calculated from government accounts, as part of the calculation of the output value ofgeneral government. This is to ensure that non-market activity remains consistent within the system.The same applies to industries where public corporations traditionally predominate and to agriculture,construction and a few other industries.

For the calculation of the compensation of employees, the source is the ERE statistics and not taxstatistics based on income tax returns (self-assessment), simply because, although both are fiscalsources connected with the income tax system, the ERE statistics based on the information forms arevery much more detailed than the published tax statistics. Although it is in principle conceivable thathouseholds would report income from hidden activity which, in contravention of the law, is notreported by employers, this is considered an unrealistic possibility. The ERE statistics must thereforebe considered to be much the best source for the calculation of the compensation of employees fromthe point of view of employees.

Total annual wages and salaries are defined at workplace (local kind-of-activity unit) level as the sumof employees’ A-income, from which labour market contributions have to be paid, and any overallcontributions to capital pension schemes administered by employers.

A-income comes from heading 13 of the salary information form. This field covers:

- wages and salaries, fees and the like. It includes: holiday bonuses, wages or salaries paid duringsickness or maternity leave, grants of any kind on which A-tax is payable, fees paid to members ofboards, committees, etc. and payments which are equivalent to pensions to former employees. (A-taxis PAYE (pay-as-you-earn) tax, i.e. a tax which the employer is obliged to withhold).

All the amounts under this heading are gross, i.e. they include the labour market contributiondeducted at source. Contributions to social security schemes (ATP, the labour market supplementarypension scheme), long-service gratuities and severance pay plus contributions to pension schemes arenot included. With one exception, these are recorded in other fields on the information form. Theexception is total contributions to capital pension schemes administered by employers, which aredifferent from other pension contributions in that they are not normally a feature of a contractualrelationship and no information is given on the form. It is instead obtained separately fromTold&Skat’s Central Pensions System, which is based on mandatory returns from financialinstitutions. As already stated, contributions to employer-administered capital pension schemes areadded to the values in field 13 when ERE total wages and salaries are calculated, whereascontributions to other pension schemes and to social security schemes (ATP) are not included in totalwages and salaries as reported in the ERE statistics.

The ERE statistics do not include income in field 36 “B-income, from which labour marketcontributions have to be paid” in their calculation of total wages and salaries. We cannot rule out thepossibility that certain income in the form of fees, which should be treated in the national accounts ascompensation of employees, is posted under this heading and is therefore not included in thecalculation of total wages and salaries in the register statistics. The national accounts implicitlycorrect for this in all cases which are GNI-relevant by basing the estimate of total wages and salariesdirectly on exhaustive accounting information (non-market output).

In the national accounts, the compensation of employees is divided up over 130 industries. Thesource for the vast majority of these industries is the ERE statistics, but for some of them, inparticular agriculture etc. and all government non-market activity, accounting information is used

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instead of the register information. For agriculture etc. and general government, the compensation ofemployees was already calculated in national accounts terms for the production of primary statistics.

The connection between total wages and salaries in the ERE statistics and the compensation ofemployees in the national accounts is illustrated in the table below. The item “employer contributionsto pension schemes etc.” includes both actual and imputed pension contributions. In Denmark, theimputed contributions refer only to civil service pensions.

Table 102 Connection between the ERE and the national accounts

Wage/salary component DKK millionCompensation of employees in the national accounts 534 094

Total wages and salaries in the ERE statistics 490 966of which employer-administered capital pensions 7 209

- Tax value of fringe benefits 2 862+ Long-service gratuities and severance pay 1 905+ Gifts in kind 12+ Wages from hidden activity (1 660 + 1 235) 2 895+ National accounts calculation of fringe benefits 6 788+ Employer contributions to the ATP 4 906+ Employer contributions to pension schemes etc. 26 284+ Industrial accident insurance 1 631= Corrected total wages and salaries for ERE statistics 532 525

Percentage discrepancy 0.29%

The national accounts figures for the compensation of employees are higher than the ERE figuresafter the latter have been corrected for conceptual differences because the ERE figures for a few - butimportant - industries are replaced by accounting information. The main such case is generalgovernment, which accounts for almost one-third of total wages and salaries in the economy. Itappears likely that the higher values in the general government accounts than in the conceptuallycorrected ERE statistics are due primarily to the treatment of certain fees etc. in the ERE statistics.Presumably, in the case general government entities, these fees are not in all cases included on theinformation forms under point 13 because legally speaking there is not an employment relationship.Instead, they come under taxable B-income. Broadly speaking, this problem is assumed to apply onlyto general government, where the remuneration for certain assignments such as lecturing, involvingonly few hours' work, consists of non-invoiced fees which are considered to be wages/salaries.

When equivalent services are supplied to market producers, there will in most cases be an invoicedsale of services, and so the same problem does not arise.

For GNI purposes, the crucial point is that the general government accounts should include all thecompensation of employees. In the national accounts, it is the public accounts values for thecompensation of employees, which are higher than the ERE values, which are included in thecalculation of output and value added for general government.

The initial income-based GDP estimate for 1995 is as follows, where MTM is the target total modulederived from the intermediate system based on business accounts, as illustrated previously in Tables 4and 7:

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Table 103 Initial estimates of income-based GDP

DKK millionInitial estimate of gross value added from the MTM 868 298

- Compensation of employees according to the MTM 527 678- Wages in the hidden economy other than for private

households with paid employees1 660

- Long-service gratuities and severance pay 1 905- Other taxes less subsidies on production= Initial estimates for gross operating surplus from the

MTM337 816

+ Compensation of employees calculated from theemployees' point of view

534 094

+ Taxes on production and imports 173 270- Subsidies 35 618= Initial estimates of income-based GDP 1 009 562

The initial estimate of GDP via the income approach is corrected for “Wages in the hidden economyother than for private households with paid employees” and “Long-service gratuities and severancepay” because these amounts are not coded as the compensation of employees in business accounts orin the target total module MTM. In the MTM, wages in the hidden economy are implicitly coded asgross operating surplus, with the wages share of hidden activity calculated afterwards in connectionwith the calculations of employment based on the ERE statistics. The exception is industry 950000,Private households with paid employees, where there is a national accounts calculation and where theoutput value in the MTM is, of course, coded as compensation of employees. Long-service gratuitieswill normally be counted by the businesses concerned as wages/salaries whilst severance pay isassumed to count as extraordinary expenditure. Since by far the largest share of the total amount forlong-service gratuities and severance pay as posted in the salary information register must be assumedto relate to severance pay connected with redundancies, it was decided to make a correction equal tothe total amount for long-service gratuities and severance pay the value of which comes from taxfigures.

The income-based GDP calculation of the compensation of employees must be considered to be asindependent of the other two methods of estimation as it is possible to make it. When compared withthe output-based estimate, it is an extremely robust check, since total wages and salaries in theintermediate system and the MTM which are the wage/salary counterpart to output-based GDP arecalculated from processed and grossed-up business accounts, whereas the income-based estimate iscalculated from a total census of the individual employees’ income in the form of wages and salariesas reported to the tax authorities. One could hardly wish for a statistically more robust comparison ofdata on wages and salaries.

It is obvious that the calculation of the other two components of income-based GDP, namely grossoperating surplus and mixed income and taxes on production and imports less subsidies, cannot, ofcourse, be independent of the output-based calculation, since the figures rely on the same businessaccounts/ government accounts.

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It is only with a more primitive statistical system, where there are no calculations of integratedaccounts by industry and sector based on exhaustive primary accounting statistics, that it mightconceivably be possible to produce independent output- and income-based estimates of that share ofGDP which corresponds to these primary income components. Obviously, if the output-basedestimate is constructed to any noticeable extent on a foundation other than business accounts, usingindirect methods of estimation and projections from a base year, for example, there might be groundsfor claiming that the output- or income-based calculations of GDP may be more or less independentas regards the gross operating surplus and mixed income share. In a more highly-developed statisticalsystem, this independence goes by the board.

With the compensation of employees accounting for some 53% of GDP in 1995, the output andincome approaches may be said to be independent only as regards this percentage at most. Since theconsistency required of the costs-based estimate of the value of government non-market output, non-market output in NPISHs and non-market output relating to employees in private households bydefinition rules out any independent estimates in this field, and non-market activity accounts for agood third of total wages and salaries, only around 35% of GDP can genuinely be said to be estimatedindependently.

The income- and expenditure-based calculations may be considered to be totally independent of oneanother apart from non-market activity and imputed transactions or transactions calculated byconvention (the rental value of owner-occupied housing, fringe benefits, etc.), where by definitionthey give the same result. Since these components together account for around 27% of GDP, the twocalculations (income and expenditure) of the other 73% or so can be said to be truly independent.

4.8 Other taxes on production

Table 104 summarises other taxes on production in the national accounts for 1995.

Table 104 Other taxes on production, 1995Type of tax DKK million

Employer contributions to Arbejdsgivernes Elevrefusion(AER)

2 262

Road fund licence on vehicles used in production 840Property taxes 10 325Payroll taxes 2 502Taxes linked with checking, supervision, licences, etc. 86

Other taxes on production, total 16 015

It shows that there are only a few types of tax which are classified as other taxes on production. TheAER contribution, which finances apprenticeships and traineeships, does not give the individualemployer or employee any rights and is therefore a tax and not, for example, a contribution to socialsecurity schemes. That share of total vehicle registration taxes which relates to vehicles used inproduction is calculated from a breakdown by owner of the total number of vehicles registered. In thenational accounts, road fund licences on consumers' vehicles are "direct taxes", i.e. taxes on incomeand wealth etc. Obviously, property taxes are not linked to products. Payroll taxes are, as their nameindicates, a tax on the wages and salaries paid by financial institutions, to offset the fact that mostfinancial services are exempt from VAT. It can be seen that only taxes for checking etc. amounting to

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DKK 86 million are counted as taxes under paragraph 4.23 e) in the ESA 95. All other payments byproducers in connection with government checks and licences are considered to be purchases ofservices.

All the above taxes are clearly other taxes on production. There is no borderline case of anyimportance in quantity terms. All the taxes are purely national and not EU schemes. The total taxrevenue is assigned to the domestic general government sector.

Other taxes on production are divided up over the national accounts' 130 industries as follows:

Most of the other taxes on production consist of property taxes (approximately 65%). On the basis ofthe property type "dwellings and agricultural property", a good 60% of property taxes can be dividedbetween the national accounts industries "agriculture" and "dwellings". The remaining property taxes,which come from taxation on non-residential property, are divided up using a specific branch key.

Payroll taxes are paid, as stated above, by various enterprises which are not liable for VAT. ThePayroll Tax Act (Consolidated Act No 666, 1994) and the VAT Act (Consolidated Act No 375, 1994)govern which national accounts branches pay the tax. The breakdown of the tax over the branchespaying it is based on the total wage/salary bill.

The AER contribution is paid for each full-time employee in the enterprise and for this reason thenational accounts industry breakdown is based on the national accounts distribution of the number ofemployees.

The motor vehicle registration tax on vehicles used in production is divided up in a specialcalculation system. In a sub-system known as the "vehicle distribution system", the road fund licenceamounts are divided up by type of vehicle and national accounts industry using the register of motorvehicles as the source.

Taxes on checking and supervision comprise the:

tax on payment cards;tax to Arbejdsmiljøfonden [Work Environment Fund].

These very small amounts are divided up using specific branch keys.

Taxes connected with licences include:

the tax on pharmacies;taxes under the cultural fund, and thetax for the operation of the school ship "Danmark".

These very small amounts are broken down on the basis of specific branch keys.

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4.9 Other subsidies on production

Subsidies on production which are not linked to products come under both EU and national schemes.Table 105 summarises these other subsidies:

Table 105 Other subsidies on production, 1995

Type of subsidy DKK million

Total EU schemes 1 650Interest rate subsidies 293Aid per hectare and set-aside 730Other EU schemes 627

Danish schemes, total 15 128Subsidies to pharmacies 40Interest subsidies and contributions, housing 4 234Municipal subsidies to private sports halls 359Municipal subsidies to theatres, orchestras, cinemas, etc. 381Central government subsidies to regional orchestras 81Danmarks Erhvervsfond [Trade and Industry Fund], export-promotingarrangements

112

Danmarks Erhvervsfond, losses on guarantee and surety schemes 305Subsidies for product development 264Start-up grants replacing offers of employment 822Retraining grants 1Arbejdsgivernes Elevrefusion (AER) 2 175Compensation for employers' contributions to the ATP 1 486AMBI reduction 588Municipal grants for the employment of the unemployed 349Expenditure under the County Land Tax Act 154Interest and interest rescheduling subsidies to agriculture 8Central government subsidies to private railways 84Municipal subsidies for the running of buses and other transport activities 1 528Home helps 259Other subsidies on production to private enterprises 1 896

Other subsidies on production, total 16 777

The only borderline case is the subsidy referred to as "AMBI reduction". This covers repayments toproducers of a tax known as the AMBI, which was unlawfully collected. The amounts paid back arenot to be offset against taxes in the years in which they were originally collected but are considered tobe subsidies in the year in which the repayment is made. The economic reasoning behind this is thatthe behaviour of the economic decision-makers was not affected by the repayment in the year inwhich the tax was unlawfully collected, since it was not until later, under a court ruling, that the taxwas declared unlawful.

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The subsidy known as "Arbejdsgivernes Elevrefusion" is the counterpart to the other tax onproduction known as the AER, which was shown in Table 104. All employers contribute to a poolwhich finances apprenticeship and trainee places in connection with vocational training. Thoseemployers who employ apprentices and trainees receive a subsidy from the pool.

The allocation by industry of other taxes on production is a two-stage process. It begins with the mostdetailed information on general government from Databasen for Integrerede Offentlige Regnskaber(DIOR) and first of all assigns a wide range of specific subsidies directly to industries. Around 60%of all other subsidies on production are allocated to an industry in this way.

Next, the remaining subsidies are classified into eight different categories, each of them broken downusing a specific industry key.

4.10 Gross operating surplus and mixed income

4.10.1 Statistical sources

Since the income component "gross operating surplus and mixed income" is estimated in a fully-fledged calculation system as an integrated estimate of output and operating surplus based on businessaccounts, the sources and methods in this case will, of course, be exactly the same as for the output-based estimate. For further details, therefore, reference should be made to Chapter 3, in particularsections 3.1.2, 3.2 and 3.3.

For this component, an alternative source might be the income tax returns for corporations and theself-employed used for corporation tax/personal income tax. Since the accounting information in theincome tax returns is much briefer and much further from national accounts concepts than theaccounts underlying the intermediate system and the target total module, these are obviously a muchless satisfactory statistical source than the accounting statistics described in Sections 3.1.2, 3.2 and3.3.

4.10.2 Methods of calculation

For the GDP component "gross operating surplus and mixed income", the statistical sources are thesame as for the production approach and the initial estimate for this component is derived from thefunctional target total module as follows:

output (1015) – intermediate consumption (2010) – other taxes on production (3110) + othersubsidies on production (3210) – compensation of employees (4010).

The periodisation of the accounting statistics used for the functional target total module was describedin Section 3.1.2.3.6

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The final balanced value of gross operating surplus and mixed income is obtained when the initialestimates for output and intermediate consumption are replaced by the corresponding figures in thebalanced supply and use tables, and corresponding initial estimates for other taxes and subsidies onproduction plus the compensation of employees are replaced by the final balanced values in thenational accounts industry tables.

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4.11 Mixed income

The initial estimate of gross operating surplus and mixed income prior to balancing is calculated as anaggregate in the target total module (MTM) on the basis of information in the intermediate system, asdescribed in Section 4.10.2. As a result of the consequent double coding of the accountinginformation by both industry and institutional sector, that share of the "gross surplus" which relates toproducer units belonging to institutional units in the household sector (S.14) can be obtained directlyfrom the target total module. The "gross surplus" in the household sector is referred to in the ESA 95as "mixed income", since it is a mixture of return on capital and a reward for labour in the form of thelabour input of the self-employed in their own enterprises.

4.12 Consumption of fixed capital

In general, the estimate of the consumption of fixed capital is not relevant to GDP or GNI, since theseconcepts are, of course, gross, i.e. production or income aggregates before deduction of the fixedcapital consumed.

There is, however, one very important exception to this main rule, namely non-market activity, whereby convention output is calculated from the costs point of view, and where the consumption of fixedcapital is one of the components of costs. Non-market activity occurs in Sector S.13, generalgovernment and Sector S.15, non-profit institutions serving households. The latter is private non-market output. The vast majority of non-market output comes from government.

As regards the minor share of non-market output in S.15, the consumption of fixed capital is, as statedin Section 3.1.2.4.3, calculated at 49.4% of total wages and salaries. This percentage is based on anestimate of capital stock in the sector carried out in 1995, where the latest final figures referred to1992. This capital stock estimate consisted of a mixture of direct estimates of stocks and PIM(perpetual inventory method) calculations. Since the link between the consumption of fixed capitaland total wages and salaries may be assumed to be relatively stable in this field, it was decided toproject the 1992 total wages and salaries benchmark in the current calculations of this relativelymodest amount. A new benchmark is now available for years up to 2000 and the percentage figure inthe calculation will be revised in 2002, in the light of this new information.

The description below therefore refers solely to the consumption of fixed capital in S.13, generalgovernment. For 1995, it was obtained by projecting from an extremely detailed and reliablecalculation of the level for 1992. Exceptionally, 1995 was not calculated directly as a level, owing tothe necessary time lag between publication in 1997 of the new ESA 95 national accounts for yearsfrom 1988 onwards and the point (year 2000) at which it became possible to calculate estimates of thestock of fixed capital which were consistent with those figures. This process was time-consumingbecause all the capital formation series in the new national accounts first had to be extrapolated backto 1966 and then at a more summary level even further back, so that they could form the basis forcalculations of the stock of fixed capital goods using long capital formation series and the PIM.These new capital stock calculations were first published on 9 February 2001. For 1992, the figuresfor fixed capital consumption match the previous figures almost exactly at macro level, whichindicates that the 1992 levels used for the calculation of S.13 for 1995 are essentially correct. Infuture (as from the final figures for 1999), the consumption of fixed capital in S.13 will be calculateddirectly as a level each year in connection with the very detailed estimates of capital stock in thegeneral government sector.

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General government capital stock consists of buildings, structures such as roads, bridges etc.,machinery, transport equipment and intangible fixed assets, which for this sector is in practicesoftware. Buildings constitute by far the largest share of government capital stock and capitalformation. For 1992, the consumption of fixed capital was obtained - as required by the ESA 95 - viaan estimate of the gross stock of the individual types of capital and use of the straight linedepreciation method. Whereas the ESA 95 is to a certain extent flexible, the ESA 79 demanded thelinear method. One important strong point in Denmark's estimate is that for buildings and transportequipment the calculations could be based on a direct estimate of stocks which in turn was based onregister information for a benchmark year - in this case 1988 - for buildings, and every year fortransport equipment. In contrast to PIM calculations, there is therefore absolutely no uncertainty as tohow many square metres of buildings there actually were in S.13 in 1988. The only uncertaintyconcerns their lifetimes. For buildings, the PIM was used solely to project the 1988 benchmark to1992. The following table shows the methods used for each type of capital formation:

Table 106 Methods of estimating capital stock in S.13

Type Method Survival Assumed average Number ofcurve lifetime products

Approx.Machinery PIM 1947 Winfrey S3 Varying350

Transport equip. Direct estimate Not relevant Varying – 13 years 6of stocks for cars

Buildings Direct estimate Constructed 1960onwards,

2

of stocks for 65 years1998 projected Constructed prior toto 1992 using 1960, graduallythe PIM increasing lifetimes

back in time

Roads and PIM Winfrey L3 40 years 1bridges 1850

Software PIM 3 years 1

The level thus obtained for general government fixed capital consumption in 1992 is projected to1995 at aggregate level, the only distinction being between software on the one hand and all othercapital stock on the other. The projection to 1995 for all capital stock other than software is obtainedby inflating the previous year's consumption of fixed capital to the current year's price level using theimplicit deflator for all gross capital formation and adding 1/25 of the current year's gross fixedcapital formation, corresponding to an assumed average lifetime of 25 years. For software, the 1995calculations reckoned on a fixed lifetime of three years. In the new capital stock calculations whichwill be included in the national accounts as from 1999, a Winfrey S3 survival curve is used, andsoftware is divided into two types, namely purchased and own-produced. For purchased software, thelifetime will now be taken to be four years and for own-produced six years.

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The above procedure may be considered to be rather a summary one, but one must bear in mind that ithas been used for a very short period of only six years (1993-1998) on the basis of what may beconsidered in international terms to be an extremely solid benchmark for 1992. There is no doubtthat, compared with other countries' calculations, the 1995 one is very reliable. As already stated, theprojection will cease as from the final national accounts for 1999, which will be based on a directestimate of levels every year.

The following table shows the consumption of fixed capital in general government, 1992-1999,calculated according to the ESA 95. Differences in definition from one system to the other are alsoshown.

Table 107 Consumption of fixed capital in S.13, ESA 95 and ESA 79

DKK million 1992 1993 1994 1995 1996 1997 1998 1999

Consumption offixed capital,ESA 95 21 887 22 775 24 514 24 706 25 280 25 796 25 939 26 159

- Roads, bridges,etc.

6 567 6 963 7 500 7 447 7 546 6 897 6 821 6 771

- Leasing 104 65 106 101 97 103 106 110- Software 632 911 1 100 1 303 1 574 1 687 1 759 1 782- Military capital

goods 520 548 571 588 611 629 646 664+ Threshold

value,consumables

1 066 1 145 1 230 1 321 1 420 1 510 1 581 1 652

Consumption offixed capital,ESA 79 15 130 15 433 16 467 16 588 16 872 17 990 18 188 18 484

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5. GDP by the expenditure approach

5.0 Introduction

For 1995, the calculation of expenditure-based GDP can be summarised as in the table below:

Table 108 GDP, expenditure approach, 1995

Value, % ofDKK million GDP

Total final consumption expenditure 769 850 76Household final consumption expenditure 501 364 50NPISH final consumption expenditure 8 187 1General government final consumptionexpenditure

260 299 26

Gross capital formation 198 596 20Gross fixed capital formation 187 858 19Changes in inventories 9 298 1Acquisitions less disposals of valuables 1 440 1

Exports of goods and services 357 454 35Imports of goods and services 316 144 31

GDP 1 009 756

The table shows that private final consumption expenditure in Denmark made up roughly half of GDPin 1995, general government final consumption expenditure a good quarter, gross capital formationaround one-fifth and net exports the final 4%. Exports of goods and services accounted for 35% andimports 31%.

5.1 Reference framework - business register, population register

The reference framework for that share of the expenditure-based GDP estimate where the statisticalunit is enterprises is the business register, which was discussed in Section 1.3.1. For that share of thecalculations where the statistical unit is households, the relevant reference framework is the totalpopulation divided by household. This framework is found in the Forbrugsundersøgelse,[abbreviated to FU, the household budget survey], which is an important source for the calculation ofprivate consumption. The Central Population Register (CPR) was discussed in Section .4.1.1 Here,therefore, we need only to discuss households as a reference framework.

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The CPR lists all persons resident in Denmark. The question is how the population of householdsresident on the economic territory can be derived from a register whose statistical unit is individuals.The basis is the address information in the CPR. A household in the population statistics is allpersons at the same address (in the same dwelling) regardless of family ties. All persons in the CPRbelong to a household, those who have no address being allocated by convention to an administrativeaddress. 5.119 million out of a total population of 5.251 million at the beginning of 1995 lived inhouseholds complying with the international guidelines for the delimitation of a household as aneconomic entity, i.e. a group of persons living together and pooling a large share of their income andexpenditure. The remaining persons lived in various kinds of collective household (those living inresidential homes, long-term patients in hospitals, prisoners, etc.). When figures from the FU areused, they have to be corrected for persons in collective households, since the population ofhouseholds included in the survey covers only the economic entities mentioned.

The CPR does not, of course, include persons who have illegally taken up residence in Denmark andwere not previously registered whilst legally in the country. Lenient treatment where immigration isconcerned means that few people are refused a residence permit and high social benefits are paid tolegal immigrants, so it may be assumed that the population of illegal foreigners without a CPRnumber is for the time being so vanishingly low that it is not a problem from the point of view ofstatistics.

5.2 Principles underlying the estimate

5.2.1 Valuation

In most cases where the final demand components are estimated directly from the point of view of thepurchaser, the observed value level is purchasers' prices including non-refundable VAT, as requiredby the ESA 95. In these cases, there is no need to process primary data to obtain value levels.

In those cases where the expenditure components are calculated from the supply side, using thecommodity flow method, domestic supply is initially broken down at basic price level. Wholesale andretail margins are then added in, along with taxes on products other than VAT less subsidies, and non-refundable VAT, and hence the expenditure (use) component is estimated at purchasers' pricesincluding non-refundable VAT.

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5.2.2 Most important sources

5.2.2.1Statistical sources for the individual final expenditure components

The most important sources for the estimate of the components of expenditure-based GDP are asfollows:

Household final consumption expenditure:

Retail trade statistics (level of retailable consumption)The FU [household budget survey] (structure of retailable consumption, services)VAT statisticsSurveys of housing rentalsHousing surveys (housing stock, stratified)Energy statistics (electricity, gas, district heating)Statistics on financial institutions (financial services)Statistics on public finances (user payments to public institutions)Tax statistics ( quantities of goods on which excise duties are levied)Output-based estimate (hotels and restaurants)Motor vehicle statistics (households’ acquisitions of new cars)Balance of payments statistics (tourist revenue and expenditure)

Final consumption expenditure in NPISHs:

ERE [establishment-related employment statistics] estimates of total wages and salariesAccounts of the largest trade union in the country

Gross fixed capital formation:

Agricultural statisticsPublic finance statisticsAccounting statistics for industries where public corporations predominateRegister of buildings and dwellings (BBR)Index of construction costsIndustrial commodity statisticsProduct statistics for the IT industriesExternal trade statisticsQuestionnaire-based accounting statisticsSpecific industry statisticsMedia statisticsRegister of motor vehiclesRegister of vesselsRegister of aircraft

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Acquisitions less disposals of valuables:

Industrial commodity statisticsExternal trade statisticsHousehold budget survey (FU)

Changes in inventories:

Questionnaire-based accounting statisticsTax accounting statisticsAccounting statistics for industries where public corporations predominateSpecific industry statistics, including agricultural statisticsEnergy statisticsAgricultural statistics

Imports and exports of goods and services:

External trade statistics (Intrastat and Extrastat)Balance of payments statisticsSettlements statistics from the NationalbankVAT statisticsAccounting statistics for sea water transport.

5.2.2.2Reasons for the choice of source: competing information

5.2.2.2.1Information on the same variable from different points of view

In only three areas is there any real competition as regards information on the same variables for theestimate of expenditure-based GDP. One of these areas is household final consumption, where formany items there is information available in both the FU and other sources. The second area isimports and exports, where information on external trade transactions is available from DanmarksStatistik’s external trade statistics and information on payments for imports and exports of goods andservices can be found in the settlements statistics of Danmarks Nationalbank. Below, we discuss thereasons for Danmarks Statistik’s choice of source in these two fields. The third area is the generalcomparison of direct information from the expenditure side and information based on the domesticsupply of goods and services using the commodity flow method.

5.2.2.2.2Choice between the household budget survey (FU) and information from other sources

It is widely known that information in consumer surveys is surrounded by a good deal of uncertaintyas regards items based on households’ own accounting, i.e. in general small items of expenditure, asopposed to those items where an interviewer notes expenditure as evidenced by supportingdocuments, which are typically the larger items. When the survey is processed, everything possible isdone to eliminate any bias resulting from differential non-response. However, it must be admittedthat there is a good deal of uncertainty surrounding the figures which households themselves haverecorded.

Against this background, the main rule in the Danish national accounts has been that whereverpossible the FU has been replaced by other information to determine levels, but it is widely used todetermine the structure of expenditure – for the breakdown of food consumption into individual

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foodstuffs, for example. In various important cases, the FU is the only available source, but in thevast majority of such cases the items concerned are consumption items where, firstly, an interviewerhas recorded expenditure from the household’s supporting documents and, secondly, the expenditureconcerned is common to virtually all households. These two circumstances are characteristic of thoseitems in the survey which can be determined with a good deal of certainty. The fact that aninterviewer has seen the supporting documents – telephone bills, for example – rules out the risk ofitems being forgotten, and the fact that this is general, recurrent expenditure for almost all householdsmeans that the sampling uncertainty for the items in question is relatively low. In these cases, FUfigures are quite justifiably used to determine levels in the national accounts.

For retailable consumption, i.e. that share of private final consumption which passes through retailtrade, the FU figures are replaced by retail sales figures which must be considered a much betterstatistical source for determining levels of private consumption. But this source is not sufficientlydetailed to enable it to be used as the basis for the breakdown of expenditure into the nationalaccounts consumption groups. The survey figures are therefore used to divide the aggregate groupsfrom retail statistics into the detailed consumption groups. For this breakdown, the FU figures for theconsumption of alcohol and tobacco etc. are replaced by figures based on tax/duty-adjusted quantities.For these expenditure items, the FU figures are known to be very much underestimated. In this way,total retailable consumption is calibrated to retail sales.

For energy products and acquisitions of motor vehicles, there is special information available basedon physical data. In these cases, the FU figures are replaced either when the initial estimates ofprivate consumption of the expenditure components in question are made , or later during thebalancing process. The FU figures for the consumption of hotel and restaurant services are alsoknown to be seriously underestimated. For these groups, the initial household consumption estimateis therefore based on supply, i.e. sales in hotels and restaurants, the starting point being that share ofthe supply which was allocated to household consumption in the most recent final national accounts.A detailed description of sources and methods underlying the initial estimates for the individualconsumption groups can be found in Section 5.7.2 and Section 5.7.3..

5.2.2.2.3Choice between external trade statistics and settlements statistics from the Nationalbank

It is only for export and import totals that there is a choice between these two sources. Settlementsstatistics contain no information on codes for the goods to which the payments refer, and thereforecannot compete with the detailed external trade statistics.

Payments for goods during a given period cannot, of course, be taken as an expression of exports andimports of goods during that same period compiled in line with the rules on periodisation in the ESA95, i.e. on a transactions basis or complying with the change of ownership principle. Trade creditsplay an important part in external trade, and the transaction date and payment date will onlyexceptionally coincide. Settlements statistics do, however, include information on both payment andtransaction dates, so it is possible to estimate payments for exports and imports on a transactionsbasis. Until 1992, there was generally a close agreement between the periodised settlementsstatistics and external trade statistics after the former had been corrected for services connected withgoods, i.e. a correction to c.i.f. values for imports and fob values for exports. Since 1992, thecorrelation has been less good, and in some periods there have been sizeable differences. Since1992, both external trade statistics and settlements statistics have been radically reorganised –external trade in connection with the change to Intrastat as from 1 January 1993.

Because the two sets of statistics did not tally, in 1999-2000 Danmarks Statistik and the Nationalbankdid a great deal of work together to sort out the problems. The most important new initiative to

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emerge is a comparison at individual respondent level of returns to Intrastat, the quarterly VATreturns relating to EU trade and returns to the Nationalbank settlements statistics. The outcome of allthis investigative work was published in the report "Forbedring af udenrigshandels- ogbetalingsstatistikken. Afgivet til Økonomiministeren den 30. juni 2000" [“Improvement of externaltrade and settlements statistics. Submitted to the Minister for Economic Affairs on 30 June 2000”.]One of the conclusions is that there is no reason to doubt the accuracy of Danmarks Statistik’sexternal trade statistics as regards the final estimates of imports and exports used for the definitivenational accounts. Consequently, for the national accounts estimate it was decided to continue to basethe national accounts figures for imports and exports of goods on external trade statistics.

5.2.2.2.4Estimates of acquisitions less disposals versus the commodity flow method

All components of expenditure-based GDP can in principle be estimated in two ways, directly usinginformation on the expenditure (uses) side (purchaser's side) to calculate acquisitions less disposalsand indirectly on the basis of supplies of products to the domestic market, using estimated shares ofsupplies to the individual final demand components to calculate final uses from the resources side.One of the ssrongest cross-checks for the compilation of national accounts consists in comparinginformation from purchasers on their acquisitions less disposals of the individual products or groupsof products with information on the sellers' side on supplies to the domestic market. This last figurewill typically be calculated from information on sales from domestic producer units in conjunctionwith export and import information.

Since the Danish national accounts are adjusted in a detailed product balance system, there is asystematic confrontation in connection with the balancing. In the vast majority of cases, the initialestimates for the final demand components are compiled as direct estimates from the expenditureside.

However, there are as yet no independent expenditure-based estimates of the economy's total capitalformation in machinery and equipment. For this final demand component, the initial estimate isproduced as an indirect calculation using the commodity flow method. Consequently, there is nocomparison of supply and use information on capital formation in machinery when the balancingtakes place. The reasons why the indirect method of estimating capital formation in machinery isassumed to be better than the direct method and should in all circumstances be the logical preferencewere discussed in Section 5.10.1.

5.2.2.2.5Independence of the other methods of calculating GDP

Other than for those areas of the economy (general government, owner-occupied dwellings etc.),where the output- and expenditure-based calculations cannot by definition be independent, inDenmark's case the two GDP measures are largely independent of one another prior to balancing.The most important exception is the estimate of the household consumption of hotel and restaurantservices, which, as already mentioned, is calculated from the supply side. The fact that capitalformation in machinery is calculated by the commodityflow method only implies dependence onoutput-based GDPto a minor extent , as is shown by the fact that around 40% of capital formation inmachinery and equipment is made up of imports (direct requirements). Imports account for over50% of goods flows at basic price level.

Again ignoring those areas of the economy where the calculations from the expenditure side and fromthe income side by definition give the same result, these two estimates must be considered to becompletely independent with the exception of the estimate of gross operating surplus and mixedincome for hotel and restaurant services.

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5.3 Transition from business accounts and administrative concepts to theESA 95 national accounts concepts

In household and business accounts, purchases of goods and services are recorded in terms ofpurchasers' prices including non-refundable VAT. Refundable VAT is not included in the acquisitionprices on which information is available, and no corrections therefore have to be made for treatmentof VAT which is different from the ESA 95 net system.

Various acquisitions which the national accounts treat as gross fixed capital formation are included inbusiness accounts as current operating expenditure in the form of intermediation consumption orwages and salaries which are not capitalised. Examples would be consumables and purchased as wellas own-produced software. The corrections which have to be made to bring business accounts intoline with national accounts concepts were described in Section 3.3, as part of the description of theoutput-base estimate of GDP. The corrections on the expenditure side are a mirror image of thecorrections to output value (e.g. own-produced software) and intermediate consumption (consumablesand purchased software) in the output-based estimate. The logical corrections to the output,expenditure and income sides are made simultaneously for the intermediate system, as described inSection 3.3.

5.4 Direct versus indirect methods of estimation

By far the largest share of expenditure-based GDP is calculated using a direct estimate of purchasers'acquisitions less disposals. The most important exceptions are capital formation in machinery andhousehold consumption of hotel and restaurant services, along with user payments to governmentinstitutions, which are calculated indirectly from the supply side.

5.5 Direct estimates of levels as opposed to projections

By far the largest share of expenditure-based GDP is calculated directly in terms of levels. The mostimportant exception is the consumption of dwelling services (actual and imputed rentals) where levelsare calculated every fourth year, in line with the periodicity in the virtually exhaustive surveys ofhousehold rents, and a projection using price and quantity indicators in the period between twobenchmarks. Another important exception relates to allowances for the hidden economy, which arebased on a calculation of levels for years 1992-1994 and then generally projected using relevantindicators. The above two components accounted for around 9.8% of GDP in 1995.

5.6 Most important exhaustiveness initiatives

As regards the legitimate (as opposed to the black) economy excluding fringe benefits, the mostimportant steps taken are corrections and supplements to the sources underlying the calculations ofprivate consumption. Retail sales statistics do not cover all branches of retail trade. In the nationalaccounts calculations, these statistics are therefore supplemented by VAT statistics to ensure that thewhole of retail trade is covered. Retail trade statistics do not cover the sales of "new" enterprises,either, i.e. those set up after the sample was last renewed (it changes every two years). In the nationalaccounts calculations, a correction is made for the resulting undervaluation of retail sales by addingthe estimated sales of new retail enterprises, the estimated figures being based on statistics on newbusinesses, which include information on their sales.

Additions for fringe benefits and the black economy were discussed in Section 1.7.

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5.7 Household final consumption expenditure

5.7.1 Calculation of independent initial estimates, expenditure approach

If an initial expenditure-based estimate of GDP is to be produced which is as independent as possibleof the output- and income-based estimates, household final consumption expenditure has to becalculated directly on an expenditure basis, both because this demand component is the largest finaluse item and because the commodityflow method in the case of household consumption has limitedautonomy vis-à-vis the output approach ,since most products used for private consumption areproduced in Denmark and also have other uses.

In the Danish national accounts, initial estimates of household final consumption are calculated in aspecial system referred to as the "consumption system", as described below.

5.7.2 Statistical sources

The consumption system uses various sources to provide information on household final consumptionexpenditure. The two most important are:

• the retail sales index [Danish abbreviation DOI], which contains information on levels of sales toprivate individuals, and

• the household budget survey [Danish abbreviation FU].

Although the first of these sources is officially referred to as the "retail sales index" (DOI), it is in facta monthly estimate of the level of retail sales. To calculate the index, we first of all gross up sales inthe sample to the total population of retail trade enterprises.

The DOI breaks down retail sales into three categories, namely

• sales to private individuals;• sales to (market producer) enterprises;• sales to (non-market) public institutions.

This breakdown is important, since only sales to private individuals are relevant to the estimate ofhousehold final consumption. If the only sales known were total sales in retail enterprises, thecalculation would be less reliable. The minor share of sales reported as being to private individualsbut which are actually to sole proprietorships and should therefore not be included are assumed forpractical purposes to offset the minor share of sales from manufacturing and wholesale enterprises toprivate individuals, which should be included in the estimate of household final consumption.

The main idea behind the calculation system is a breakdown of final consumption into groups bypurpose/product, each group being calculated on the basis of the most reliable of the availablesources, but in a way which seeks to make optimum use of all the available information. The basicbreakdown of final consumption is into retailable and non-retailable consumption. The former is thatshare of the final consumption of goods which involves retail trade. In this context, retail trade istaken to exclude motor vehicles etc. and energy goods, which are not covered by the DOI.

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Sales to private individuals as taken from the DOI statistics are normally considered the best source ofinformation on household final consumption expenditure. In particular, this source is not subject tothe same sampling uncertainty and problems with the treatment of tourist expenditure and otherpossible skewness as the FU. It should be stressed here that the DOI sample coverage is up to around75% of basic turnover in the population, so sampling uncertainty is extremely low. The problem is,however, that the breakdown of goods in statistics on retail sales is at present not very detailed. Asfrom January 1995, the DOI has consistently broken down sales into three main groups of goods:

1. food, beverages and tobacco and convenience goods (FD);2. clothing etc. (B);3. other consumer goods (A)

and, from the basic DOI information, this breakdown can be extrapolated back to January 1994. Nomore detailed breakdown of goods is planned.

For the national accounts, target totals have to be worked out at a much more detailed level. The nextstage is therefore to use the FU to split the main groups of goods into subgroups. There areexceptions here, however, in cases where the FU is known to paint a misleading picture ofconsumption. Here, the view is taken that the FU is essentially more reliable as a distribution keythan as an estimate of levels.

For non-retailable consumption, i.e. other goods and all services, the preferred source is in general theFU with a number of corrections. In cases where the FU is known to cause problems, supply statisticsare used, i.e. supplies of certain product balances and the commodity flow method or, alternatively,the balanced consumption group as in the provisional national accounts, which likewise means use ofthe commodity flow method.

Table 109 shows the sources for the calculation of the initial estimates for each of the 72 consumptiongroups in the national accounts' most detailed consumption grouping. "DOI" stands for retail salesstatistics, "FU" for the uncorrected household budget survey, "FU corr." for the household budgetsurvey with certain - in most cases conceptual - corrections, "FU + product" means the householdbudget survey plus a product balance, "supply" means supply-side estimates using the commodityflow method, "FNR" refers to the balanced values from the latest provisional national accounts, "BB"stands for balance of payments statistics, "FD" for food, beverages and tobacco and conveniencegoods in the retail sales index, "B" for clothing and footwear in the index and "A" for other groups ofgoods in the index.

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Table 109 Statistical sources for the national accounts estimates of household finalconsumption expenditure∗∗∗∗

COICOP- Source Retailable/ Group of ValueConsumption group non-retailable goods in the DKK million72-grouping consumption retail sales

index

1110 Bread and cereals DOI Retail FD 10 0401120 Meat DOI Retail FD 16 2991130 Fish DOI Retail FD 2 6861141 Eggs DOI Retail FD 9501142 Milk, cream, yoghurt etc. DOI Retail FD 4 9701143 Cheese DOI Retail FD 3 2501150 Butter, oils and fats DOI Retail FD 2 0351160 Fruit and vegetables except

potatoesDOI Retail FD 8 039

1171 Potatoes etc. DOI Retail FD 1 6791181 Sugar DOI Retail FD 4421182 Ice-cream, chocolate, etc. FNR Retail FD 8 8351190 Food products n.e.c. DOI Retail FD 2 5411210 Coffee, tea and cocoa DOI Retail FD 2 9931220 Mineral waters, soft drinks and juices FNR Retail FD 5 3842110 Wine and spirits FNR Retail FD 6 2782130 Beer FNR Retail FD 6 8832210 Tobacco FNR Retail FD 12 0233110 Garments and clothing materials etc. DOI Retail B 20 9833140 Laundry, dry cleaning etc. FU-corr. Non-retail 4333200 Footwear DOI Retail B 4 8774100 Actual rentals for housing Supply Non-retail 31 9344200 Imputed rentals for housing Supply Non-retail 60 6234300 Regular maintenance and repair of the

dwellingFU Non-retail 6 222

4410 Refuse collection etc. FU Non-retail 3 5504430 Water supply and sewerage services FU+prod

uctNon-retail 5 622

4510 Electricity FU Non-retail 11 6934520 Gas FU-corr. Non-retail 2 7514530 Liquid fuels FU-corr. Non-retail 5 0384540 Hot water, steam etc. FU-corr. Non-retail 10 2925100 Furniture, furnishings, carpets etc. DOI Retail A 10 7215200 Household textiles DOI Retail A 2 9795310 Major household appliances DOI Retail A 4 1215330 Repair of major household appliances FU Non-retail 4495400 Glass, tableware and household

utensilsDOI Retail A 3 112

5500 Tools and equipment for house andgarden

DOI Retail A 2 144

5610 Non-durable household goods DOI Retail FD 3 6935620 Domestic services and home care

servicesSupply Non-retail 2 024

∗ The English version of this classification comes from Danmarks Statistik - cf. Section 10.2, for example.

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COICOP- Source Retailable/ Group of ValueConsumption group non-retailable goods in the DKK million72-grouping consumption retail sales

index6111 Medical and pharmaceutical products DOI Retail A 3 8646112 Therapeutic appliances and equipment DOI Retail A 2 1406200 Out-patient services FU corr. Non-retail 5 0876300 Hospital services Supply Non-retail 9857100 Purchase of vehicles FU Non-retail 29 3337210 Maintenance and repairs of motor

vehiclesFU corr. Non-retail 12 715

7220 Fuels and lubricants FU corr. Non-retail 13 0497240 Other services in respect of personal

transport equipmentSupply Non-retail 4 104

7300 Transport services FU corr. Non-retail 8 5548100 Communications FU corr. Non-retail 8 5589110 Radio and television sets etc. DOI Retail A 4 5199120 Photographic equipment etc. DOI Retail A 7779130 Data processing equipment DOI Retail A 4 4549140 Recording media for pictures and

soundDOI Retail A 2 021

9150 Repair of a/v and data-processing equipment

FU Non-retail 465

9200 Other major durables for recreation andculture

DOI Retail A 2 388

9300 Other recreational items and equipment DOI Retail A 10 1499400 Recreational and cultural services FU-corr. Non-retail 15 3009510 Books, newspapers and periodicals DOI Retail A 7 6049530 Stationery and drawing materials etc. DOI Retail A 1 1649600 Package holidays FU Non-retail 4 3979700 Education Supply Non-retail 3 6569810 Catering Supply Non-retail 24 2479820 Accommodation services Supply Non-retail 2 8859911 Hairdressing salons etc. FU corr. Non-retail 3 9769912 Appliances, articles and products for

personal careDOI Retail FD 7 216

9921 Jewellery, clocks and watches DOI Retail A 1 2999922 Other personal effects DOI Retail A 2 0179931 Retirement homes, day-care centres

etc.Supply Non-retail 1 425

9932 Kindergartens, crèches etc. Supply Non-retail 5 5049940 Insurance Supply Non-retail 8 9969950 Financial services n.e.c. Supply Non-retail 7 6109960 Other services n.e.c. FU+prod

uctNon-retail 3 537

9980 Consumption of non-residents on theeconomic territory

BB Non-retail -20 888

9990 Consumption of residents in the ROW BB Non-retail 19 666

Total 501 364

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5.7.3 Methods of calculation

The calculation system described below works out initial estimates for household final consumptionexcluding fringe benefits (company cars, canteen subsidies, etc.) and excluding most transactions inthe black economy. The initial estimates for household final consumption included in the nationalaccounts before the balancing are obtained by adding fringe benefits and certain corrections for theblack economy, which are calculated in special systems, to these initial estimates.

The DOI value level is purchasers' prices including VAT, i.e. the value relevant to household finalconsumption. Consequently, no value correction is needed.

It is useful to break down the calculation process into a number of steps:

Step 1: Definition of the three main groups of goods on the basis of the national accountsconsumption groups

The following links were adopted between the national accounts consumption groups defined bypurpose - c.f. Section 10.2 - and the DOI main groups of goods:

Table 110 Breakdown of retailable consumption into main groups of goods

DOI main group of goods NR consumption groups coveredFood, beverages and tobacco,convenience goods

1110-2210; 5610; 9912

Clothing etc. 3110; 3200Other consumer goods 5100; 5200; 5310; 5400; 5500;

6111; 6112, 9110; 9120; 9130;9140; 9200; 9300; 9510; 9530;9921; 9922

Step 2: Adding to the DOI retail branches not covered (other than the motor vehicles group)and deducting goods used as inputs in construction

The DOI does not cover all retail trade branches other than the motor vehicles group and energy. As afirst step, the missing DK-NACE retail branches are identified and their VAT sales are input into thecalculation system's input data sheet. VAT sales multiplied by one plus the VAT rate are as a generalrule assumed here to be equivalent to DOI sales to private consumers. There are, however, a numberof important exceptions. For the very large branch 52.48.65, retail trade in PCs, office machinery andsoftware, it is assumed that 85% of VAT sales are to private consumers. This percentage was basedon the high level of household consumption of PCs which emerged from the FU over a number ofyears, an item which is subject to a great deal of sampling uncertainty in any given year. Thepercentage may if necessary be revised later in the light of the supply and use balancing.

Apart from retail trade proper, the DOI covers all turnover in bakers' shops, i.e. both retail sales andsales of own products. The sales figures thus do not need any correction. Nursery gardens, however,are not covered and are consequently covered via VAT statistics, with 90% of sales assumed to be for

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household consumption. The same applies to electrical installation businesses, where 10% of VATsales are assumed to be household consumption.

The retail sales index covers builders' supplies and paint and wallpaper shops. Most sales in theseunits are goods which are inputs in construction and do not go to household consumption. 5% ofsales are assumed to be goods for private consumption and 95% to be inputs in construction, and thelatter share, including VAT, is deducted from sales to private consumers as shown in the retail salesindex. However, with these percentages it should be remembered that all materials for the repair andmaintenance of buildings in the Danish national accounts are channelled through the special materialsindustry 450004, as described in Section 3.12. That share of expenditure on materials which goes toordinary minor repairs and maintenance work, which in the case of dwellings which are let arenormally the responsibility of the tenants, and the corresponding share for owner-occupiers, arelumped together under consumption in households under the product balance "building repairs".

Step 3: Special treatment for pharmacies

In the case of pharmacies, only that share of expenditure on medicines which is paid by householdsshould be included in the consumption system. The share paid by government is recorded in healthinsurance statistics and deducted from VAT sales, so that a figure corresponding to the DOI's "sales toprivate consumers" is obtained and included in retail sales of other consumer goods.

Step 4: Retail sales index sales: correction for new businesses

At present, the retail sales index does not include sales in businesses started after the year in whichthe sample was drawn, normally year t-2. Sales in businesses which have ceased trading are notcounted, either. Consequently, the retail sales index includes a systematic underestimate whichbecomes greater the further back the year in which the sample was drawn. A correction is made forthis using raising factors based on annual statistics on business start-ups. The grossing up naturallyaccumulates for each year after the DOI sample. Work is currently being done to improve the DOI bycorrecting for sales in new businesses. Once this improvement filters through, the consumptionsystem's grossing up will cease. In general, adjustments will be made whenever the DOI is based on anew sample. For 1995, the sampling base is 1993.

Step 5: Correction for in-flight and airport duty-free sales

The DOI does not cover duty-free shops at airports or sales on Danish ferries or during flights. In-flight and airport sales of goods for resale are calculated in a calculation system for industries coveredby accounting statistics for industries where public corporations predominate and recorded in the"handelud" spreadsheet. Such sales of goods for resale are included in total in retail sales. Thefigures are grossed up using a factor of 1.15 to cover duty-free sales on Danish ferries, mainly thoseon the Rødby-Puttgarden route. There is, of course, no VAT added to such sales when the retailturnover is calculated.

Step 6: Correction for filling station sales of goods not connected with the motor trade

The DOI does not cover sales of food, beverages and tobacco etc. at filling stations. Sales of goodsnot related to motor vehicles are calculated in the spreadsheet for the "motor vehicle group", i.e. DK-

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NACE 50. The figure for sales of goods from kiosks etc. at filling stations is input into the input datasheet, with sales divided into 80% for the main group of food, beverages and tobacco andconvenience goods and 20% for other consumer goods.

Step 7: Grossing up the household budget survey

For any given year, the FU is grossed up by the national accounts division using the methodrecommended by the primary statistics division. The Danish FU includes a correction for differentialnon-response in the individual strata, which would appear to be extremely reliable compared withcorrections in other countries. The reason is that in Denmark it is possible to collect incomeinformation relating to households in the sample from register data, thus ensuring that all incomegroups are correctly represented in the grossing up. In some countries, it is apparently not possible tocorrect for the fact that high income households have a greater non-response rate than the average,which can lead to a downward bias in the household budget surveys. Denmark would not appear tohave any such bias.

Step 8: National accounts coding of the FU and extra grossing up

A key is established to convert from the FU product codes to the national accounts consumptiongroups. The grossedup FU is aggregated to consumption groups. A correction is also made fordefinitional differences between the national accounts and the FU (insurance, gambling, etc.). Thereis then an extra grossing up to correct for any skew in the FU's average household size and personsnot living in households. The correction factor is calculated as the average number of persons in thecountry in the reference year divided by the number of persons covered by the FU. The correctionfactor for 1995 was 1.04. This extra grossing up is not without its problems, but the national accountsexperience has been positive. The resulting figures must be seen as being the best possible expressionof household consumption including consumption in small non-profit institutions with no paidemployees, which are lumped together with households.

Step 9: Incorporating final and provisional national accounts consumption

For the final years, the relevant parts of the SUMTA (the supply and use table aggregated overproducts) are copied into the input data spreadsheet. For the provisional years, the figures from thelatest publication are input.

Step 10: Creating a distribution basis for the DOI, supplemented and corrected, and for theFU

For each of the three main groups of goods, the initial estimate is equal to the value of retail sales toprivate consumers taken from the DOI as supplemented and corrected. Within each of the maingroups of goods, the totals are distributed over the individual consumption groups in proportion to theFU distribution, but five groups where the FU figures are systematically skew are not included. Theseare 1182 chocolate and confectionery, 1220 mineral waters and soft drinks, 2110 wine and spirits,2130 beer and 2210 tobacco products. The distribution basis is set up for the FU and the DOI toexclude these five groups. The FU figures are grossed up/down so that the totals match thesupplemented and corrected DOI.

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Figures are added for farmers' consumption of own products and direct sales to private consumers inconsumption groups 1120 meat, 1141 eggs and 1142 milk, cream, yoghurt, etc. The source isagricultural statistics. The consumption of own products by other economic operators, as assessed fortax purposes, is considered to be covered via the DOI's VAT-based grossing up. During a subsequentstep, there is an allowance for fringe benefits and the black economy.

Step 11: Consumption groups 1182, 1220, 2110, 2130 and 2210 are considered a priori to beequal to the values in the provisional national accounts

The initial estimate for the five consumption groups which are exceptions is taken to be equal to thevalues in the latest provisional national accounts, which are considered to be the best possible supply-side estimate using the commodity flow method.

Step 12: Correction of the FU for gifts when the FU is used as a distribution key

The FU includes an item of around DKK 3 billion for gifts, with no further details. When the FU isused as a distribution key, this amount is divided into clothing, other recreational items andequipment, jewellery, clocks and watches, other personal effects, stationery and drawing materials etc.A similar correction is made for expenditure on heating when there are communal boilers in blocks offlats etc. and for the difference in the treatment of package (charter) tours.

Step 13: Input of selected values from the calculations for selected industries

For various consumption groups, the best initial estimate is obtained by using supply values eitherdirectly or as a supplement to the FU. The relevant data are input into the PRIMSTAT worksheet.

Step 14: Input of keys for distribution of the consumption of non-residents on the economicterritory (tourist income)

The consumption groups for which the target total is calculated on the basis of the FU have to becorrected for the fact that the FU does not include purchases by foreign tourists in Denmark. Thedistribution key is that used for the calculation of input/output multipliers.

Step 15: Calculation of levels for all consumption groups each year

The levels for the current year are then calculated on the basis of the sources quoted on the worksheet.When the FU is used for insurance and for entertainment etc. (betting, lottery), a correction is made tobring the figures into line with the national accounts definitions.

Step 16: Balancing correction based on experience

Finally, the values obtained by Step 15 for the individual consumption groups are multiplied by a setof factors which are determined by experience with the balancing of the national accounts duringprevious years, typically based on experience with year t-1. When the initial estimates are made,account is taken of any known bias in the estimate of the individual consumption groups based on

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sources from the expenditure (uses) side. If, for example, the first of the consumption groups, 1110,bread and cereals, was adjusted in the latest final national accounts to a value which was two percentabove the initial estimate, the level obtained from Step 15 is multiplied by a factor of 1.02 when thefinal initial estimate is worked out for household consumption of group 1110.

5.7.4 Balancing in the framework of the national accounts product balancesystem

The initial estimates described above for household consumption are included with all the other initialestimates for the supply and use components in the balancing of the national accounts. In Denmark'scase, supply and use or, equivalently, GDP as compiled from the output and expenditure angles - arebalanced in a very detailed product balance system covering around 2 750 products, just under 1 300of which were used for household consumption in 1995.

In most cases, the balancing process means that the initial estimates for consumption have to beamended. Overall, the balancing of national accounts for the benchmark year 1992 led to an upwardadjustment of around 1.5% over the initial estimate. For that share of consumption which involvesretail trade (retailable consumption), there is an upward adjustment of 1.5% compared with the initialestimate in the final balanced values taken together are fixed for the benchmark year 1992. For1995, which is generally used as an illustration in the GNI documentation, the initial estimates and thefinally adjusted values can be seen in Table 111, which also shows the values according to thegrossed up FU for 1995.

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Table 111 Initial estimates and adjusted values for household consumption divided byCOICOP consumption group and values according to the 1995 household budgetsurvey (FU)

COICOP- Initial Balanced Grossed up Nationalaccounts/FU

consumption group estimate national household72 grouping DKK mill. accounts budget (2)/(3)

DKK mill. survey (FU)DKK mill.

(1) (2) (3) (4)1110 Bread and cereals 10 084 10 040 10 444 0.961120 Meat 16 425 16 299 15 177 1.071130 Fish 2 658 2 686 2 603 1.031141 Eggs 972 950 908 1.051142 Milk, cream, yoghurt etc. 5 039 4 970 4 856 1.021143 Cheese 3 302 3 250 3 444 0.941150 Butter, oils and fats 2 058 2 035 1 925 1.061160 Fruit and vegetables except potatoes 8 095 8 039 8 118 0.991171 Potatoes etc. 1 619 1 679 1 897 0.881181 Sugar 450 442 378 1.171182 Ice-cream, chocolate, etc. 8 895 8 835 7 112 1.241190 Food products n.e.c. 2 674 2 541 1 539 1.651210 Coffee, tea and cocoa 3 021 2 993 2 838 1.051220 Mineral waters, soft drinks and

juices5 443 5 384 4 426 1.22

2110 Wine and spirits 6 317 6 278 6 389 0.982130 Beer 6 857 6 883 4 051 1.702210 Tobacco 12 103 12 023 9 437 1.273110 Garments and clothing materials etc. 21 127 20 983 21 175 0.993140 Laundry, dry cleaning etc. 534 433 711 0.613200 Footwear 4 817 4 877 4 834 1.014100 Actual rentals for housing 31 911 31 934 34 165 0.934200 Imputed rentals for housing 60 623 60 623 47 940 1.264300 Regular maintenance and repair of

the dwelling5 890 6 222 8 443 0.74

4410 Refuse collection etc. 3 622 3 550 3 022 1.174430 Water supply and sewerage services 5 596 5 622 6 808 0.834510 Electricity 11 628 11 693 10 810 1.084520 Gas 2 826 2 751 3 145 0.874530 Liquid fuels 5 053 5 038 3 850 1.314540 Hot water, steam etc. 10 151 10 292 11 324 0.915100 Furniture, furnishings, carpets etc. 10 796 10 721 11 250 0.955200 Household textiles 3 028 2 979 2 498 1.195310 Major household appliances 4 188 4 121 4 376 0.945330 Repair of major household

appliances492 449 237 1.89

5400 Glass, tableware and householdutensils

3 144 3 112 2 868 1.09

5500 Tools and equipment for house andgarden

2 114 2 144 2 626 0.82

5610 Non-durable household goods 3 903 3 693 4 279 0.865620 Domestic services and home care 2 005 2 024 1 477 1.37

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services6111 Medical and pharmaceutical products 3 833 3 864 3 797 1.026112 Therapeutic appliances and

equipment2 023 2 140 1 800 1.19

6200 Out-patient services 5 462 5 087 4 148 1.236300 Hospital services 985 985 331 2.987100 Purchase of vehicles 29 810 29 333 29 810 0.987210 Maintenance and repairs of motor

vehicles12 741 12 715 11 714 1.09

7220 Fuels and lubricants 12 407 13 049 14 094 0.937240 Other services in respect of personal

transport equipment4 311 4 104 1 377 2.98

7300 Transport services 8 678 8 554 9 050 0.958100 Communications 10 018 8 558 11 005 0.789110 Radio and television sets etc. 4 552 4 519 3 816 1.189120 Photographic equipment etc. 615 777 362 2.159130 Data processing equipment 4 296 4 454 2 606 1.719140 Recording media for pictures and

sound2 022 2 021 2 947 0.69

9150 Repair of a/v and data-processing equipment, etc.

479 465 228 2.04

9200 Other major durables for recreationand culture

2 409 2 388 1 338 1.79

9300 Other recreational items andequipment

10 143 10 149 10 583 0.96

9400 Recreational and cultural services 16 769 15 300 14 677 1.049510 Books, newspapers and periodicals 7 592 7 604 7 808 0.979530 Stationery and drawing materials etc. 1 146 1 164 1 198 0.979600 Package holidays 4 397 4 397 6 008 0.739700 Education 3 656 3 656 1 871 1.959810 Catering 24 247 24 247 15 808 1.539820 Accommodation services 2 927 2 885 2 357 1.229911 Hairdressing salons etc. 4 103 3 976 3 758 1.069912 Appliances, articles and products for

personal care7 051 7 216 6 833 1.06

9921 Jewellery, clocks and watches 1 069 1 299 1 451 0.909922 Other personal effects 2 031 2 017 1 103 1.839931 Retirement homes, day-care centres

etc.1 425 1 425 0

9932 Kindergartens, crèches etc. 5 504 5 504 4 718 1.179940 Insurance 8 977 8 996 9 992 0.909950 Financial services n.e.c. 7 610 7 610 2 649 2.879960 Other services n.e.c. 3 612 3 537 2 746 1.299980 Consumption of non-residents on the

economic territory-20 888 -20 888

9990 Consumption of residents in theROW

19 666 19 666

Total 505 139 501 364

Total excluding consumption groups4200, 9931, 9980 and 9990 444 313 440 538 415 428 1.06

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The table shows that, with the balancing for 1995, there was a total downward adjustment ofhousehold consumption by DKK 3 775 million or 0.75%. This adjustment is within the normal range.

As regards the comparison of household consumption in the national accounts and the grossed uphousehold budget survey (FU), the general impression is that the two estimates are very similar for allconsumption groups where, a priori, there must be expected to be a good match, because the FU hasthe same definitions as the national accounts and low sampling uncertainty for the items in question,especially expenditure which the vast majority of households incur in each accounting period andwhere there is no particular bias. For groups 1182 ice-cream, chocolate and confectionery, 1220mineral waters and soft drinks, 2110 wine and spirits, 2130 beer and 2210 tobacco, along with 9810catering, the FU is known normally to have a marked downward skew.

The comparisons of the national accounts and the FU at a higher level of aggregation are highlyproblematic owing to the above bias for certain consumption groups and to definitional differences.Nevertheless, some countries frequently compare household budget surveys with national accounts ata more highly aggregated level. For this reason, an aggregate comparison is also shown in the table.Corrections have to be made at least for the different treatment of owner-occupied housing andexpenditure on retirement homes etc, plus tourist income and expenditure, which are not covered bythe FU. The aggregate comparison excluding these items shows that national accounts figures forhousehold final consumption expenditure are 6% higher than the extra grossed-up figures from theFU.

5.8 NPISH final consumption expenditure

On the expenditure side, all the non-market output of NPISHs is allocated to final consumptionexpenditure in a special column in the supply and use tables. The sources and methods for thiscomponent have therefore already been described in detail in the chapter on GDP as calculated usingthe production approach, more specifically Section 3.1.2.4.3.

5.9 Government final consumption expenditure

This can be divided into three parts:

• transfers in kind of market goods and services• transfers in kind of non-market goods and services• collective consumption expenditure in government non-market producer units.

1) refers to goods and services which general government purchases on the market and makesavailable to households. According to the ESA 95, such purchases are not included in intermediateconsumption or the output value of general government but are allocated directly to final uses asindividual consumption of market goods and services paid for by government. This is logical, sincethe products purchased by government non-market producers are not processed further before beingmade available to households. In the vast majority of cases, they are supplied directly from themarket producer - a general practitioner, for example - to the recipient households. In Denmark'scase, almost all transfers in kind of market products are health insurance benefits. The values are

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taken directly from government accounts which have 100% coverage, and must be considered to betotally reliable.

2) consists of the output of government, individual non-market services less sales income in non-market government units which produce the products in question for government individualconsumption plus the value of own-produced software in those units. The sources and methods forestimating output value were described in Section 3.1.2.2.1 as part of the description of the output-based estimate of GDP and Section 4.12 referring to the consumption of fixed capital. Referenceshould therefore be made to these sections. Information on sales income can be taken directly fromgovernment accounts. The value of own-produced software is based on total wages and salaries forhighly qualified computer staff assumed to be working on the development of software and largedatabases. A mark-up factor is applied to total wages and salaries to cover intermediate consumptionand the consumption of fixed capital.

3) consists of the output of government non-market services used for collective, i.e. non-individualisable, government consumption, minus sales income in the non-market government unitswhich produce the products in question for collective government consumption, plus the value of thesoftware produced in those units. The sources and methods for estimating the output value weredescribed in Section 3.1.2.2.1 as part of the description of the output-based estimate of GDP andSection 4.12 referring to the consumption of fixed capital. Reference should therefore be made tothese sections. Information on sales income can be taken directly from government accounts. Thevalue of own-produced software is based on total wages and salaries for highly qualified computerstaff assumed to be working on the development of software and large databases. A mark-up factor isapplied to total wages and salaries to cover intermediate consumption and the consumption of fixedcapital.

The breakdown of total government final consumption expenditure into the three components can beseen in Table 112.

Table 112 Breakdown of government final consumption expenditure into individual andcollective consumption

Type DKK millionTransfers in kind of market products 13 131Transfers in kind of non-market products 160 902Collective consumption expenditure 86 265Total government consumption expenditure 260 299

It can be seen that individual consumption accounted for 67% of total government consumptionexpenditure.

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5.10 Acquisitions less disposals of tangible fixed assets

5.10.1 Introduction

This component of final expenditure is estimated in the Danish national accounts in the followingbreakdown:

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Table 113 Gross fixed capital formation in tangible assets, by type

Type DKK millionMachinery and equipment 60 370Transport equipment 22 266Buildings 64 807

of whichDwellings 39 664Non-residential buildings 25 143

Structures 23 882Livestock 91Total 171 416

All of these with the exception of machinery and equipment, a few types of transport equipment andmajor repairs to buildings are estimated using the expenditure approach, for new construction(buildings), either from accounting statistics with very detailed coverage of actual observations orfrom an exhaustive register of buildings (the BBR). Capital formation in machinery and equipment isestimated from the supply side using the commodity flow method. As the questionnaire-basedaccounting statistics are expanded to cover virtually all industries with market producer units, it willbecome possible to estimate capital formation in machinery directly via expenditure as well. Thereare strong indications, however, that this type of direct expenditure estimate based on accountingstatistics for non-government units other than agriculture has a downward bias owing to incompletecoverage of new enterprises, which may have relatively few sales and relatively little employment buta great deal of capital formation during the start-up phase. Even after the introduction of a directestimate of capital formation in machinery and equipment which is expenditure-based, it seems likelythat the initial estimate for this component will still be supply-based, since this method must beconsidered better, statistically speaking, owing to the well-known start-up bias. Where capitalformation in machinery is concerned, the questionnaire-based accounting statistics have an importantpart to play, however, in the breakdown by industry of the economy's total capital formation inmachinery.

5.10.2 Expenditure-based estimates

For the economy as a whole, acquisitions less disposals of tangible fixed assets are, as alreadymentioned, estimated directly from the expenditure point of view, with the exception of machineryand equipment, a few types of transport equipment and major repairs to buildings.

Transport equipmentThe initial estimate prior to balancing for acquisitions less disposals of motor vehicles is based on theVehicle Statistics Register, which in turn is based on the Register of Motor Vehicles. Similarly, theestimate of capital formation in ships and aircraft is based on register information for each individualvessel and each individual aircraft. Only capital formation in railway rolling stock, containers andother types of transport equipment - less important types - is estimated from the supply side using thecommodity flow method. In 1995, capital formation in transport equipment covered 57 products inthe supply and use tables.

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DwellingsThe construction of new dwellings is estimated from the number of square metres of activity in theexhaustive Register of Buildings and Dwellings (BBR). "Square metres of activity" means thenumber of square metres constructed on average in the calendar year (quarter). The capital formationis therefore counted as and when the building progresses and not on the completion date. The squaremetres of activity are calculated from information in the BBR on dates when the individual buildingsare started and completed. There are four types of new housing construction in the calculation, eachwith an average price per square metre - a "standard square metre". The calculation is stratified intotwo geographical areas, the Copenhagen region and the rest of the country. The square metre pricesare noticeably higher in the Copenhagen region than elsewhere. The benchmark for these prices is1993, when a committee under Danmarks Statistik, which included experts from the Ministry ofHousing and Statens Byggeforskningsinstitut [Danish Building and Urban Research] and financialinstitutions specialising in the financing of buildings examined all available sources which providedinformation on housing construction costs. The 1993 benchmark prices are projected to the currentyear using changes in the index of construction costs for housing reduced by 1% for productivityincreases which, by their very nature, will not be captured in an input-based building costs index. Theproductivity correction factor is based on a comparison of the benchmark figures for years 1969, 1979and 1993 with changes in the building costs index for housing construction in the intervening periods.

Major repairs to dwellings are calculated as 55% of the total supply of construction and civilengineering repairs which relate to dwellings. The remaining 45% refer to ordinary repairs andmaintenance which are not counted as capital formation. All repairs and maintenance are estimatedfrom the supply side, whereas the percentage for major repairs is expenditure-based, using the FU.The value of major repairs includes materials for own major repairs to dwellings.

Table 114 shows the calculation of the main components of capital formation in housing construction.It shows the value of new construction and major repairs excluding hidden construction activity,estimated at basic prices. Total capital formation in housing construction also includestaxes/subsidies on products excluding VAT, VAT, hidden construction activity plus transfer costsrelating to housing, which have to be allocated to capital formation (estate agents, lawyers, stampduties, government sales income connected with court rulings).

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Table 114 Calculation of capital formation, housing construction

Housingconstruction

Square metres ofactivity:1000 m2

Standard price (beforededuction for deductible

VAT) DKK/m2

Value of new construction, basic priceDKK 1000

1995 Copen-hagenregion:

Rest ofDen-mark

Copenhagenregion:

Rest ofDen-mark

Copenhagenregion:

Rest ofDenmark

Wholecountry

Single-family houses: 215.6 825.0 7 833 7 266 1 374 678 4 878 659 6 253 336Garages and carports 94.1 388.1 2 349 2 179 179 975 688 463 868 438Multi-family houses 238.6 214.5 9 811 9 102 1 904 881 1 589 030 3 493 910Weekend cottagesetc.

23.3 164.3 6 532 6 343 123 830 831 834 955 664

Total excl. majorrepairs and hiddeneconomy

3 583 363 7 987 986 11 571 349

Major repairs todwellings

17 411 410

Incl. major repairs 28 982 759

Private non-residential construction

This is calculated in the same way as housing construction. The value of new construction iscalculated by multiplying standard square metre prices according to the 1993 benchmark by squaremetres of activity. For private non-residential building, too, account is taken of productivity increaseswhen projecting square metre prices on the basis of the construction costs index.

Table 115 Calculation of capital formation, private non-residential construction

Private non-residentialconstruction

Square metres ofactivity:1000 m2

Standard price (beforededuction for deductibleVAT) DKK/m2

Value of new construction, basic priceDKK 1000

1995 Copen-hagenregion:

Rest ofDen-mark

Copenhagenregion:

Rest ofDenmark

Copenhagenregion:

Rest ofDenmark

Wholecountry

Farm buildings 39.7 1 319.0 1 800 1 820 57 393 1 926 532 1 983 925Factories, workshops 91.4 864.7 4 680 4 384 343 191 3 042 946 3 386 137Offices, shops 203.5 458.1 8 231 7 502 1 344 407 2 758 522 4 102 929Other private property 33.8 164.9 8 609 7 834 233 607 1 037 137 1 270 744Total, excl. majorrepairs

1 978 598 8 765 137 10 743 735

Major repairs toprivate non-residentialpremises

4 077 623

Incl. major repairs 14 821 358

Total capital formation in private non-residential construction is obtained by adding non-refundableVAT plus ownership transfer costs.

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Public construction for commercial use

This component of capital formation is calculated from accounting statistics for industries wherepublic corporations predominate. In these statistics, the information on new capital formation isdivided by type of investment using a breakdown by DK-NACE industry and subsector.

Public construction for non-commercial purposes

Capital formation in buildings by government non-market producer units is estimated from the OIMAsystem (the calculation system for government non-market activity), which is in turn based on thenational accounts estimate of the general government sector in the DIOR database. The informationon new capital formation in the OIMA is broken down by type of investment with the help of thebreakdown of capital formation by DK-NACE industry and subsector.

Table 116 shows the result of the calculations of public commercial and non-commercial constructionup to the estimate of the use of the two products at basic price level.

Table 116 Capital formation, government commercial and non-commercial construction

Product number U454012 U454013Text1000 DKK

Governmentcommercialconstruction

Governmentnon-

commercialconstruction

Capital formation 1 120 613 7 239 839Of which: Stamp taxes 4 393 29 929

Lawyers 12 685 86 420Real estate dealing 7 344 50 031

Total trading costs 24 422 166 380

Purchasers' price incl. VAT 1 096 191 7 073 459Of which: VAT 61 619 1 277 042

Taxes -966 13 974Basic price 1 035 538 5 782 443

Private structures

Capital formation is calculated in this case from the expenditure side, as the total value of all newcivil engineering structures, according to whatever sources are available. The calculation is the sameas that used to work out target totals for capital formation divided by industry. It is assumed that thereare no net product taxes and VAT levied on private structures. Table 117 shows the values for 1995and the sources used.

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Table 117 Calculation of capital formation in private structures

DKK 1000 Capitalformation, private

structures

Source

Agriculture (soil improvement, etc.) 103 000 Agricultural statisticsExtraction of crude oil and natural gas 1 969 590 Specific industry statistics for industry 110000Accounting statistics 457 377 Calculation of capital formation on the basis

of accounting statisticsOther private structures, horticulture,forestry

2 445 Other measures for capital formation matrices

Total 2 532 412

Public commercial structures, plus public non-commercial structures other than military installationsfor capital formation

Capital formation in structures in public corporations and in the general government sector, like thevalues for new building, comes from accounting statistics for industries where public corporationspredominate and the OIMA new capital formation figures (OIMA: the national accounts calculationsystem for general government based on the DIOR database). This capital formation can be seen inTable 118.

Table 118 Public capital formation in structures other than military

Product number U454022 U454023Text1000 DKK

Publiccommercialstructures

Public non-commercialstructures

Capital formation =purchasers' price incl. VAT

17 468 293 3 108 647

Of which: VAT 1 159 750 595 407Taxes 0 -422 203

Basic price 16 308 543 2 935 443

Military capital formation

The information on military building and civil engineering work comes from extracts from publicaccounts. Out of a total value in purchasers' prices including non-refundable VAT of DKK 1 124million in 1995, DKK 570 million is allocated to capital formation while the remaining DKK 554million is counted as intermediate consumption in general government under industry 752002, theprovision of services to the community [literally "defence, police and the administration of justice"],since these are ordinary repairs and maintenance or weapons systems which should not count ascapital formation, according to the ESA 95.

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Livestock

The relatively minor item "changes in agricultural livestock" is explained in the section onagricultural statistics.

5.10.3 Estimates using the commodity flow method

The initial estimate for total capital formation in machinery and equipment in the economy isnormally based on the value in the latest version of the provisional national accounts for the referenceyear. These provisional accounts also compare supplies and uses of products, albeit using much moreapproximate methods than in the final national accounts. The latest value for total capital formationin machinery and equipment in the provisional national accounts may therefore be considered a goodsupply-side approximation of total investments in machinery.

If there are major differences between total supply and use of products taken together at macro levelwhen the initial estimates are compared for the final national accounts, the provisional accounts totalmay, however, be amended even at this initial stage.

The initial value for total capital formation in machinery based on the provisional national accounts isthen divided up over the 670 or so products which have uses in this category of capital formation, onthe basis of the composition of products in the latest final year (t-1), with technical coefficientsreferring to constant price figures. Next, supplies of each of the products are compared with uses andthe difference between the initial estimates at product level is divided proportionally over the varioususes of the products, although a few uses are not included in the proportional distribution. The supplyof products side is considered to be an extremely reliable estimate and is not normally amended. Theresult of this systematic and fully automated application of the commodityflow method after theproportional distribution mentioned is the initial estimate for total capital formation in machinerywhich is then included in the balancing process, together with the initial estimates for all the othersupply and use components.

The initial estimate of total capital formation in machinery for 1995 can be seen in Table 119.

Table 119 Initial estimate of capital formation in machinery and equipment

DKK millionInitial value based on provisional national accounts 63 878Result of automatic commodity-flow method (2-step RAS method) 63 729Initial estimate for the manual balancing of supplies and uses 63 729Balanced value 60 370

The relatively large balancing correction downwards in 1995 must be seen against the fact that capitalformation in structures was adjusted upwards from the provisional national accounts' values for thatsame year. As discussed in Section 3.12.3, the dividing line between capital formation in machineryand in civil engineering work is often drawn according to the terms of delivery of major structuressuch as power stations. Larger investments in structures will therefore normally go hand in hand withlarger inputs of machinery and parts for that machinery in civil engineering, with a correspondinglylower volume allocated directly to final uses in the capital formation in machinery and equipmentcategory.

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A few, minor components of transport equipment, such as railway rolling stock and containers, arealso estimated from the supply side. The sources for the estimate of domestic supply are industrialcommodity statistics and external trade statistics.

Finally, as already mentioned, major repairs to buildings are estimated from the supply side on thebasis of total resources of repairs to buildings and structures. The calculation of this resource wasdescribed in Section 3.12.3.

5.10.4 Breakdown by industry of total capital formation in the economy,divided by type

5.10.4.1Capital formation divided by industry

There is considerable user interest in the breakdown of gross fixed capital formation by industry, andwe therefore describe below the sources and methods used for this breakdown, even though it is notdirectly relevant to GNI.

5.10.4.2Government non-commercial capital formation

OIMA (the calculation system for government non-market activity) based on the DIOR databasedetermines the totals, divided by investment into "new capital formation" and "capital formation inexisting buildings and structures". Figures are also received for capital formation in software, dividedby industry. The OIMA capital formation is transferred to the intermediate system using MLS codes:

6100: New fixed capital formation6321: Purchases minus sales of existing buildings and structures.

The worksheets with the detailed breakdown of capital formation into DK-NACE industries andsubsectors (integrated county, municipal authority and central government, non-integrated county,municipal authority and central government, funds etc.) are received every year from the PublicFinances and Prices Division. No detailed (or even provisional) breakdown of the individualsubsectors' capital formation into buildings and structures, machinery and equipment etc. is producedannually, but such a breakdown is available for the year 1995. The figures in a full breakdown arematched with the final OIMA system figures in the national accounts' 130-industry breakdown.Figures for purchases minus sales of existing buildings and structures in a breakdown by industry areincluded.

5.10.4.3Public corporations' capital formation

A worksheet containing the results of statistics for industries where public corporations predominateisreceived from the Public Finances and Prices Division. This sheet also supplies input data for variousof the national accounts' industry-specific calculations and for the capital formation figures forbuildings and structures which are used to work out the value of new buildings and new structures inpublic enterprises in the construction system.

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The worksheet includes capital formation in buildings, structures, machinery and equipment andtransport equipment plus software, divided by DK-NACE industry. With the help of an extract fromaccounting statistics for industries where public corporations predominate, it is also possible toproduce a separate estimate for that share of the capital formation which relates to purchases minussales of existing buildings and structures. Various changes have had to be made to the sheet'sinvestment figures on the basis of other sources. Investments in supplies of electricity are divided upinto buildings, structures and machinery. In addition, substantial sales of existing electricity powerstations have been taken out or, more accurately, offset against new capital formation, since it must beassumed that there has been asymmetrical recording of the amount as a result of structural changes inthe branch. In addition, capital formation in the supply of gas and in railways is adjusted to thenational accounts' own breakdowns by kind on the basis of the accounting information of theenterprises concerned.

5.10.4.4Industries covered by the questionnaire-based accounting statistics

In 1995, the general, questionnaire-based accounting statistics covered 130 national accountsindustries from 140009 to 370000. The statistics are now exhaustive in this field, i.e. they assignaccounting figures to all units in the industries in question. They are available as either firm orworkplace statistics. For national accounts purposes, the two sets are processed so that all the capitalformation information used is allocated to workplaces, and it is this information which is used tocompile capital formation by function. With the processing of accounting statistics, information oncapital formation is transferred to the intermediate system, in a breakdown by MLS code:

6110: Purchases of intangible assets (in firm statistics only)6121: Purchases of existing buildings6123: Construction of new buildings6124: Rebuilding and improvements to buildings6125: New layout and rebuilding of roads, harbours, etc.6134: Purchases of plant and machinery and equipment (operating resources)

6210: Disposals of intangible assets (in firm statistics only)6221: Sales of existing buildings (including land value)6223: Sales of existing roads, harbours, etc.6234: Sales of plant and machinery and equipment (operating resources).

Under the items relating to the enterprises' ordinary operations, there is now a separate item forpurchases from current expenditure, so that it is no longer necessary to calculate the following item inthe former manufacturing system separately:

7025: Expenditure on consumables etc.

There is also information on purchases and sales of unbuilt land which are not included in grosscapital formation, under the codes:

6122: Purchases of unbuilt land6222: Sales of unbuilt land.

The items for acquisitions and disposals of intangible fixed assets cover licences, trademarks, soleagencies, software, goodwill and capitalised development, rationalisation and research etc., in otherwords a mixture of figures which have to be included in gross capital formation and figures which

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should not be included. This makes these accounting items less useful for measuring capitalformation.

For those industries covered by the questionnaire-based accounting statistics, i.e. in the 1995 nationalaccounts' 130 industries from 140009 to 370000, the initial estimates of capital formation are dividedinto buildings, structures, machinery, equipment and transport equipment etc. plus software on thebasis of information in the intermediate system. As a default hypothesis, we assume that the landvalue makes up 20% of the total value of the existing buildings and structures items under codes6121, 6221, 6263 and 6226. Consumables are corrected as before in the intermediate system for thatshare which is transferred to current intermediate consumption.

There are a few problems with use of the questionnaire-based accounting statistics in that the figuresfor disposals of machinery, equipment and transport equipment have been improbably large in someindustries in relation to new acquisitions. Closer scrutiny has shown that the accounting statisticsfigures for disposals have in many cases been the acquisition values of the equipment disposed of. Insuch cases, there has been no correction for the cumulative depreciation on the items disposed of, anitem which in many accounts occurs in the section with the depreciation for the year. Ideally,accounting statistics should show the actual selling price. However, it may be difficult to see this inmany accounts and it may in any case be assumed that the selling price - especially for equipmentwhich has worn out - is usually closer to the book value of the items disposed of than to theiracquisition value. The differences between the actual selling price and the book value of disposalsshould be entered under secondary income/expenditure, an item which has seldom tallied with thevery high disposal values. The division of Danmarks Statistik which is responsible for accountingstatistics is currently attempting to overcome this problem.

To the extent that disposals have been put at an unreasonably high level in those enterprises for whichthere were reporting forms or accounts, these high figures have had an effect on the standard figuresused for the construction of the corresponding accounting items for enterprises known solely fromVAT returns, and for this reason the level has been incorrect in these units, too.

For the national accounts calculations, it was decided to use the accounting statistics values foracquisitions but to correct the values for disposals in certain industries. In the capital formationsystem, the corrections are input at the level of the 130 national accounts industries with nobreakdown by sector. Owing to the methods used to work out the initial estimates for aggregatecapital formation in machinery, buildings and structures, the problem does not affect these totals - andthus GNI - but only the breakdown of capital formation by industry.

A further problem is that start-ups are seldom included in the statistics on the basis of reporting formsor accounts. In such cases, information on capital formation is normally compiled from VATinformation using standard accounting ratios based on enterprises which have been operatingnormally throughout the period in question. As already mentioned, capital formation must beexpected to be underestimated in respect of businesses which have just started up.

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Attempts have been made to correct for this undervaluation with the help of statistics on start-ups.Information is available in VAT statistics for the first four quarters of the lifetime of each newbusiness. Since the figures from the statistics for start-ups are received in a breakdown by quarter, ithas been possible each quarter to separate out the share of VAT sales and purchases which relates tostart-ups, and to compare that with the share of other enterprises in each branch at the 130-industrylevel. With this exercise, therefore, an enterprise set up in the previous calendar year can be pickedout as a "start-up" in from one to three quarters of the current year, depending on when it started up,but included as a non start-up during the rest of the year. This should not lead to any seriousproblems with the calculation. It is now assumed that the share of VAT purchases in excess of the"normal", which can be calculated using the VAT purchases/VAT sales share in non start-ups, shouldbe taken to be capital formation which was not included in the accounting statistics' calculationsbased on standard figures. It has been decided that all the extra amount added to capital formationshould be counted as capital formation in machinery, equipment and transport equipment. With thebalancing in mind, it seems likely that capital formation in machinery and equipment, in particular,should be marked up, to avoid too large a share for private services, and one important concern was toallocate the addition to the accounting statistics' capital formation figures to industries which do infact include start-ups.

The above problem of undervaluation is, once again, not directly relevant to the estimate of GNI,since the initial estimate for the economy as a whole is based on building register data in the case ofbuildings and on supplies in the case of machinery and equipment.

The reporting forms for the questionnaire-based accounting statistics explicitly state that if, in theaccounting year, new financial leasing contracts have been entered into, the acquisition price of thegoods leased should be reported, regardless of whether or not that price has been capitalised. It couldtherefore be argued that the previous correction for financial leasing is no longer necessary forindustries covered by accounting statistics.

However, the reporting form includes a few additional questions for enterprises which have financialleasing contracts still in force. They refer to the total expenditure on financial leasing in theaccounting year and a breakdown of the above-mentioned acquisition price into real estate, technicalplant and machinery and other plant, machinery and equipment. But very few firms answer all thesequestions, and this raises doubts about how the enterprises have actually treated equipment which hasbeen the subject of financial leasing.

For the national accounts calculations, it was decided to assume that accounting practice is tendingtowards capitalising equipment leased under a financial leasing contract, but that this is a gradualdevelopment, and that many enterprises have in fact reported their capital formation according to theirown accounting practice. For this reason, it was decided to scale down the intermediate system'sleasing correction in areas where questionnaire-based accounting statistics are used. In 1995, thereclassification was thus cut back to 2/3 of the level which would have resulted from previouspractice, with a full reduction for financial rental payments under current non-financial operatingexpenditure. In the following two years, the correction is scaled down to 1/2 and 1/3 respectively ofthe initial 1992 level, which included a full correction. A comparison of the rental paymentscalculated for financial leasing contracts and the calculated total rental payments in the accounts,which must include operational leasing, would speak in favour of this reduction.

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In 1995, it was initially assumed that the addition to capital formation as a result of the differenttreatment of equipment leased under financial leasing contracts should be roughly the same as thecorrection of gross rentals. This assumes that the number of new leasing contracts increases evenlyover time (which is not the same as saying that the need for the correction declines).

Other than in the area covered by questionnaire-based accounting statistics, the previous calculationwith the 1992 benchmark was continued without any reduction in the size of the leasing correction.

5.10.4.5Other sources of information on industries

There are independent sources of information on capital formation in a few other private industriessuch as branch 110000: extraction of crude petroleum and natural gas. In this case, the total value oftarget total module (MTM) code 2058: mineral exploration, is determined at the same time, includingthe enterprises' own output. Agricultural capital formation is taken from agricultural statistics. In afew other cases, the initial estimates from the previous calculation system are adopted - for capitalformation in horticulture and forestry, for example. Finally, capital formation in 651000: monetaryintermediation, 652000: other financial intermediation, 660102: life insurance and pension fundingand 660300: non-life insurance is worked out from the accounting figures for those industries. Thefinal value of capital formation in the 65-66 branches was not available, however, when the capitalformation targets for 1995 were originally set.

5.10.4.6Capital formation in construction, broken down by industry

Capital formation in buildings in government non-market services, public corporations, agricultureand industries covered by the questionnaire-based accounting statistics is worked out in the systemswhich process the capital formation in question - cf. above. Within these areas, capital formation isnormally retained as calculated, with the estimated breakdown into new building and purchases lesssales of existing buildings.

Total building is estimated in the construction and civil engineering system, the basis for governmentcommercial and non-commercial building being the information on capital formation compiled for thecalculation system for capital formation in a breakdown by industry. The calculation of the outputvalue of construction and civil engineering ignores, of course, that share of capital formationaccounted for by purchases and sales of existing buildings. Capital formation in industry 702009,dwellings, is fixed as the value calculated in the construction and civil engineering system.

All that remains is then to divide up the rest of private non-residential building among thoseindustries which do not have accounting-based target totals for capital formation in construction. Tothis end, the register of buildings and dwellings is compared with the business register to give anoverview of the square metres of floor space added during the year for new non-residential buildings,divided by category of building and national accounts' 130 industries.

The value of these square metres of floor space is calculated using average prices for each type ofbuilding according to the construction and civil engineering system, with VAT added in line with theVAT regulations used elsewhere in the national accounts. The value thus calculated does not includeany estimate for the value of any major repairs by the industries concerned. The estimatedbreakdown of the value of the building by industry is used primarily for a proportional breakdown ofthe residual value of new building which could not be allocated by industry on the basis of bettersources.

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It would have been desirable to be able to produce similar estimates for purchases less sales ofbuildings from previous years, but the attempt showed that (at that time, at any rate) there were toomany unrelated reasons for differences between opening and closing figures in the register. Oneparticular problem is that there always appear to be a good number of incorrect records relating toproperty which existed when the register was set up and that no distinction can be made betweencorrections of such errors and other reasons for changes in the industries' stocks of buildings. It hasnot yet been possible, either, to make a distinction between the reclassification of enterprises andgenuine acquisitions/disposals of real estate. With future calculations of capital stock in mind, furtherthought can be given to this question.

Net purchases and net sales of existing buildings on Danish territory should be the same. (At present,in line with the calculations of construction and civil engineering, all change of ownership costs arefor practical reasons assigned to new building). For the time being, it has been decided to work onlywith purchases or sales of existing buildings in those industries where the figures can be based onsources. However, it was decided to allocate the residual to industry 702040, the letting of non-residential buildings.

As was the case with buildings, capital formation in structures in government non-market services,public enterprises, agriculture and industries covered by accounting statistics is worked out in thesystems which process the capital formation in question. We assume here that there is normally nocapital formation in structures other than in industries for which it can be compiled from a specificsource. One exception is branch 702040, the letting of non-residential buildings, to which is allocatedthe residual of investment/disinvestment in existing structures, since, as for buildings in the strictsense, we are constrained by the rule that used structures may not appear or disappear throughpurchases/sales between industries. The value of new structures is thus determined from theexpenditure side, and it is the systems for the compilation of capital formation in a breakdown byindustry which supply the final figures for capital formation in structures for the calculation of theoutput value of construction and civil engineering.

Initial estimates for capital formation in construction and civil engineering in a breakdown by industryare obtained as the sum of the initial estimates for buildings and structures.

5.10.4.7Capital formation in transport equipment, broken down by industry

Motor vehiclesBriefly, the method is as follows: information is received from vehicle statistics on opening andclosing stocks of motor vehicles recorded in the central register of motor vehicles, and these figuresare then divided up by type of vehicle, size category and year of first registration. Next, by matchingwith the business register, the national accounts' 130 branch codes are added to the vehicles in theindustries to give a division into the 130 industries/households, albeit with an undistributed remainderwhich the National Accounts Division itself has to divide up to ensure that the system tallies. Thefigures correspond to those used in the "vehicle distribution system", which breaks down by industrythose inputs which relate to the operation of motor vehicles, with one change, namely that stocks arecalculated as at the end of one year/beginning of the next, so that the change can be calculated for allsubgroups. On the basis of assumptions about average prices for the individual categories andsurvival and depreciation profiles, initial breakdowns are calculated for changes in terms of eachvehicle product number divided over the 130 national accounts industries plus private finalconsumption. From this, we pick out that share of "departures" which may be assumed to be due to"departures" from the total stock, and the remainder is assumed to be investment/disinvestment. Theinitial estimates in basic prices are supplied with margins, taxes and VAT. These are adjusted to the

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balanced supply and use tables (SUTs) so that the estimated value matches the value in the supplyinformation. The figures for all capital formation in vehicles are then summed to give thecontribution of vehicles to the capital formation target totals for transport equipment.

Other transport equipmentSupply of other transport equipment: railway rolling stock, containers, ships and aircraft.For other types of transport equipment counted as capital formation, the supply is calculated byproduct number on the basis of the sources used for the compilation of the supply and use tables(SUTs). The SUT balances for ships and, over the last few years, railway rolling stock as well, pluslarger aircraft, are compiled as predetermined values which are retained for the balancing of the SUT.Here, information on the individual deliveries is used, and in a few cases changes in inventories havebeen specifically calculated imputed (2064 changes in inventories) to produce a match between thesupply and use information.

On the basis of a few relatively simple assumptions about which industries invest in the various typesof transport equipment and parts etc., the contribution of these products to the target totals for capitalformation in transport equipment can be worked out. When these figures are combined with thetargets for capital formation in motor vehicles, we get the column showing the initial estimates fortarget total code 2052 capital formation, transport equipment.

5.10.4.8Capital formation in machinery and equipment, broken down by industry

For government non-market services, public corporations, industries included in the questionnaire-based accounting statistics, agriculture, the extraction of oil and gas, financial services and insurance,once again capital formation in machinery and equipment and transport equipment - taken together -is calculated from accounting statistics information - cf. above. For each of these industries, targetscan be set for MTM code 2050, capital formation, machinery and equipment, by deducting the initialestimates for MTM code 2052, capital formation, transport equipment.

This leaves various industries for which there is no accounting information on capital formation inmachinery and equipment. In this case, a first estimate is calculated as an addition to the targetsworked out for capital formation in construction and civil engineering and transport equipment. Theadditions are adjusted in the light of employment in the industries, and we look at the share of valueadded and gross operating surplus/mixed income accounted for by capital formation.

5.11 Acquisitions less disposals of intangible fixed assets

5.11.1 Introduction

Gross fixed capital formation in intangible assets covers three types, as shown in Table 120. Softwareis by far the most important.

Table 120 Gross fixed capital formation in intangible assets, by type

Type DKK millionExploratory drilling 271Software and large databases 14 978

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of whichPurchased software etc. 8 689Own-produced software etc. 6 290

Entertainment, literary or artistic originals 1 193Total 16 442

5.11.2 Exploratory drilling

In Denmark's case, the only expenditure on mineral exploration at present is on exploratory drilling inthe North Sea oil and gasfields. All concession-holders have to supply accounts to the Danishsupervisory authorities, containing information on expenditure on items such as exploratory drilling.The national accounts estimate is based on this exhaustive accounting information.

5.11.3 Software and large databases

5.11.3.1Purchased software and large databases

In the Danish national accounts, capital formation in purchased software is estimated from the supplyside using the commodity flow method. There is at present no reliable, exhaustive estimate from theexpenditure side. The few indications that there are on the expenditure side - in business accounts,for example - suggest values which are unrealistically low, no doubt because, in accordance with so-called prudent accounting practices, enterprises only capitalise expenditure on software in exceptionalcases, unless it is preinstalled and is thus part of total expenditure on purchased hardware.

For 1995, the value of the economy's total capital formation in purchased software and large databasesis calculated at 70% of domestic VAT sales in DK-NACE industry 722000, software consultancy andsupply. The remaining 30% of domestic VAT turnover in the industry is assumed to refer tocomponents of sales which must not be capitalised, primarily consultancy services connected with theroutine operation of computer systems and ordinary repairs and maintenance.

In the final national accounts for 1996, capital formation in purchased software and large databaseswas estimated from the supply side at DKK 7 092 million. As from reference year 1996, there isavailable a new, robust statistical source, namely the product statistics for the IT industries, whichgive a detailed breakdown by product of turnover in the industries from which it is possible toproduce a more accurate supply-based estimate. The article by Esben Dalgaard: "Estimating GrossFixed Capital Formation in Software", Proceedings from the Workshop on the Implementation ofESA 95: Achieving Comparability in Practice, Copenhagen June 7-9 1999, pp. 167-183, StatisticsDenmark and Eurostat 1999 (Annex 9), shows that on the basis of the new product statistics, anddepending on assumptions about the type of consultancy services and software sales throughwholesale trade etc., the plausible range of values for GFCF in software is DKK 6 466 million toDKK 9 974 million.

This maximum value assumes that 100% of consultancy services in NACE 7220 are capitalised andthat all domestic sales of software through wholesale trade go to capital formation, which is too much,of course. The lower limit is based on the assumption that one-third of consultancy services anddomestic sales through wholesale trade are capitalised. In both cases, 100% of domestic sales of the"software" product from the genuine IT industries, i.e. those in the product statistics other thanwholesale industries, go into the amount calculated for capital formation. In 1996, this was DKK 4

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493 million. The value of capital formation in purchased software in the final national accounts for1996 can be interpreted as being in line with the assumption that approximately half of consultancyservices are installation costs etc. which have to be capitalised and that the other half is currentoperating expenditure.

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5.11.3.2Own-produced software

Own-produced software etc. accounted for 42% of total capital formation in software and databases in1995.

Like purchased software and large databases, own output is calculated from the supply side, morespecifically from total wages and salaries which in each of the national accounts' 130 industries areconsidered to relate to own output of software.

Total wages and salaries are compiled from Danmarks Statistik's salary statistics, i.e. the statisticalsystem which provides information on wage and salary levels and changes divided by job category.These statistics cover all workplaces with ten or more employees. There is no grossing up for wagesand salaries in small units with fewer than ten employees, since it is considered unlikely that suchsmall workplaces would produce their own software.

The starting point is total wages and salaries according to the statistics on employees in ISCO group213, computing professionals. ISCO is the international classification of occupations. It is thusassumed that wages and salaries in the category of computer specialists with the highest level ofeducation is the best possible estimate of total wages and salaries connected with the in-housedevelopment of software and large databases. Obviously, even the most highly educated computerspecialists do some work other than producing software and large databases in house, and this otheractivity is therefore implicitly considered to offset that share of wages and salaries which goes to theless well qualified computer staff on the operating side and which, insofar as it relates to own outputof software and large databases, should be included.

The value of own-produced software is calculated for all industries as ISCO 213 total wages andsalaries multiplied by a mark-up factor of 2.46 or, to put it another way, total wages and salaries aregrossed up by 146%. This factor is based on accounting ratios in the tax-based accounting statisticsfor the relevant industry group. It covers intermediate consumption (including overheads at firmlevel), the consumption of fixed capital, other taxes on production, net, and net operating surplus. Atpresent, the factor is fixed but it will be revised for reference year 1999, when the questionnaire-basedaccounting statistics are extended to cover DK-NACE industry 7220.

5.11.4 Entertainment, literary or artistic originals

As might be expected, there are no statistical sources providing information on the value of originalworks produced in any given year. The national accounts calculation is therefore based on economictheory, according to which the value of the originals in question is equal to the discounted value offuture royalty incomes which they will earn. International manuals, too, recommend this valuation.

The problem is that the future royalties are not, of course, known. Denmark is in a favourablesituation compared with other countries in that information on current income from royalties isavailable every year in statistics on culture. In the national accounts, the value of the originals createdin year t is determined as the value of the royalties received by the artists in question in year t. Thereasoning behind this simple convention is as follows: since there is no information on future royaltyearnings, it is assumed that in the long term royalties actually increase rather faster than the economyas a whole, since leisure activities have income elasticity greater than one. More specifically, thefuture real growth rate is taken to be equal to the real rate of interest, which likewise is normally

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greater than the growth rate of the economy. With these assumptions, the equilibrium value of theoriginals created in any given year may be estimated as the income from royalties in the same year.

The value thus calculated for 1995 was DKK 1 193 million.

5.12 Additions to the value of non-produced non-financial assets

There are two groups in this category of product transactions:

P.5131 Major improvements to non-produced non-financial assetsP.5132 Costs of ownership transfer for non-produced non-financial assets

P.5131In Denmark's case, this category covers only soil improvement work in agriculture (drainage etc.),information on which is available from agricultural statistics. In 1995, the value was DKK 103million. This component of capital formation is calculated together with capital formation instructures, and is covered by capital formation in private structures as shown in Table 117 above.

P.5132This heading covers the costs of transfers of ownership (estate agents, lawyers, stamp duties, publicsales income relating to courts of law) of land and natural resources etc. Since the costs oftransferring the ownership of land can seldom be estimated independently of the costs of transferringthe ownership of the buildings and installations on that land, the aggregate costs of transferring theownership of land and real estate are considered to be part of gross fixed capital formation inbuildings and structures as described in Section 5.10. The transfer of ownership costs for land andreal estate included in the estimate of gross fixed capital formation in 1995 can be seen in Table 121.

Table 121 Costs of ownership transfer included in gross fixed capital formation

Type DKK millionCourts of law, public sales income 98Stamp taxes 571Lawyers 1 824Estate agents 2 850Total 5 343

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5.13 Changes in inventories

5.13.1 National accounts principles versus the principles in business accounts

The principles underlying the national accounts' treatment of changes in inventories as compared withthe estimates in business accounts were discussed in the sources and methods documentation,Sections 1.3.9.1.4 and 3.3.1.2. The section below will therefore be more technical and include anexample of the national accounts' calculations of inventories. As already mentioned, for a correctestimate of GDP, it has to be possible to split changes in inventories (reported at market prices on therespective dates) between the start and end of the period in question into product transactions innational accounts terms and revaluations (plus, in some cases, other volume changes). In the nationalaccounts, changes in inventories (product transactions) are posted to the capital account whereasrevaluations go to the revaluation account. It is also important to ensure that the estimate of changesin inventories at industry level is consistent with the estimate based on special information on theindividual products.

A similar problem occurs with splitting the changes in financial balance sheets between the start andthe end of the period into financial transactions, other volume changes (e.g. losses on loans) andrevaluations. In the financial national accounts, the split is essential for a correct estimate of financialtransactions and thus the sectors' net lending/net borrowing, from the financial point of view.

5.13.2 Opening and closing stocks

The estimate of changes in inventories can be divided into:

• changes estimated on the basis of the change in inventories during the year, according toaccounts. These changes occur under MTM codes 2060 (raw materials), 2061 (wholesaling),2062 (retailing) and 2065 (finished goods and work in progress);

• changes which are calculated regularly on the basis of special information relating to changesin stocks of individual goods, mainly under MTM code 2063.

Changes which are calculated from special information on any given year or introduced at the time ofthe actual balancing are entered under MTM code 2064.

5.13.3 Accounting figures underlying the calculation of inventories brokendown by industry

Questionnaire-based accounting statistics

For 1995, the old accounting statistics for manufacturing were replaced by the new, generalquestionnaire-based accounting statistics, coverage of which will be extended over time to more andmore private urban industries. In 1995, the new accounting statistics covered the same ground as theprevious manufacturing statistics, i.e. DK-NACE industries in divisions 14 to 36, plus construction

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and civil engineering in division 45, retail trade with the exception of vehicles etc. and repair work indivision 52.

The general questionnaire-based accounting statistics are also different from the old accountingstatistics for manufacturing in that they are exhaustive in their own area, meaning that they include allsmaller enterprises in the manufacturing branches ("craft industries" in the previous calculations),including the former "craft branches" within manufacturing. As far back as the changeover to DK-NACE industries in the accounting statistics for manufacturing in 1993, coverage was extended toinclude publishing other than the publishing of sound recordings 221110-221340 and 221500. Thegeneral questionnaire-based accounting statistics from 1995 onwards also cover 158120 bakers'shops, 221400 publishing of sound recordings, 2851 the surface treatment of metals, 285200mechanical engineering on a contract basis, 291120 the repair of marine engines, repair of agriculturaland forestry machinery, 316220 workshops engaged in electrical engineering, 361120 upholstery ofchairs and seats and 361490 varnishing etc. of furniture. The recycling branches 371000 and 372000are now also included.

In the accounting statistics, all the firms and workplaces in the statistics are assigned the accountingfigures which come from the reporting forms, or the tax accounts for firms not covered by the sample.In cases where there are neither reporting forms nor tax accounts, the missing accounting figures arecalculated with the help of "standard ratios" compiled with reference to units for which the data areknown. This therefore applies to a large number of small units which are known from VAT statisticsonly. By grossing up, therefore, the accounting statistics' inventories cover all firms and workplacesin the accounting statistics' industries and there should be no need for the figures to be grossed up anyfurther. The connection between the inventory items in the questionnaire-based accounting statisticsand the intermediate system codes can be seen in Table 122.

Table 122 Connection between the questionnaire-based accounting statistics (RS) and theintermediate system (MLS)

Item inRS

Text MLS-code MLS-code

Opening Closing43. Raw materials, ancillary materials, fuel and packaging 5060 606044. Work in progress 5065 606545. Finished goods, of which

87./88. Goods for resale 5061/5062 6061/6062Remainder: finished goods 5065 6065

46 Ongoing work for account of others 5065 6065

The primary statistics processing throws up problems such as the lack of concordance betweenmanufacturing/trading activity and the incidence of finished goods and stocks of goods for resale. Forthe national accounts calculations, there is a (computerised) reallocation of inventories in such unitswhich appear to be incorrectly allocated. The inventories from the accounting statistics thus revisedare then transferred to the intermediate system.

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Tax accounting statistics

For 1995, it is primarily the important wholesale stocks which are covered by this accountingstatistics source. Since the input data for the tax accounting system include information on closingstocks only, opening stocks have to be based on the closing figures from the previous year. Someimprobable changes in the inventories of the individual branches are thus unavoidable, most of themarising from a change in the delimitation or branch allocation of units from one year to the next.Since it is not possible in the tax accounting system to trace these changes back to the individualenterprises, a number of estimated corrections have to be made in the breakdowns of opening stocks,where possible in the form of switches from one industry to another or one sector to another withinthe same industry. The corrected inventories are supplied to the intermediate system in the usualform.

Industry-specific accounting statistics

To the extent that inventory data are calculated in A-files, the national accounts changes ininventories are calculated in a breakdown by product outside the central inventory calculation system.The resulting aggregate changes in inventories are transferred to the intermediate system under thecodes for changes in inventories only, i.e. 206x, and no stocks are input into the system. In 1995,there were only 2063 changes in inventories in agriculture, 011109, which were transferred to theintermediate system file. Thus any changes in inventories in other industries, where the calculationsare based on industry-specific accounting statistics, are ignored unless they come under 2063 or 2064inventories.

5.13.4 Intermediate system: breakdown of inventories by good

The intermediate system software collects data on the industries' inventories at the level of DK-NACEindustry/sector and intermediate system codes. For the calculation of changes in inventories in theintermediate system, opening and closing stocks are needed at average prices for the year, and this inturn requires a complete breakdown of inventories by good. The system for the goods breakdown istherefore part of the system for producing the intermediate system, as well as being part of the systemfor the breakdown of accounting figures by product.

In the national accounts, there may in principle be inventories of raw materials in all industries, notonly manufacturing but also in trade, even, or construction and civil engineering and serviceindustries. But at present inventories of finished goods occur only in manufacturing, whilstinventories of goods for resale, as a result of the definition by activity of the trading industries, occuronly in wholesale and retail trade industries. The intermediate system inventories are broken down bysector.

The breakdown by product of the industries' inventory totals is based on the product composition inthe balanced supply and use tables for the previous year. The main rule is that for each of theintermediate system's inventory totals there is a column or a combination of columns from theprevious year's supply and use matrix. From each of these columns, those products are selected whichcan go into the inventories in question, i.e. negative SUT values (scrap, disinvestment or negativeconsumption) are omitted and services, for example, or expenditure on advertising or electricity arenot included in the basis for the distribution. The only records in the SUT columns which areextracted for the breakdown of wholesale and retail inventories are those which include wholesale orretail margins. Each inventory total at DK-NACE industry/sector level is then divided up by product

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in proportion to the selected values from an SUT column or with weighted values from more than oneSUT column.

The breakdown by product of the intermediate system inventory totals is at MLS code/DK-NACEindustry/sector level, whilst the supply and use matrices (SUTs) contain only breakdowns bycommodity number/target total module code/industry. For the breakdown of inventories of rawmaterials and finished goods, the calculation is based on an SUT for the previous year, which isgrossed up to include breakdowns for all DK-NACE industries, with the national accounts industrybreakdown used for all sub-industries. For inventories of finished goods, raw materials and goods forresale, the same breakdown by product is used for each sector represented in the industry.

Totals for inventories of finished goods are broken down as the output of the industry at basic prices.The raw materials totals are broken down as the input of the industry at purchasers' prices excludingVAT. As a general rule, wholesale inventories are divided on the basis of the composition of inputsat basic prices for the types of industry which may be assumed to buy the goods in question.However, there are various branches whose inventories of goods for resale cannot be divided up inthis way, and for most of these fixed breakdowns have been laid down. Inventories of retail goods arelikewise divided using the composition of basic prices plus wholesale margins for consumptiongroups, with the individual groups weighted using a key corresponding to the key for the conversionfrom retail trade branch to consumption group used in the consumption and retail trade marginsystems.

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Table 123 Method for the breakdown of inventories by product

Type of inventory MLS codes,value level

National accountsindustries

Broken down asprevious year's SUT

Finished products 5065/6065basic prices

All National accountsindustry output

Raw materials 5060/6060purchasers' pricesexcl. VAT

All National accountsindustry intermediateconsumption

Wholesale 5061/6061basic prices

Main rule Input in nationalaccounts industry acc.key

Included in manuf. Output in nationalaccounts branch

basic pricesIncluded inconstruction and civilengineering

Input in nationalaccounts branch(es)acc. key

basic prices5001010-501020,512100-513100,513700-513890,515100

Fixed breakdowns byproduct number.Assumed covered byenergy system.

Retail 5062/6062basic prices +wholesale margin

All except 524890 Consumptiongroup(s) acc. key

Danmarks Statistik has produced for internal use a technical documentation note on the keys used forthe breakdowns.

For various industries such as agriculture and those which consist solely of general government,industry target totals are not used for inventories. For agriculture, changes in inventories are coveredby the special calculation of agricultural inventories (2063 inventories) at product level.

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5.13.5 Calculation of national accounts changes in inventories

For each type of inventory, changes in inventories in the business accounts are calculated as the valueof closing stocks minus the value of opening stocks, estimated according to the enterprises' ownaccounting principles, which means that opening and closing stocks are calculated at different pricelevels. In the national accounts, changes in inventories should be estimated at the average prices forthe year. Ideally, changes in inventories should be monitored throughout the year and all changessplit into revaluations (holding gains) and national accounts changes in inventories. Normally, areasonable approximation of the correct change can be produced by converting the value of bothopening and closing stocks to the average prices for the year using the ratio of the year's average priceto the price on the date of the inventory estimate. The national accounts change in inventories is thencalculated as the difference between closing and opening stocks, at the average prices for the year(ignoring sporadic instances of inventory values being written up or down for reasons other than pricechanges).

The method used has been unchanged since the benchmark years 1988-92. The price indices used forthe conversion of inventories to the average prices for the year are now in every case the "NF index"which can be found for all product numbers in the inventory calculations and is based predominantlyon the wholesale price index. As the end-of-year index , 2/3 of the December index + 1/3 of thefollowing January index is used. No different treatment is attempted for inventories estimatedaccording to different accounting principles.

Opening and closing stocks are converted to average prices for the year for all combinations ofproduct number/target total module code/DK-NACE industry/sector following the breakdown ofinventory totals by product. The national accounts change in inventories is calculated as closingstocks minus opening stocks for each of these combinations.

Goods which appear in 2063-inventories and energy goods are also included in the breakdown byproduct of inventories of raw materials, since inventories in the accounts include such stocks. Whenthe changes in inventories columns are worked out in the SUTs, it is assumed that these goods arecovered in full by 2063 changes in inventories, and they are therefore omitted from the other changesin inventories, although they are, of course, included in the intermediate system figures for nationalaccounts changes in inventories by MLS industry/sector.

The difference between the MLS industries' (i.e. the detailed DK-NACE industries') national accountsand business accounts changes in inventories is transferred to the intermediate system as a "pricecorrection" under MLS codes 2098 referring to inventories of raw materials and 2099 for inventoriesof goods for resale. These items are used here to switch from business accounts to national accountsintermediate consumption and consumption of goods for resale.

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Table 124 Comparison of changes in inventories in business accounts and national accounts,DK-NACE industries: examples

MLS code DK-NACE

Sector Opening1000 DKK

Closing1000 DKK

Change1000 DKK

Increase ininventories1000 DKK

Pricecorrection1000 DKK

2060 014110 S11 24 999 31 160 6 161 4 870 -1 2912060 014110 S14 78 513 95 341 16 828 12 846 -3 9822060 014120 S11 7 536 7 733 197 -144 -3412060 014120 S14 5 062 5 580 518 278 -2402060 014190 S11 8 281 28 421 20 140 19 241 -8992060 014190 S14 948 1 533 585 527 -582060 014200 S11 29 446 26 626 -2 820 -4 066 -1 2462060 014200 S14 8 494 11 457 2 963 2 506 -4572060 020100 S11 12 994 28 647 15 653 15 477 -1762060 020100 S14 68 265 62 140 -6 125 -6 870 -7452060 020200 S11 3 382 9 667 6 285 6 235 -502060 020200 S14 1 648 1 787 139 121 -182060 050100 S11 24 792 16 468 -8 324 -9 754 -1 4302060 050100 S14 2 514 5 450 2 936 2 705 -2312060 050200 S11 220 974 220 227 -747 -15 246 -14 4992060 050200 S14 65 536 68 472 2 936 -1 434 -4 3702060 103000 S11 10 322 10 004 -318 -446 -1282060 103000 S14 57 54 -3 -2 12060 120000 S11 50 46 -4 -7 -32060 141110 S14 170 157 -13 -10 32060 141120 S11 50 46 -4 -7 -32060 141120 S14 23 13 -10 -11 -12060 141200 S11 45 127 52 576 7 449 6 817 -6322060 141200 S14 1 221 1 070 -151 -163 -122060 142100 S11 36 947 39 672 2 725 2 248 -4772060 142100 S14 4 322 3 986 -336 -381 -452060 142200 S11 597 553 -44 -49 -52060 142200 S14 217 201 -16 -15 12060 143000 S11 11 527 10 674 -853 -978 -1252060 144000 S11 12 583 12 891 308 154 -1542060 145000 S11 27 469 25 435 -2 034 -2 351 -3172060 151110 S11 623 533 420 558 -202 975 -221 594 -18 6192060 151110 S14 221 241 20 15 -5

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Table 125 Examples of the calculation of inventories. Inventories of raw materials in DK-NACE industry 050200: fish hatcheries and fish farms, divided by sector. 1000DKK.

PROD.NO

130INDUST.NO

DK-NACEINDUST.

SEC. OPEN. CLOS. AVER.FOR THEYEAR

OPENINGSTOCK

CLOS.STOCK

CHGE OPEN.STOCK

CLOSINGSTOCK

CHGE PRICECOR.

030101 050000 050200 S11 92.49 89.96 89.96 7 564 7 539 -25 7 357 7 539 182 207030103 050000 050200 S11 99.77 96.13 97.34 416 414 -2 406 419 13 15050800 050000 050200 S11 80.76 99.43 96.29 275 274 -1 328 265 -63 -62051103 050000 050200 S11 90.86 107.34 104.82 52 910 52 732 -178 61 039 51 493 -9 546 -9 368051105 050000 050200 S11 93.4 90.26 90.78 12 193 12 152 -41 11 851 12 222 371 412230903 050000 050200 S11 98.77 100.74 99.11 49 774 49 605 -169 49 945 48 802 -1 143 -974271005 050000 050200 S11 71.89 70.4 72.27 739 736 -3 743 756 13 16271007 050000 050200 S11 79.24 77.18 77.18 64 64 0 62 64 2 2271011 050000 050200 S11 86.7 87.45 85.1 34 34 0 33 33 0 0271012 050000 050200 S11 77.43 84.14 78.37 56 984 56 792 -192 57 676 52 896 -4 779 -4 587271019 050000 050200 S11 104.2 104.11 97.35 29 29 0 27 27 0 0271021 050000 050200 S11 107.6 110.22 109.99 10 842 10 805 -37 11 085 10 782 -302 -265271101 050000 050200 S11 86.75 85.66 77.02 169 169 0 150 152 2 2283905 050000 050200 S11 96 101.33 98.33 85 84 -1 87 82 -6 -5391703 050000 050200 S11 112.2 127.34 122.39 122 122 0 133 117 -16 -16391707 050000 050200 S11 99.31 110.94 107.14 389 387 -2 420 374 -46 -44391711 050000 050200 S11 110.1 119.28 118.6 133 133 0 143 132 -11 -11391713 050000 050200 S11 104.3 109.32 107.08 54 54 0 55 53 -3 -3391900 050000 050200 S11 105.6 111.75 109.48 22 22 0 23 22 -1 -1392301 050000 050200 S11 97.49 106.15 104.78 3 323 3 312 -11 3 571 3 269 -302 -291392303 050000 050200 S11 109.6 104.06 116.32 25 24 -1 27 27 0 1392313 050000 050200 S11 113.8 115.33 119.2 11 612 11 573 -39 12 160 11 961 -198 -159560705 050000 050200 S11 132.1 121.78 130.93 4 734 4 718 -16 4 692 5 072 380 396560801 050000 050200 S11 98.49 98.16 97.93 5 092 5 075 -17 5 063 5 063 0 17560805 050000 050200 S11 98.45 98.14 97.91 271 270 -1 270 269 0 1560900 050000 050200 S11 99.86 99.02 98.41 94 94 0 93 93 1 1950700 050000 050200 S11 79.85 74.15 74.62 3 025 3 014 -11 2 827 3 033 206 217

050000 050200 S11 220 974 220 227 -747 230 266 215 017 -15 246 -14 499

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PROD.NO

130INDUST.NO

DK-NACEINDUST.

SEC. OPEN. CLOS. AVER.FOR THEYEAR

OPENINGSTOCK

CLOS.STOCK

CHGE OPEN.STOCK

CLOSINGSTOCK

CHGE PRICECOR.

030101 050000 050200 S14 92.49 89.96 89.96 2 243 2 344 101 2 182 2 344 162 61030103 050000 050200 S14 99.77 96.13 97.34 123 129 6 120 131 11 5050800 050000 050200 S14 80.76 99.43 96.29 81 85 4 97 82 -14 -18051103 050000 050200 S14 90.86 107.34 104.82 15 693 16 395 702 18 103 16 010 -2 093 -2 795051105 050000 050200 S14 93.4 90.26 90.78 3 616 3 778 162 3 515 3 800 285 123230903 050000 050200 S14 98.77 100.74 99.11 14 763 15 423 660 14 813 15 173 361 -299271005 050000 050200 S14 71.89 70.4 72.27 219 229 10 220 235 15 5271007 050000 050200 S14 79.24 77.18 77.18 19 20 1 19 20 1 0271011 050000 050200 S14 86.7 87.45 85.1 10 11 1 10 11 1 0271012 050000 050200 S14 77.43 84.14 78.37 16 901 17 658 757 17 104 16 446 -658 -1 415271019 050000 050200 S14 104.2 104.11 97.35 9 9 0 8 8 0 0271021 050000 050200 S14 107.6 110.22 109.99 3 215 3 359 144 3 287 3 352 65 -79271101 050000 050200 S14 86.75 85.66 77.02 50 52 2 44 47 2 0283905 050000 050200 S14 96 101.33 98.33 25 26 1 26 25 0 -1391703 050000 050200 S14 112.2 127.34 122.39 36 38 2 39 37 -3 -5391707 050000 050200 S14 99.31 110.94 107.14 115 120 5 124 116 -8 -13391711 050000 050200 S14 110.1 119.28 118.6 40 41 1 43 41 -2 -3391713 050000 050200 S14 104.3 109.32 107.08 16 17 1 16 17 0 -1391900 050000 050200 S14 105.6 111.75 109.48 7 7 0 7 7 0 0392301 050000 050200 S14 97.49 106.15 104.78 985 1 030 45 1 059 1 017 -42 -87392303 050000 050200 S14 109.6 104.06 116.32 7 8 1 7 9 2 1392313 050000 050200 S14 113.8 115.33 119.2 3 444 3 598 154 3 606 3 719 112 -42560705 050000 050200 S14 132.1 121.78 130.93 1 404 1 467 63 1 392 1 577 186 123560801 050000 050200 S14 98.49 98.16 97.93 1 510 1 578 68 1 501 1 574 73 5560805 050000 050200 S14 98.45 98.14 97.91 80 84 4 80 84 4 0560900 050000 050200 S14 99.86 99.02 98.41 28 29 1 28 29 1 0950700 050000 050200 S14 79.85 74.15 74.62 897 937 40 838 943 105 65

050000 050200 S14 65 536 68 472 2 936 68 288 66 854 -1 434 -4 370

5.13.6 Inventories calculated from information on products - 2063 inventoriesand energy inventories

Special 2063 inventories are calculated for a small number of national accounts product numbers, allof them agricultural products and including a few pre-processed ones regularly calculated frominformation on the individual goods (excluding some specific changes in inventories which, bytradition, are entered under MTM code 2064).

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Table 126 Increases in inventories calculated from information on products

CODE: 20631000 DKK

PRODUCT-No

CODE Purchasers'prices incl. VAT

Bovine animals, live, other than forbreeding

V010203 2063 -16 200

Pigs, live V010300 2063 -51 700Meat of bovine animals,fresh/refrigerated

V020100 2063 63 878

Poultry, especially offal,fresh/refrigerated

V020701 2063 9 690

Cheese V040601 2063 40 873Wheat, wheat and rye mixed seed V100100 2063 -427 173Rye V100200 2063 244 846Barley V100300 2063 701 176Oats V100400 2063 -6 636Maize V100500 2063 -3 225Mink, beaver, fox and seal fur V430101 2063 19 265

Increase in inventories, specialproducts

Total 2063 574 794

The calculation of 2063 changes in inventories is based on information on inventories in physicalunits, in contrast to the general method which is based on information on the value of inventories atindustry level.

For those products included in the energy system, changes in inventories are calculated in theEnvironment and Energy Division in connection with the estimate of energy balances. The startingpoint here is information from Energistyrelsen [the Danish Energy Agency] on volumes and prices ofthe individual goods. Changes in inventories divided by product are received from the Environmentand Energy Division, with no indication as to where in the inventories and industries the changesoccur. As for the 2063 changes in inventories, the 2064 changes are based on information on physicalquantities.

Table 127 Increases in inventories from the energy system

CODE: 20641000 DKK

PRODUCT-No

CODE Purchasers'prices incl. VAT

Hard coal and hard coal briquettes V270100 2064 459 640Coke and semi-coke of coal V270400 2064 -5 090Petroleum oils and crude oils V270900 2064 94 715Kerosene-type jet fuel and medium oil V271001 2064 12 021Aviation spirit and motor spirit V271005 2064 105 456Coloured fuel V271007 2064 -171Light oil, special spirits V271009 2064 -46 440Petroleum, medium oils V271011 2064 13 474Gas-oil, except for processing V271012 2064 -642 269Fuel oils other than for further processing V271019 2064 -79 269Fuel oils etc. for processing V271023 2064 212 451Natural gas, propane, butane, etc. V271101 2064 33942Natural gas, high-pressure, export (III) V271106 2064 16 824Petroleum coke V271301 2064 -10 821Bitumen, asphalt, natur. bituminous V271400 2064 -17 705Wood waste and scrap V440101 2064 23 349

Increase in energy inventories Total 2064 170 107

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5.13.7 Special changes in inventories - other 2064 inventories

The other 2064 changes in inventories are also compiled for individual goods, but in principle shouldnot be produced on a regular basis as results from national accounts subsystems. It is debatablewhether this is the case with all products occurring here. The estimate of 2064 changes in inventoriesfor ships has gradually become an ongoing process. However, more often than not changes ininventories are either introduced with the balancing or their actual figure is not finally fixed until thatpoint, and cannot be worked out from the accounting sources. Some of these changes may, however,occur within inventories covered by the accounts. In 1995, there were unusually few nationalaccounts product numbers with 2064 inventories.

Table 128 Increases in inventories, other special inventories

CODE: 20641000 DKK

PRODUCT-No

CODE Purchasers'prices incl. VAT

Coffee, not roasted, not decaffeinated V090101 2064 215 000Unmanufactured tobacco V240101 2064 -150 000Mink, beaver, fox and seal furs V430101 2064 418 031Telephone sets V851701 2064 -200 000Railway coaches etc, self-propelled V860300 2064 -1 526 875Motor vehicles, new V870303 2064 -1 335 936Motor vehicles, used V870305 2064 -200 000Tankers V890103 2064 -2 351Cargo ships etc. V890107 2064 47 982Warships V890601 2064 -151 237

Increase in other special inventories Total 2064 -2 885 386

Initially, 2064 changes in inventories are worked out by linkage with the supply and use tables (SUTs)with no breakdown by sector or industry. As regards the institutional accounts, however, abreakdown by sector is necessary, and these changes in inventories are subsequently broken down(somewhat roughly) by industry and sector.

5.13.8 Correlation between changes in inventories calculated on the basis ofeither inventory totals broken down by industry or information onindividual products

The table below outlines how national accounts changes in inventories are obtained. Since thepurpose here is to show where there is a possible overlap between changes calculated from differentsources, the aggregate inventory calculations are divided up into 2060-, 2061-, 2062- and 2065-inventories on the one hand and 2063- and 2064- inventories on the other.

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Figure 12 Correlation between changes in inventories broken down by industry andinformation on individual products

Industries

Products

Industries where changes ininventories are calculated on thebasis of inventories in accounts

Industries where changes ininventories cannot be calculatedfrom inventories in accounts

Changes ininventoriesdivided byproduct

Products forwhich changes ininventories areworked out usinga breakdown ofchanges ininventories in theaccounts

These are obtained as thedifference between opening andclosing stocks as broken downin the accounts, calculated inaverage prices for the year.There may be 2064-changes ininventories here, in which casethere are balancing correctionsto the changes in inventoriesoriginally calculated.

Only 2063- or 2064- changes ininventories can occur here.

Here, changesin inventoriesbroken downby productare obtainedas the sum ofthe changes ininventoriesdivided upover theindividualindustries +any 2063- and2064-changes ininventories.

Products forwhich theaggregate changein inventories iscalculated interms of goods(2063- and 2064-inventories)

These are calculated on thebasis of the breakdown ofinventories but at the same timeare included in those changes ininventories which are calculatedon the basis of information ongoods. To avoid doublecounting, they are omitted whenthe aggregate change ininventories is worked out in abreakdown by product. Theyare, however, included in thecalculation of the industries'national accounts changes ininventories and the change frombusiness accounting to nationalaccounts consumption.

This area is covered in full bychanges in inventoriescalculated on the basis ofinformation on goods, eventhough these are not available ina breakdown by industry.It covers items such as stocks ofenergy in energy supply andtransport industries, which arecalculated in A-files.

Total changesin inventoriesfor goodswherechanges arecalculated onthe basis ofinformationby good.

Changes ininventoriesbroken down byindustry.

Total changes in inventoriescalculated from inventories inthe business accounts plus anyadditions (2064).

These changes in inventoriesare included in the totalscompiled at goods level with nobreakdown by industry.

Nationalaccountsaggregatechanges ininventories.

The first column in the table shows the changes in inventories according to the intermediate system,broken down by good according to the "inventory breakdown system". The national accountsaggregate changes in inventories are obtained as the sum of these changes excluding those goods forwhich all changes are determined in terms of goods as 2063- or 2064-inventories. Implicitly, thevalue of the overlap between the two calculations is also estimated in the inventory breakdownsystem. It is the cells (row 4, column 2) and (row 3, column 4) for which information is availablebefore the start of the balancing.

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It is clear that the calculation of the overlap will be somewhat uncertain. There is also normally acertain amount of uncertainty about the figures in the accounting statistics which refer to inventories.If the calculated inventory data conflict with other information when the product balances arebalanced, it may therefore in many cases be reasonable to amend the aggregate changes ininventories8.

5.14 Valuables

Acquisitions less disposals of valuables are estimated from the supply side using the commodity flowmethod. Table 129 shows net acquisitions of valuables divided into those products which wereincluded in this capital accumulation category in 1995.

Table 129 Acquisitions less disposals of valuables

Product no Text DKK millionV570201 Kelem and similar hand-woven rugs 178V711301 Articles of jewellery of silver 255V711303 Articles of jewellery of precious metals 216V711401 Articles of silversmiths' wares 172V711403 Articles of goldsmiths'/silversmiths' wares of precious

metals11

V711600 Goods of natural pearls/cultured pearls 1V711700 Imitation jewellery n.e.c. 93V970101 Paintings, drawings and pastels 251V970200 Original engravings, prints or lithographs 68V970300 Original sculptures or statuary 331V970601 Antiques of an age exceeding 100 years -135

Total 1 440

5.15 Exports of goods

Goods accounted for DKK 284 491 million, or 80%, of the DKK 357 454 million total exports ofgoods and services in 1995.

In the national accounts, exports of goods are based directly on Danmarks Statistik's estimates ofexternal trade. External trade statistics are described in greater detail in Section 11.3. The estimatesuse one method for EU trade (Intrastat) and a different one for trade with non-EU countries(Extrastat).

The statistics have the same geographical coverage as the national accounts and are grossed up tocover all external trade in goods regardless of any administrative threshold values for the reporting ofEU trade to the Intrastat system. EU trade not reported is estimated on the basis of the quarterly VATreturns on all EU trade. The primary statistics do not therefore need to be grossed up for use in the

8 The balancing, however, normally complies with the principle that there has to be a counterpart entry to corrections toinventories in other changes in inventories which may reasonably be considered to have taken place within the sameenterprise. There are only a few exceptions, most often the introduction of 2064 changes in inventories in the goods inquestion.

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national accounts. The value levels in external trade statistics are f.o.b. for exports and c.i.f. forimports, as required by the ESA 95.

Since the external trade statistics in the national accounts take precedence over DanmarksNationalbank's estimates of settlements for the import and export of goods - after they have beenassigned to the transaction date, corrected to the same economic area and valued f.o.b. or c.i.f. -without the difference being set off against services or any other item on the balance of paymentscurrent account, it is clear that the official balance of payments surplus according to national accountsis not the same as the surplus according to the Nationalbank's settlements statistics. The implicitassumption is therefore that the Nationalbank settlements statistics for exports and imports of goodsdo not capture all cross-border transactions involving changes of ownership of goods, or possiblyinclude a certain amount of transit trade which should not be included in external trade estimated inline with the general trade principle, as required by the ESA 95.

5.16 Exports of services

Exports of services accounted for DKK 72 963 million, or 20%, of the DKK 357 454 million totalexports of goods and services in 1995.

The source for the estimate of the services export total is Danmarks Nationalbank's settlementsstatistics, which are based on the mandatory payment returns which all "currency residents", i.e.persons resident according to the Lov om valutaforhold [Foreign Currency Act] are obliged to submit.The currency provisions in this Act refer to a threshold value for payments below which no paymentreturns have to be submitted. In 1995, the threshold was DKK 60 000, i.e. so low that almost alltransactions in goods and services other than tourist income and expenditure and the like gave rise toa payment return from the resident unit which made or received the payment. Tourist income andexpenditure are covered directly by the returns sent to the Nationalbank by the financial institutions.

The Nationalbank has ordered the monetary institutions [commercial banks] to collect theinformation and pass it on to the Nationalbank. The information is confidential and is used forstatistical purposes only. Since the commercial banks through which settlements are routed ensurethat the payment returns are sent to and collected from their customers, the settlements statistics haveno noticeable non-response problems. The returns for settlements statistics have to report the purposeto the commercial bank, using a specific code. The breakdown by purpose of settlement (4-digitcode) has been much more detailed since 1998 and more satisfactory from the point of view of aproduct breakdown than was the case in 1995. The new coding designation makes it possible toproduce a more detailed breakdown of imports and exports of services by type than was previouslythe case. The rules valid in 2001 for returns to Danmarks Nationalbank settlements statistics werepublished in the Nationalbank publications "Udlandsbetalinger – Formålskoder", in June 1998, and"Udlandsbetalinger – Indberetningsforskrifter" in October 1998.

Resident units which make or receive payments via banks in the rest of the world are likewise obligedto submit payment returns. Compliance is ensured by legislation under which "currency residents"have to notify the Nationalbank when they open accounts in foreign banks etc. It is obvious that thisrequirement, and the penalties which go with it, increase the Nationalbank's chances of monitoringmovements.

The statistical challenge arising from the use of settlements statistics for the estimate of aggregateexports/imports of services lies in ensuring that the definition of what constitutes an export or an

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import of services remains consistent with the external trade statistics and national accounts estimatesof exports of goods f.o.b. and imports of goods c.i.f. Since the payments in the settlements statisticsare coded as goods or services depending on whether transport and insurance services are invoicedseparately or not, it is clear that the settlements statistics' delimitation of external trade ingoods/services will not tally with the national accounts' definitions. When settlements statistics areused for national accounts, therefore, a correction is made to exports and imports of services asestimated in the settlements statistics to bring the latter into line with the estimate of exports of goodsf.o.b. and imports of goods c.i.f.

This f.o.b./c.i.f. correction uses the "correction percentage method", i.e. a correction percentage isused for exports of goods to estimate the related services reported for settlements statistics togetherwith the payments for the goods, because the delivery terms have given the customer more transportand insurance than would correspond to f.o.b. delivery conditions. The opposite occurs on theimports side, where some transport and insurance services crop up in the settlements statistics asimports of services even though the services in question are already included in the imports of goodswhen these are estimated c.i.f.

The correction percentages for 1995 are fixed by comparing external trade statistics exports andimports with the settlements statistics' payments for goods, assigned to the transaction date, excludingthe Faeroes and Greenland, over a fairly long period. The correction percentages are fixed so that thebalance of goods and services over time will, as far as possible, be the same in both estimates, withthe constraint that the percentages estimated have to be compatible with information from externaltrade statistics on delivery terms for exports and imports of goods. More specifically, the f.o.b.correction percentage for exports for 1995 was fixed at 3.08 and the c.i.f. correction percentage forimports at 0.39.

Exports of services are then calculated by adding an amount of DKK 8 453 million to the settlementsstatistics' estimate of payments for services. This figure is 3.08 % of exports of goods according toexternal trade statistics, less exports to the Faeroes and Greenland and less exports of ships andaircraft. The amount is the amount estimated for transport and insurance services linked toDenmark's exports of goods which is in excess of f.o.b. delivery terms and which, in the settlementsstatistics, is included in the payments for goods. These services have to be treated as exports ofservices in the national accounts.

Similarly, imports of services are calculated by subtracting DKK 972 million from the settlementsstatistics estimate of payments for services. This is 0.39% of imports of goods according to externaltrade statistics, less imports from the Faeroes and Greenland and less imports of ships and aircraft.The amount is the amount estimated for transport and insurance services linked to Denmark's importsof goods which the settlements statistics fail to include in the c.i.f. delivery terms for imports of goodsand which are included as payments for services in the settlements statistics. These services have tobe treated as imports of goods in the national accounts.

The correction percentage method can be interpreted as Denmark's implementation of the f.o.b./c.i.f.corrections described in Tables 3.4 and 3.5 in the ESA 95 on the basis of the statistical sourcesavailable in Denmark. If countries have no settlements statistics, their method is likely to be verydifferent from Denmark's, since the basis will be questionnaire surveys, for example.

The breakdown of aggregate exports and imports of services in the national accounts product balancesfor services uses both the information on kind found in the settlements statistics purpose codes andother statistical sources such as the transport statistics estimates of the foreign freight income ofDanish vessels and expenditure in foreign ports. VAT statistics are also used - a source which is

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particularly useful on the exports side, since they contain information on tax-free export sales for eachof the most detailed DK-NACE industries.

5.17 Imports of goods

Goods accounted for DKK 256 522 million, or 81%, of total imports of goods and services in 1995(DKK 316 144 million).

Reference should be made to Section 5.15, since sources and methods are the same for imports as forexports of goods.

5.18 Imports of services

Imports of services accounted for DKK 59 622 million, or 19%, of the total imports of goods andservices in 1995 (DKK 316 144 million).

Reference should be made to Section 5.16, since the sources and methods are the same for imports asfor exports of services.

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6. The balancing procedure and main approaches to validation

6.1 Supply and use tables as a framework for balancing the functionalnational accounts

6.1.1 Definitions

A supply table is a matrix whose row dimension is the number of products specified in the economyas depicted by the national accounts and whose column dimension is the number of domesticindustries plus one column representing imports. If n is the number of products and m is the numberof industries, the supply table is a matrix of dimension n x (m+1). The table has positive row entriescorresponding to all sources of supply of a given product.

A use table is a matrix whose row dimension is the number of products specified and whose columndimension is the number of industries plus the number of final use categories (types of final consump-tion, gross capital formation, exports). If q is the number of final use categories shown, the use tableis a matrix of dimension n x (m+q).

The above general definitions are apparently very straightforward. In reality, however, the world isnot as simple as that, because supplies and uses of products are recorded at different price levelsdepending on where in the production and distribution chain the transactions are observed andrecorded. It is very important when talking about supply and use of products to be aware of whetherthe values recorded are inclusive of trade and transport margins on the one hand and taxes andsubsidies on products on the other.

The two main price level concepts of the SNA are basic prices and purchasers' prices including non-deductible VAT. GDP at market prices can be derived and presented as final uses (consumption,gross capital formation and exports) at purchasers' prices including non-deductible VAT less totalimports. The term "market prices" is in fact shorthand for purchasers' prices including non-deductibleVAT. The two price level concepts are defined as follows:

Basic prices:The basic price is the amount receivable by the producers from the purchaser for a unit of a good orservice produced as output minus any tax payable on that unit as a consequence of its production orsale (i.e. taxes on products), plus any subsidy receivable on that unit as a consequence of itsproduction or sale (i.e. subsidies on products). It excludes any transport charges invoiced separatelyby the producer. It includes any transport margins charged by the producer on the same invoice, evenwhen they are included as a separate item on the invoice. (ESA 3.48).

When output is recorded at basic prices, any tax on the product actually payable on the output istreated as if it were paid by the purchaser directly to the government instead of being an integral partof the price paid to the producer. Conversely, any subsidy on the product is treated as if it werereceived directly by the purchaser and not the producer. The basic price measures the amount retainedby the producer and is, therefore, the price most relevant for the producer's decision-making. It is

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becoming increasingly common in many countries for producers to itemise taxes separately on theirinvoices so that purchasers are informed about how much they are paying to the producer and howmuch as taxes to the government. (SNA 6.206).In the supply table, imports are valued c.i.f..

Purchasers' prices (including non-deductible VAT):At the time of purchase, the purchaser's price is the price the purchaser actually pays for the products,including any taxes less subsidies on the products (but excluding deductible taxes like VAT on theproducts); including any transport charges paid separately by the purchaser to take delivery at therequired time and place; after deduction for any discounts for bulk or off-peak purchases fromstandard prices or charges; excluding interest or service charges added under credit arrangements;excluding any extra charges incurred as a result of failing to pay within the period stated at the timethe purchases were made. (ESA 3.06).

An economist unfamiliar with national accounting concepts might perhaps ask why the national ac-counts need such complicated rules regarding the valuation of products. Why does the System not justrecord all transactions at market prices understood as purchasers' prices including non-deductibleVAT? The answer is first of all that in many cases a purchase of a good by the final user involves notone but several transactions - for instance, a sale from the original producer to a wholesaler, a salefrom the wholesaler to a retailer and finally a sale from the retailer to the final purchaser. Secondly, asremarked above, the price relevant for a producer in his decision-making is the basic price and not theprice paid by the final purchaser.

The reasons the SNA gives prominence to the concept of basic prices in the description of the produc-tion process can be summarised as follows:• It is the price concept relevant for the producer and hence for economic analysis of production• It is the price concept which is likely to feature in business accounts that often serve as the starting

point for filling out statistical questionnaires. It is thus observable.• Linear economic models (applied input-output analysis) require the values in dollars of the

different uses of a product to approximate as closely as possible to the physical quantities of theproduct used. This price homogeneity is best achieved by recording uses of products at basicprices.

A set of supply and use tables therefore contains not one but several use tables.

S (n x (m+1)) supply matrix at basic prices (c.i.f. values for imports)B (n x (m+q)) use table at basic pricesW (n x (m+q)) use table for wholesale trade marginsTR (n x (m+q)) use table for transport marginsR (n x (m+q)) use table of retail trade marginsT (n x (m+q)) use table of taxes less subsidies on products except VATV (n x (m+q)) use table of non-deductible VATP = B+W+TR+R+T+V

(n x (m+q)) use table at purchasers' prices including non-deductible VAT) (f.o.b. values forexports).

These tables are illustrated in figure 13 which, for simplicity, merges tables W and TR. In the Danishnational accounts, W and TR are merged as described in Section 3.12.5. Figure 13 illustrates thenumber of products, industries and final use categories in the Danish supply and use tables.

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6.1.2 The place of supply and use tables in the system of national accounts

The supply and use tables are directly linked to the first three accounts of the system of accounts forthe total economy, viz. the goods and services account, the production account and the generation ofincome account. They are merely a two-way breakdown of these accounts. The first dimension in thebreakdown is products, the second is industries and components of final uses.

6.1.3 Supply and use tables and the compilation of national accounts

6.1.3.1A powerful tool for integrating GDP(O) and GDP(E) plus to some extentGDP(I)

GDP is generally considered to be the most important aggregate in the national accounts. DeterminingGDP so that this statistical measure of production is both exhaustive and reliable is one of the mostdemanding tasks facing national accountants.

The key to achieving exhaustive and reliable estimates of GDP lies, apart from the existence of up-to-date registers or censuses enumerating the total population of producer units, in the systematicconfrontation of the various primary statistics underlying different components of GDP. The essenceof such a confrontation of statistical sources is that estimates derived using one set of estimates arecross-checked against alternative estimates of the same item derived using other sources. An exampleof such cross-checking could be a validation of the estimate of final household consumption of foodin the national accounts using alternative estimates derived in 3 different ways:

1. based on household budget surveys adjusted for tourist expenditures;2. based on retail sales of food adjusted for own-account consumption;3. based on total output of food plus imports less estimated intermediate consumption less changes

in inventories less exports.

The national accounts estimate finally retained after such a validation will clearly be more firmlybased than one that relies exclusively on a single set of sources.

It is well known that GDP can be derived from three different angles, namely production, expenditureand income.

In the production approach, GDP derived from the output side, GDP(O), can be written as:

GDP(O) = output at basic prices - intermediate consumption at purchasers' pricesincluding non-deductible VAT + taxes on products, net1)

Taxes on products, net, means taxes on products less subsidies on products. Non-deductible VAT ispart of taxes on products.

If VAi denotes value added at basic prices of industry i (i.e. output at basic prices less intermediate

consumption at purchasers' prices including non-deductible VAT), equation (1) can be rewritten as:

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productsonsubsidieslessproductsontaxesVAOGDPi

i� +=)( 2)

(2) says that GDP equals the sum of industry value added plus the total of taxes less subsidies onproducts.

In the expenditure approach, GDP(E) is derived as:

GDP(E) = final consumption + gross capital formation + exports - imports (3)

(3) says that GDP equals final national uses plus net exports.

Finally, in the income approach, GDP(I) is derived as:

GDP(I) = compensation of employees + gross operating surplus/mixed income (4)+ taxes on production and imports less subsidies.

(4) says that GDP equals the sum of primary incomes in the economy, i.e. wages etc., profits in abroad sense plus taxes less subsidies on production and imports.

Note that (1) includes the item "taxes on products less subsidies on products", i.e. net taxes onproduction which are linked to the quantity or value of output, whereas (4) contains the item "taxesless subsidies on production and imports", which consists of all taxes, net, on production and imports.Taxes and subsidies on production consist of taxes/subsidies on products, which are those directlylinked to the volume or value of output, and of other taxes/subsidies on production e.g. taxes onproperty and employment subsidies that are not directly linked to the volume or value of output.

As mentioned above, an important aspect of the quality of GDP estimates is the opportunity for cross-checks implied by equations (1), (3) and (4). Other things being equal, a GDP estimate which is basedon two or three approaches will be more reliable than one which basically relies on a single approach.However, the statistical value of the confrontation of the three approaches depends on theindependence or autonomy of the estimates derived from the three sides. If, for instance, final nationaluses are largely derived as residuals for product groups from the equation: final national uses = outputplus imports less intermediate consumption less exports, the expenditure approach, even though it ispresent from a purely formal point of view, does not really corroborate the estimate of GDP derivedfrom the production side. Conversely, if industry value added is estimated to a large extent frominformation on gross output by branch, and, for lack of information, intermediate consumption ratiosby industry are fixed so as to make the resulting value added tally with final uses, the output measureof GDP has virtually no autonomy. The output measure of GDP cannot in that case be said to validatethe expenditure measure. The same reasoning applies with respect to GDP(I).

Exploitation of the powerful checks on the level and evolution of GDP implied by the accountingrelationships (1), (3) and (4) therefore presupposes a high degree of independence or autonomybetween the statistical sources and methods underlying the three initial estimates of GDP namelyGDP(O), GDP(E) and GDP(I). Since the system of national accounts requires estimates to be drawnup for all the income and expenditure components of GDP, almost any country with a set of nationalaccounts will be able to present GDP from the three different angles. That, however, is not the samething as actually deriving GDP from all three angles. Most OECD countries are currently in a positionto estimate GDP from two angles. Some, including Denmark, have gone further and draw up initialestimates from all three sides before proceeding to an integration of these initial estimates into asingle official GDP figure.

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Given that GDP(O), GDP(E) and GDP(I) will not coincide, except by chance, the question arises as tohow these three measures should be integrated into a single compromise measure of GDP which willbe retained as the official figure. Looking first at the balancing or integration of GDP(O) and GDP(E),it must be observed that the difference between the two equals the difference between the initialestimate of total supply and the initial estimate of total uses of goods and services in the economy.The problem of integrating or balancing GDP(O) and GDP(E) is therefore equivalent to balancingtotal supply and total uses in the economy.

At the one extreme, this balancing can be done at the macro level. In some countries where largelyindependent estimates are compiled for GDP(O) and GDP(E), the official GDP measure is fixed asmax{GDP(O), GDP(E)} on the grounds that the lower figure is likely to have omitted someproduction. Alternatively, the official GDP measure could be fixed somewhere between the two,depending on the statisticians' informed opinion of the relative uncertainties involved. This methodmay be termed the macro integration method. If so-called statistical discrepancies are to be avoided,the discrepancies between the initial estimate of GDP(O) and the GDP finally retained must be brokendown by industry. By the same token, the discrepancy between the initial GDP(E) estimate and theofficial GDP measure must be assigned to particular expenditure components.

An intermediate strategy is to balance the accounts by looking at supply and use for broad categoriesof products, for instance by end-use categories. The systematic application of this method consists inusing an updated input-output table from the previous year or some benchmark year as integratingframework. This approach is currently used in some of the EU countries. Again, it is necessary toassign the initial differences to particular value added and expenditure components in order to avoidinconsistent accounts containing unexplained statistical discrepancies. This approach may be calledthe intermediate level balancing method.

Finally, the most systematic way of balancing GDP(O) and GDP(E) is to proceed product by product.When equilibrium in the resources-uses balances is achieved for all products by adjusting the initialestimates of supply and intermediate plus final uses, the macro discrepancy between total supply andtotal use of goods and services, and hence between GDP(O) and GDP(E), will be eliminated in theprocess. The result is a single GDP figure with no unexplained statistical discrepancies. Thisintegration method is the supply and use table method (sometimes called the commodity-flow orproduct-flow method). It implies that supply and use tables are drawn up each year as an integral partof the production of national accounts. This in turn implies that symmetric input-output tables areavailable for current years and not just for benchmark years.

In Europe, the supply and use table integration method is currently used in a few countries includingFrance, the Netherlands and Denmark. Some other countries have adopted a similar approach, albeitat a more aggregate level corresponding to the level of aggregation in input-output tables. Finally, in anumber of countries the supply and use table integration method has been used in establishing thebenchmark for the national accounts, but not in current years where more aggregate balancing isapplied. The ESA95 Regulation now requires all EU countries to draw up supply and use tables everyyear from the reference year 1995 onwards and with the data transmission starting in 2002. Theminimum level of detail required is 60 products and 60 industries. It seems likely that therequirements of the ESA95 data transmission programme will lead an increasing number of Europeancountries to move towards the supply and use table framework for integrating GDP(O) and GDP(E),at least for benchmark years.

The supply and use table framework understood as a product by product balancing process is the mostsystematic way to attain consistency between initial estimates of GDP(O) and GDP(E). This leaves

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the role of GDP(I). Since GDP(I) has no direct counterpart in terms of products, its link with supplyand use tables is much less direct than is the case with GDP(O) and GDP(E). Even so, GDP(I) isnaturally integrated into the same framework. To see this, take the case of the GDP(I) componentcompensation of employees. Suppose that estimates of compensation of employees by industry areavailable from tax or social security records, say. If, when balancing GDP(O) and GDP(E) using thesupply and use table approach, one arrives at an estimate of value added in industry i which,combined with the figures for wages etc. from the tax sources, leaves a suspiciously small (or largefor that matter) value for gross operating surplus and mixed income, there is clearly a problem in theaccounts. In that case the information contained in components of GDP(I) reveals a need to reviewthe value added estimate resulting from the integration of GDP(O) and GDP(E). In particular, it willbe necessary to compare compensation of employees as calculated from the accounts of producerunits (the outlays of producers) with compensation of employees as recorded for wage-earners in thetax files (income of wage-earners). However, since the strength of the supply and use table frameworkfeatures most clearly in the integration of GDP(O) and GDP(E), the question of the role of initialestimates of GDP(I) will not be pursued further in this context.

6.1.3.2The supply and use table framework: rationale and limitations

Over the past couple of decades, a consensus has emerged at the international level that the supplyand use table approach is the ideal framework for integrating components of GDP derived fromdifferent angles. The rationale for the supply and use table approach is basically a common senseargument: given that cross-checks of components of GDP derived from different angles are valuablein ensuring the quality of official GDP figures, obviously the more detailed the level at which thesechecks can be carried out the better.

This common sense argument may be elaborated to demonstrate that the strength of balancing thenational accounts at the product level shows up not only for the final national accounts at currentprices but for national accounts at constant prices and provisional and quarterly accounts as well. Themain strengths of the detailed product approach may be summarised in the following points:

(1) Exploitation of links between discrepancies between supply and use of products and specificcategories of uses.

Given an initial deviation between GDP(O) and GDP(E), it is difficult to know to which componentsto assign this discrepancy and thus which of the initial estimates to modify. Knowing which productsaccount for the major part of the macro discrepancy, on the other hand, yields a strong indication ofwhich components to modify. Example: suppose that GDP(O) is higher than GDP(E), and that a sig-nificant part of the macro difference is due to an apparent surplus of consumer durables. In that case,after verification of domestic production, intermediate consumption, imports and exports, it will beobvious that we should consider adjusting the initial estimates for final household consumption ofconsumer durables and possibly also gross fixed capital formation in these products. Conversely,suppose that GDP(E) is higher than GDP(O) and that there is an apparent deficit of consumerdurables in the economy. Assume further that the initial estimate of final household consumption is(partly) based on a household budget survey of good quality. In that case it will be necessary toinvestigate the exhaustiveness of the production and import figures for consumer durables as well asthe trade margins involved. In both cases, knowledge of which product groups are behind the macrodiscrepancy is of great use for achieving consistency in the national accounts.

(2) Exploitation of knowledge of the technical nature of products.

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Many products are used exclusively or predominantly for certain specific uses by virtue of theirtechnical nature. Knowing the domestic supply of individual products therefore serves as a check onthe intermediate consumption ratios and cost structures (technical coefficients) compiled in industrialsurveys. Example: if the domestic supply of cement does not tally with the input of cement into theconstruction industry estimated on the basis of technical coefficients derived from industrial surveys,the statistical sources on the supply and uses sides are inconsistent, and one of them needs to beamended. Knowing the product detail pinpoints a statistical problem, which might otherwise havegone unnoticed.

(3) Filling gaps caused by lack of basic statistics.

Most countries are likely to have gaps in their coverage in basic statistics of some components ofGDP. In the national accounts, an estimate will, of course, have to be drawn up anyway. Exploitingthe logic of the accounting system, i.e. the accounting identities of the system, in conjunction withknowledge of the products involved frequently enables solid estimates to be made in the absence ofbasic statistics. Example: suppose that the basic statistics needed to estimate gross fixed capitalformation from the expenditure side (part of GDP(E)) are not available. Even countries that do notrely on the supply and use table approach as the framework for integrating their national accountsoften exploit the commodity flow approach in order to estimate investment in machinery andequipment.

(4) Ideal basis for drawing up price and volume measures.

The supply and use tables provide the weighting structure needed for calculating national accounts atconstant prices and, more generally, for drawing up consistent price and volume measures for nationalaccounts aggregates. Indeed, without supply and use tables it is extremely difficult to implement thedouble deflation system in a consistent manner.

(5) Strong starting point for provisional yearly plus quarterly national accounts.

The structural relationships embedded in a set of supply and use tables are of great value forimproving the reliability of provisional and quarterly accounts which frequently have to be based onindicators instead of solid statistical information in the form of observations of the levels of thevariables.

Turning now to the limitations of the supply and use table framework, it should be realised that theapproach basically consists in the systematic and intelligent use of all the available information. Asalready observed, the supply and use tables can be used to fill gaps in basic statistics, but only at thecost of weakening the cross-checks which are the main strength of the approach seen as an integrationframework. Supply and use tables therefore cannot serve as a real substitute for the basic statistics un-derlying independent or largely independent estimates of GDP from the production, expenditure andincome sides. Supply and use tables should be seen as a complementary check to the check on GDPimplied by independent estimates of GDP from two or three sides, not a substitute for this basicvalidation.

That said, exploitation of the links between products and potential uses is a powerful tool. If productscould be split into two mutually exclusive groups, namely products used for intermediate con-sumption and products used for final uses, GDP could in principle be calculated from the supply side,given imports, exports and purchases by non-market producers, merely from exploiting theknowledge about the technical nature of products. In reality, such a strong relationship does not exist.Even in the case of gross fixed capital formation, there is no one-to-one relationship. A case in point

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is parts for machinery and equipment which may be used both as intermediate consumption and grossfixed capital formation. Nevertheless, the fact remains that most products have predominant uses, andit is this fact which contributes to making supply and use tables such a powerful statistical tool.

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6.1.4 Construction of supply and use tables

6.1.4.1Architecture of a system of national accounts based on supply and usetables

The basic structure of a statistical system capable of producing supply and use tables consists of thefollowing building blocks:

1. definition of the products to be specified in the supply and use tables in terms of product no-menclatures;

2. maintenance of an updated key between nomenclatures used in domestic production statisticsand foreign trade statistics and the products (commodity balances) employed in the supplyand use tables;

3. product statistics (breakdown of total output/sales by commodity) for most of the goods-producing industries (agriculture, manufacturing, energy, construction) and preferably also forservices;

4. foreign trade statistics for goods and balance of payments records for exports and imports ofservices;

5. key between activities/industries and national accounts products for industries not covered byproduct statistics;

6. accounts statistics or administrative records giving the ratio of intermediate consumption togross output for the various industries;

7. cost-structure surveys giving the breakdown of total intermediate consumption by product,and

8. sources giving final household consumption, gross fixed capital formation and changes ininventories by product groups.

In a supply and use table framework items (1) and (2) are indispensable, since the whole idea is tocombine domestic production statistics and foreign trade statistics in order to determine the supply ofeach product available for domestic uses. Items (3)-(8) should ideally be available withcomprehensive coverage each year. In practice, some of these points may only be covered partiallyand at intervals of some years. A supply and use table system is also workable in these circumstancesby exploiting the benchmark information to estimate yearly figures.

Ideally, each producer unit in basic statistics should be double-coded by both sector and branch in or-der to ensure consistency between the tables by industry (supply and use tables) and the institutionalsector accounts. This double coding is not necessary for the supply and use tables as such, but insituations where a new system of national accounts is established, it is advisable to take this step inorder to anticipate the further development and integration of the full system of national accounts.The result of this is the sector-industry table recommended by the SNA.

6.1.4.2Basic statistics required

The statistical unit used for the production and generation of income accounts of the SNA, and hencein supply and use tables, is the establishment (local kind-of-activity unit). Ideally, production statisticsand cost-structure surveys should be available for industries defined as aggregations ofestablishments. In practice, the statistical unit in production statistics for some activities is likely to be

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the enterprise i.e. a larger and more heterogeneous unit than the establishment. A system of supplyand use tables does not require production statistics drawn up from questionnaires filled out forestablishments to be available for all industries. Statistics based on enterprise information will in mostcases provide a reasonable approximation.

However, the strength of the system both as integration framework and for input-output analysis willbe greater the more homogeneous the industries in the system. National accountants should thereforetake care to separate out, wherever possible, trading and construction activity carried out as secondaryactivity in other industries and gather together trade and construction in "pure" branches which inprinciple encompass all trading and construction activity in the economy. Concentration on trade(merchanting) and construction is recommended because these secondary activities are likely to bequantitatively important and to have an input structure which differs greatly from those of the primaryactivities with which they are combined. Trade (merchanting) will be a secondary activity in manyindustries even when the statistical unit is the establishment.

6.1.4.3Filling the gaps if some of the basic statistics are missing

If production statistics are missing, fiscal information may often serve as a reasonable substitute, pro-vided it is adjusted for definitional differences and underreporting. The latter point should not beexaggerated, though. If enterprises underreport their turnover, say, on fiscal returns, chances are thatthey will do the same on statistical questionnaires. In both cases, corrections are needed forunderreporting. Often cost structure surveys will be missing for a number of industries in theeconomy. In that case, the input structure will have to be estimated on the basis of the input structureof similar industries and/or common sense considerations.

Gaps on the expenditure side can generally be filled by calculating the residual: output + imports - in-termediate consumption - exports. In that case, however, the autonomy of the expenditure estimatesvis-à-vis the production side is lowered, and the value of the cross-checks in the system iscorrespondingly reduced. Nevertheless, one of the major strengths of a supply and use tableframework is precisely the fact that rather detailed information can be derived for final demandcomponents by exploiting the accounting identities of the system of national accounts in conjunctionwith product information. A case in point is gross fixed capital formation by type of product. If therelationship between type of product and category of use is strong, and if imports constitute a largepart of total supply, estimates for GFCF derived using the product-flow method will, in fact, have areasonable degree of autonomy.

6.1.4.4Benchmark versus current years

If one has to build up a supply and use table framework from scratch, one of the greatest challenges isthe establishment of the initial input structure and the initial structure of trade and transport margins.Drawing up these initial structures requires mobilising the maximum number of cost-structure surveysavailable plus surveys of final household consumption and gross fixed capital formation. In the totalabsence of information on certain parts of manufacturing and construction, which is the normally thearea with the most complex input structure, it may be necessary to resort to (a) the input structure ofneighbouring industries, (2) input structures from other countries with a similar economic structure,or (3) common sense considerations. For market service industries, the input structure in terms ofbroad categories of products may frequently be available in accounting statistics and reports frombranch organisations. The detailed product breakdown must then be estimated on the basis of similarindustries and common sense considerations.

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For current years, it will normally be most efficient to begin with the input structures and the compo-sition of final uses from the previous year at constant prices (Leontief assumption) and to modify thestructure known from the past in the light of new cost-structure and final demand surveys that havebecome available in the meantime. In practice, this is done by inflating all the product flows in year t-1 by t/t-1 price indices and deriving the technical coefficients from the inflated year t-1 use table atbasic prices. These technical coefficients are then used to distribute the totals of intermediateconsumption and the totals of final demand components at basic prices by product. This inflationprocedure implements the Leontief assumption by adjusting the technical coefficients from year t-1for relative price changes between year t-1 and year t.

6.1.5 The balancing process

6.1.5.1Drawing up the initial estimates to be balanced

The computation of the initial (unbalanced) estimates of supply and use tables to be balanced in cur-rent years involves the following 7 steps:

Step 1 Calculate the supply matrix S from domestic production and product statistics plus foreigntrade statistics.

Step 2 For all industries, take total intermediate consumption by industry from the calculation ofGDP(O). Take all final demand components, i.e. final household consumption by purpose,collective consumption by purpose, gross fixed capital formation by type, changes ininventories by type and exports, from the calculation of GDP(E). These data together givethe column totals of matrix P.

Step 3 Move from the column totals of matrix P to the column totals of matrix B. This is done byusing matrices T and V from year t-1, adjusted for changes in the tax rules and adjusted so asto be aligned with tax revenues on an accrual basis, to calculate the column totals of matricesT and V. The column totals of matrix (P-V-T) are then distributed between the column totalsof matrices B, W, TR and R using the relationships between these column totals in year t-1,and preferably adjusted so as to match the target totals of trade and transport margins in thecurrent year t.

Step 4 Vertical distribution at basic prices. The column totals of matrix B derived in step 3 aredistributed by product (vertically) using the inflated technical coefficients from year t-1 asdescribed in section 6.1.4.4.

Step 5 Horizontal distribution. The differences between the row totals of matrix S less exports andchanges in inventories and the row totals of matrix B less exports and changes in inventoriesis distributed over uses (horizontally) by proportional distribution along the rows of matrix Bexcept for the items exports and changes in inventories.

Step 6 Initial estimates of matrices W, TR and R. These matrices are constructed by multiplying thematrix B after step 5 by the coefficients (rates of trade and transport margins) implied bymatrices W, TR and R from year t-1, and subsequently adjusting (proportionally) theresulting matrices to make them tally with total trade and transport margins as given by therow totals for the trade and transport industries in matrix S.

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Step 7 Initial estimate of matrices T and V. These matrices are estimated by modifying the T and Vmatrices from step 3 in order to take account of the changes in product flows intervening insteps 4-6. The adjustments are made proportionally so as to respect the total tax revenue onan accrual basis.

Note that the supply table is not modified at this stage. The procedure is thus based on the assumptionthat, at the level of individual products, supply is determined with greater certainty than uses. Theabove description gives a somewhat simplified picture. In practice, parts of the use tables will bedetermined and balanced in advance in subsystems (satellite accounts), for instance energy andinsurance services. Similarly, trade and transport margins on certain product groups may beconstrained by total margins of particular branches of trade and transport industries. Furthermore, inpractice steps 3-7 will be caried out several times in an iterative process. In practice, one starts bydistributing the column totals in the matrix (P-V-T) according to the relationships between thecolumn totals in B, W, TR, and R in year t-1 with a subsequent adjustment to the current year sumtotals for trade margins.. Then steps 4-7 are exercised. After that one can return to step 3 and computean improved split of the column totals in P into column totals of the matrices V, T, R, TR, W and B.Even so, the description contains the essence of the procedure required in order to manage a system ofsupply and use tables in practice.

The vertical and horizontal distributions set out in steps 4 and 5 above are essentially the first twosteps in the well-known iterative procedure known as RAS which is used for automatic updating ofsymmetric input-output tables. It should be observed that the RAS procedure cannot, however,balance a set of supply and use tables. The reason is that the necessary condition that the sum ofcolumn totals equals the sum of row totals is not satisfied. Taking automatic balancing further thanthe first two steps of RAS requires an algorithm which is considerably more sophisticated. Anyway,before considering the elimination of minor differences by automatic procedures, it will usually benecessary to treat a large number of substantial differences manually.

After step 7, all product balances are equilibrated. Supply equals use. GDP(O) equals GDP(E). In thatsense the above procedure has already balanced the national accounts. However, the column totals inthese initial use tables differ from the initial estimates of the column totals implied by the initialestimates of GDP(O) and GDP(E). The balancing process consists primarily in changing the uses ofproducts in such a way as to strike the best possible compromise between the column totals ofintermediate consumption by industry from the GDP(O) estimate and the column totals for categoriesof final uses from the GDP(E) estimate. Moreover, to the extent that initially estimated supply of agiven product or groups of products differs from demand in cases where demand information is veryreliable, the supply matrix will also have to be reconsidered. In most cases, though, the supply matrixis not modified at any point in the balancing process.

6.1.5.2Keeping track of uses at different price levels

The balancing process requires software which enables several national accountants ("arbitrators")chosen to settle the dispute between the initial estimates of the components of GDP(O) and GDP(E))to work on the initially established supply and use tables simultaneously. Each arbitrator enterschanges to these initial tables in a separate amendments file at basic prices, which is the price level atwhich supply and use must balance for individual products. Given the changes at basic prices, thecomputer system automatically computes the consequences for wholesale margins, transport margins,retail margins, taxes less subsidies on products and VAT by applying the relevant percentages fromthe initial files. Moreover, it is possible to introduce changes to all value levels in the supply and usetables. In particular, it is possible to amend the individual cells for trade margins and taxes on

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products manually during the balancing process. In addition, it is possible to introduce amendments atthe level of purchasers' prices and let the software compute backwards from there. However, in thelatter case the arbitrator has to make subsequent adjustments in order to ensure that the productbalance continues to have resources equal to uses at basic prices.

When all the arbitrators have finished their work on the areas of the economy for which they areresponsible, there will still be some generally minor differences between the total use of trade andtransport margins and the corresponding supply. A final round of balancing ensures that trade andtransport margins plus taxes in the use table sum up to their target totals on the supply side.Throughout the process, updated macro control tables showing the consequences of the amendmentsintroduced for the national accounts aggregates as well as the distance from the original column totalsof the supply and use tables are available to the arbitrators. The balancing process is terminated whenthe results shown by these control tables are found to reflect the best possible compromise betweenthe initial (inconsistent) estimates.

6.1.6 From supply and use tables to symmetric input-output tables

6.1.6.1Technology assumptions

Symmetric input-output tables are analytical tables used for input-output analyses. Contrary to supplyand use tables, which in principle are observable, they are based on certain assumptions. The formatof symmetric input-output tables is either product x product or industry x industry. Product by producttables show the inputs of products into production of products and final uses, whereas industry byindustry tables show the inputs of deliveries from industries into the production of output of industriesand final uses. In both cases the conversion from the statistical supply and use tables to the analyticalsymmetric input-output tables requires certain assumptions. The use of assumptions is necessitated bythe presence of secondary production. If there were a one-to-one correspondence between industriesand products, the symmetric input-output tables could be derived from the supply and use tables bysimple aggregation. The two standard technology assumptions are the so-called product technologyassumption and the industry technology assumption. In constructing symmetric input-output tables, itis possible to combine these two models into a mixed-technology assumption.

Whereas the literature on supply and use tables is sparse, there is a vast literature on the constructionof symmetric input-output tables. This is probably due to the fact that the latter topic has been seen asthe more interesting by theoretical economists. The size of the literature on the two issues should notbe seen as a reflection of their relative importance. In practice, it is much more important for thequality of symmetric input-output tables to get the supply and use tables right and to have areasonably detailed description of the economy than to use one or the other set of technologyassumptions for the conversion from supply and use tables into symmetric input-output tables.

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6.1.6.2The treatment of imports

Given that the supply table specifies the share of each product which is imported, the application oftechnology assumptions in the conversion from the supply and use tables into symmetric input-outputtables automatically gives total imports into each of the columns of the symmetric input-output tables.It is not necessary to aggregate imports by product into one single line, though. In the product xproduct tables, the Leontief matrix A, which shows the input of products into the output of products,can be compiled for both domestic production and for imports. The same is true for industry xindustry tables. Such detailed information on imports is valuable in many analytical uses of input-output tables. Consequently, compressing the detailed information on imports available in the supplyand use tables into a single line when drawing up the symmetric input-output tables is not to berecommended.

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6.2 Other methods of validating the GDP estimate

In addition to all the cross-checks involved in the balancing of the initial estimates of GDP from allthree sides, both the balanced GDP value and the components of the output, income and expendituresides undergo various further checks and validation procedures, the most important of which are:

1) probability checks on changes at constant prices (real growth rates);2) comparison of theoretical and actual VAT receipts;3) comparison of sectoral accounts for the household sector and tax statistics;4) comparison of lending/borrowing in the non-financial sector accounts and lending/borrowing

in the financial sector accounts prior to the final balancing, and5) employment comparisons.

1) gives rise to further balancing corrections in many cases. During the balancing process described inSection 6.1, the statisticians involved constantly keep an eye on the implicit real growth rates. If theseseem a priori to be improbable, the initial estimates of output, intermediate consumption and the finalexpenditure components are re-examined and balancing corrections may be made. As a result of thisfeedback from deflation to balancing in current prices, there may to some extent be said to be anintegrated balancing of the estimates at current and constant prices. But the supply and use matricesare deflated at a later stage than the current-price balancing. In exceptional cases, problems at thislevel of detail, which do not come to light until the deflation, give rise to a rebalancing of the supplyand use matrices at current prices. One of the checks on changes at fixed prices is a probabilitycheck on productivity changes, i.e. changes in real value added per person in employment.

2) was discussed in Section 3.25.3.

3) consists of a comparison of the gross income in the household sector with personal gross incomeaccording to tax statistics after correction for conceptual differences

4) was discussed in Section 1.6.3.

5) is discussed in Section 7.3

The final result of the GDP balancing for 1995 can be seen in Table 130.

Table 130 Initial estimates for GDP, three approaches plus balancedvalue

DKK million % of GDPOutput-based GDP - GDP(O) 1 009 179 99.9Income-based GDP - GDP(I) 1 009 562 100.0Expenditure-based GDP – GDP(E) 1 013 897 100.4Balanced GDP 1 009 756 100.0

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For 1995, the initial estimates of GDP based on the production and income approaches are similar,the discrepancy being under 0.1%. The initial expenditure-based estimate is somewhat higher, but allthree measures are still within a range of 0.5% of GDP, i.e. the normal range. The final balancedvalue is closest to the initial output- and income-based estimates, which is logical given the greaterstatistical weight attached to two initial estimates than to one. This final balanced level reflects thebest possible compromise between the three initial estimates for 1995 in the light of the detailedinformation on the kind and possible uses of the individual products in the economy, which isincorporated into the supply and use tables.

The total difference between final uses and the initial estimates as a result of the balancing is –DKK4.1 billion. This is divided into –DKK 3.8 billion for household final consumption, –DKK 1.3 billionfor gross fixed capital formation and - DKK 1.0 billion for changes in inventories. Governmentconsumption expenditure and exports and imports are unchanged from the initial estimates.

The above initial differences between the original estimates obtained from the three possibleapproaches are specific to 1995 and cannot be said to reflect any general pattern. For other years, thedifferences may have the opposite mathematical signs.

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7. Overview of allowances and adjustments for exhaustiveness

7.1 Explicit allowances

Starting with the information which comes from the accounts for the institutional units, the Danishnational accounts make the following allowances for unrecorded product transactions. In addition,there are, of course, the traditionally imputed figures such as non-market output of generalgovernment and NPISHs and the imputed rental value of owner-occupied housing. Fringe benefitsare to a certain extent – but by no means completely – covered in business accounts andadministrative data (salary information forms).

Table 131 Explicit allowances in the national accounts

Explicit allowances Value, % ofDKK mill. GDP

Farmers' output for own consumption etc. 382 0.04Own-account production of software and large databases 6 290 0.62Output of entertainment etc. originals 1 193 0.12Fringe benefits for employees 6 788 0.67Hidden activity, underreporting and the corresponding VAT fraud 7 317 0.72Total 21 970 2.18GDP 1 009 756 100

7.1.1 Allowances for farmers' output for own consumption etc.

These values are available from agricultural statistics, and are assumed to cover farm-gate sales aswell, most of which presumably come under the black economy. The values are based on agriculturalselling prices for the products concerned, i.e. they are at basic prices, as required by the ESA 95.Table 132 shows these products and their uses, divided into consumption groups.

Table 132 Allowances for farmers' consumption of own products

Product No Text Use Consumptiongroup

Value, DKK mill.

E020100 Cattle for ownconsumption

Householdconsumption

1120 22

E020301 Pigs for own consumption Householdconsumption

1120 151

E040107 Raw milk for ownconsumption

Householdconsumption

1142 184

E040700 Eggs for own consumption Householdconsumption

1141 25

Total 382

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7.1.2 Own output of software and large databases

The sources and methods used for this calculation were described in detail in Section 5.11.3.2.

7.1.3 Output of entertainment, literary or artistic originals

The sources and methods used to estimate the value of originals were discussed in Section 5.11.4.Statistics on culture give information on, for example, the royalties/copyrights which certainorganisations such as KODA and GRAMEX demand from users and pass on to the artists who holdthe copyrights. For loans from libraries, the authors receive "library money", which is also similar toroyalties. The output of artistic originals is divided by product as shown in Table 133. The totaloutput is allocated to capital formation.

Table 133 Allowances for entertainment, literary or artistic originals

Product No Text Use Value, DKKmillion

U920011 Originals – "library money" Gross fixed capitalformation

135

U920012 Originals – publishing contracts Gross fixed capitalformation

241

U920013 Originals – KODA Gross fixed capitalformation

173

U920014 Originals – NCB Gross fixed capitalformation

109

U920015 Originals – COPY-DAN Gross fixed capitalformation

311

U920016 Originals – GRAMEX Gross fixed capitalformation

48

U920017 Originals – licence payments from therest of the world

Gross fixed capitalformation

176

Total 1 193

7.1.4 Fringe benefits for employees

For 1995, allowances are imputed for payments in kind to employees (fringe benefits) covering thefollowing six products:

1) free cars2) free telephone3) canteen subsidies4) free housing5) free travel6) free newspaper.

In 1995, the total amount was DKK 6 788 million. Of these six goods, free cars and subsidies tocanteens are by far the most important, accounting for DKK 2 769 million and 3 223 millionrespectively.

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The value of free cars is taxable and as from income year 1994 has been reported by employers on thesalary information forms, together with wages and salaries in cash. The value is estimated in terms ofstandard rates which reflect realistic market prices, such as the rental payments for a similar car if itwere leased with a service agreement plus fuel costs etc. The standard rates are a percentage of theprices of new cars registered within the past three calendar years. The rate is reduced to 75% of thenew car price for vehicles older than that. There is also a ceiling for the purchase price taken intoaccount, which approximates to the price of a BMW 5-series model. The vast majority of companycars come below that ceiling. One might legitimately wonder how these rates can claim to be marketrates when it is generally considered to be a great financial advantage for individuals to have acompany car instead of a normal private car. The answer is simple. Earnings in the form of fringebenefits are taxed on the basis of the value of consumption, whereas earnings in cash are taxed on thebasis of income and not the post-tax consumption potential which corresponds to that income – i.e. amuch greater amount for the same consumption potential. Even with a realistic assessment of thevalue of fringe benefits, this asymmetry in the tax system means that, all other things being equal,there is a great advantage in receiving wages or salaries in kind rather than in cash if the goods inquestion are ones which would have been acquired anyway.

In the national accounts, the tax values are used for the value of free cars, as reported on theinformation forms.

The value of free telephones is likewise reported on the information forms in terms of standard rateswhich are a realistic reflection of market prices. As for cars, it is the values for tax purposes whichare used in national accounts. In 1995, the total value of free telephones was DKK 320 million.

The value of canteen subsidies is not taxable income provided that the employees pay a minimumprice for a meal which (more or less) covers the costs of the raw materials. The value of the employersubsidy for the running of canteens is consequently not reported to the tax authorities. The source forthe national accounts estimate here is the harmonised EU labour costs surveys which, as from 1995,are annual. From these figures, the canteen subsidy is calculated in a breakdown into the nationalaccounts' 130 industries, as a percentage of the compensation of employees in cash reported by thesurvey. This percentage is then applied to the cash figures for each of the national accounts' 130industries.

The value of free housing is reported on the information forms in terms of standard rates which are arealistic reflection of market prices. As for cars, it is the values for tax purposes which are used in thenational accounts. In 1995, the total value of free housing was DKK 105 million.

The value of free travel includes both free travel for employees in the transport sector and the bonuspoints earned on business travel and missions etc. which employers generally allow their employeesto use for private purposes. In principle, free travel is taxable income, but it does not need to bereported separately on the information forms. It may be assumed that this income in kind essentiallyavoids tax. The national accounts do not therefore use tax statistics as the source for the estimate buta price x quantity calculation. The price of free travel is based on the price of an air ticket with thesame restrictions as apply to the free journeys. In 1995, the estimated value was DKK 179 million.

The value of free newspapers is reported on the information forms as standard rates which are arealistic reflection of market prices. As for cars, the national accounts use the tax values. The totalvalue of free newspapers was DKK 192 million in 1995.

Table 134 shows the breakdown of wages and salaries in kind (fringe benefits) over the nationalaccounts' 130 industries. As might be expected, fringe benefits are particularly common within the

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market service industries and more particularly in wholesaling, where company cars are widely used.Only in a few cases do the many zeros in the table indicate a genuine zero in the cells in question.They usually mean that the values are under DKK 500 000.

Table 134 Wages and salaries in kind divided over the national accounts' 130 industries

Industry Car Telephone Canteen Housing Travel News-papers

Total

(130) DKK million011009 4 1 5 24 0 1 35011209 4 0 2 1 0 0 8014000 3 1 5 1 0 0 9020000 1 1 1 7 0 1 10050000 2 0 1 2 0 0 6110000 4 1 2 2 0 0 10140009 5 1 5 0 0 0 10151000 16 2 46 0 0 1 66152000 9 1 14 0 0 1 24153000 7 1 6 0 0 0 15154000 2 0 2 0 0 0 5155000 3 1 19 1 0 1 24156009 28 2 19 0 0 1 52158109 10 1 8 0 0 1 19158120 3 0 15 0 0 0 18158300 3 0 3 0 0 0 7159000 12 1 13 1 0 1 28160000 5 0 3 0 0 0 9170000 21 1 22 0 0 1 47180000 13 1 17 0 0 0 31190000 4 0 4 0 0 0 8200000 18 2 24 0 0 1 45210000 24 2 21 0 0 1 48221200 16 4 19 0 0 3 43221309 23 3 18 0 1 2 47222009 47 3 30 0 0 2 83230000 1 0 2 0 0 0 4241109 2 0 1 0 0 0 4241209 5 1 9 0 0 0 16241500 0 0 2 0 0 0 3241617 2 0 1 0 0 0 4242000 0 0 2 0 0 0 2243000 13 1 6 0 0 1 21244000 28 3 18 1 3 2 54245070 15 1 11 0 0 1 28251122 21 2 22 0 0 1 46252300 4 0 3 0 0 0 7252400 13 1 12 0 0 1 27261126 6 1 10 0 0 0 16263053 3 0 4 0 0 0 7266080 23 3 21 0 0 2 49271000 2 0 4 0 0 0 7272030 5 1 8 0 0 0 14274000 3 0 6 0 0 0 10275000 0 0 1 0 0 0 1281009 34 3 36 0 1 2 76286009 27 2 32 0 0 1 63291000 15 2 36 0 1 1 55

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292000 29 3 39 0 1 2 74293000 6 1 12 0 0 0 20294009 29 3 34 0 1 2 68297000 7 1 14 0 0 0 22300000 5 0 7 0 0 0 12310000 23 2 26 0 0 1 52320000 9 1 21 0 0 1 32330000 26 2 29 0 0 1 58340000 6 1 15 0 0 0 22351000 6 1 26 0 1 0 34352050 3 0 5 0 0 0 8361000 31 2 43 0 1 1 79362060 7 1 15 0 0 0 22370000 1 0 1 0 0 0 2401000 8 4 25 1 0 2 40402000 3 0 4 0 0 0 8403000 1 1 5 0 1 0 8410000 0 1 3 0 0 1 5450001 68 7 38 1 1 4 119450002 85 9 52 1 1 5 153450003 30 3 30 0 7 2 73450004 0 0 0 0 0 0 0501009 96 5 18 1 2 3 125502000 17 2 28 0 0 1 48505000 0 0 1 0 0 0 2510000 892 67 270 7 44 40 1 320521090 23 2 62 2 1 1 91522990 21 1 20 0 0 1 43523000 4 0 7 0 0 0 11524190 24 1 16 0 0 1 43524490 64 4 46 1 2 3 120551009 6 1 17 1 0 0 26553009 12 1 39 1 0 1 53601000 0 1 39 0 0 0 40602100 2 1 34 0 0 0 37602223 1 0 10 0 0 0 11602409 24 3 50 0 1 2 81610000 17 4 28 0 9 2 60620000 4 1 22 0 21 1 49631130 12 2 27 0 24 1 67634000 54 7 18 0 11 4 95640000 15 13 77 0 7 8 119651000 31 4 72 8 0 2 118652000 38 3 23 2 0 2 67660102 5 1 11 0 0 0 18660300 35 4 23 2 0 2 67670000 16 1 25 0 0 1 43701109 12 2 10 1 2 1 27702009 11 6 19 6 0 3 45702040 9 1 13 1 0 0 24710000 15 1 27 0 2 1 46721009 15 2 13 0 3 1 34722000 40 4 22 0 4 3 72730001 2 0 4 0 0 0 6730002 0 0 10 0 0 0 10741100 14 2 13 0 1 1 31741200 59 7 21 1 1 4 92742009 62 8 49 2 6 5 132744000 39 3 30 1 2 2 76

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747000 28 1 12 0 0 1 41748009 69 6 34 3 4 3 120751100 0 10 69 0 0 6 85751209 0 2 60 0 0 1 63751300 0 1 29 0 0 0 30752000 5 1 87 0 0 0 94801000 0 4 110 0 0 2 117802000 0 1 45 1 0 0 46803000 0 0 30 0 0 0 30804001 1 0 1 0 0 0 3804002 0 1 16 0 0 1 17851100 0 1 117 0 1 1 120851209 36 5 43 1 0 3 88853109 0 2 83 0 0 1 87853209 1 5 139 2 1 3 150900010 1 0 11 0 0 0 13900020 3 4 10 0 1 2 19900030 1 0 3 0 0 0 4910000 18 15 44 3 1 9 89920001 15 4 28 2 2 3 54920002 0 0 15 0 0 0 16930009 9 1 11 0 0 0 21950000 0 0 0 0 0 0 0

0 0 0 0 0 0 0Total 2 769 320 3 223 105 179 192 6 788

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7.1.5 Work in the black economy, underreporting and the associated VATfraud

In the national accounts, there are two types of allowance for the black economy, one for hiddenactivity and one for underreporting and the associated VAT fraud. In any given industry, there is –with a single exception – only one type of allowance. This avoids the risk of double counting, i.e. agiven black economy activity being counted both at the employer and again separately for theemployees who carry out such activity. The exception is national accounts industry 524490, "otherretail sale, repair work", where allowances are added in for both the underreporting of retail activityand work in the black economy linked to the "repair work" sub-branch. At sub-branch level,therefore, it is also a question of either/or when there are allowances for hiddenactivity/underreporting. The allowances are additions to output and value added, for equal amounts.No corrections are made to the intermediate consumption calculated.

In all cases where there are allowances for underreporting and the associated VAT fraud, the taxevasion is assumed to be without the buyer's connivance, meaning, for example, that the individualrestaurant customer does not know whether the payment for his meal goes through the cash register ornot. It does not mean that the individual is unaware that underreporting occurs to a certain extent inthe restaurant branch and that some of the tax savings are passed on to the consumers in the pricesthey pay.

Allowances are made for underreporting and the associated VAT fraud in the following industries:

524490 Other retail sale, repair work553009 Restaurants930009 Hairdressing salons.

It is assumed that the producers in the industries in question have demanded the usual purchase pricefor the goods and services which are not routed through the cash register. In addition tounderreporting their turnover, they are also evading VAT by demanding VAT from their customerswhich is not reported or remitted to the tax authorities. An allowance is therefore calculated with aVAT rate of 25% in addition to the allowance for underreported sales. This ensures consistencybetween supplies and uses of the products concerned and with the income created by the productionof those products. One particular form of underreporting is tips and gratuities, where a furthercorrection is made for the associated VAT fraud.

Part of the value added created by underreported sales and VAT fraud is paid out as "black" wages tothe non-registered employees in the producing enterprises. Of a total value added connected withunderreporting etc. of DKK 3 084 million in 1995, DK 1 660 million goes to employees in the formof "black" wages – cf. Table 14. The remainder is gross operating surplus and mixed income in theregistered enterprises which are responsible for the underreporting.

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Allowances are made for work in the black economy in the following industries:

050000 Fishing158120 Bakers' shops180000 Manufacture of wearing apparel etc.222009 Printing activities281009 Manufacture of construction materials of metal361000 Manufacture of furniture362060 Manufacture of toys, gold and silver articles, etc.450002 Repair and maintenance of buildings450001 Construction of new buildings502000 Repair and maintenance of motor vehicles524490 Other retail sale, repair work602223 Taxi operation and coach services741200 Accounting, bookkeeping, auditing, etc.747000 Industrial cleaning851209 Medical, dental, veterinary activities, etc.920001 Recreational, cultural, sporting activities (market)950000 Private household with employed persons.

In all of these cases, the tax evasion is assumed to take place with the buyer's connivance, since,unlike in retail trade, restaurants and hairdressers', this is expenditure which the purchasers incurinfrequently, in many cases contacting the producer for a quotation for a specific job of work. Theproducer and the purchaser agree that this price is "off the books", in other words there is anagreement that the work will be carried out in the black economy. The repair and maintenance ofbuildings would be a typical example.

It is, of course, fairly common for employees in or the owners of firms which are registered for VATto work in the black economy. In the national accounts, this hidden activity is treated not asunderreporting in a registered enterprise but as secondary activity in a "black" unregistered enterprise.Consequently, all those employed in the black economy are considered to be self-employedentrepreneurs, and all the income from such activity is gross operating surplus and mixed income.The exception is industry 950000, Private households with employed persons, where the whole of thevalue added is by definition compensation of employees. In 1995, this value was DKK 1 235 million– cf. Table 135.

Underreporting is estimated in terms of levels for years 1992-95 on the basis of an analysis of thepurchase percentages for the individual enterprises in the relevant industries according to VATstatistics plus information on the extent of work in the black economy taken from a special surveycarried out for 1992 in connection with the Labour Force Survey (LFS). High purchase percentagesin enterprises other than start-ups with potentially high levels of capital formation are considered to bean indication of underreporting. The standard maximum purchase percentage in this connection isbased on the percentages for enterprises which, by virtue of type of ownership etc, may be consideredto have reported all their sales and purchases accurately. Account is also taken of the tax authorities'experience with their checks on retail trade, which indicate that turnover not reported isapproximately twice the undeclared wages paid to black economy employees. The levels for 1992-1994 are initially projected using changes in output in the corresponding legitimate activities. For1995, the figures were adjusted downwards somewhat from this initial level, since the results ofresearch based on interview surveys carried out by the Rockwool Foundation's research unit show a

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fall in the number of hours worked in the black economy, possibly as a result of the strong economyin years 1994 onwards.

The allowances for work in the black economy are estimated in terms of levels for 1992 from theabove-mentioned special survey linked to the LFS for that year. Detailed documentation on thissurvey, which was carried out under an EU contract, was sent to Eurostat in 1993. The prices forwork in the black economy are, as required for national accounts purposes, actual transaction prices –i.e. "black" prices per hour worked – and not the hourly wages which would have applied if the workhad been carried out in the legitimate economy. The 1992 levels are initially projected using changesin the output value of the corresponding legitimate activities. For 1995, the figures were adjusteddownwards somewhat from this initial level, since the results of research based on interview surveyscarried out by the Rockwool Foundation's research unit show a fall in the number of hours worked inthe black economy, possibly as a result of the strong economy in years 1994 onwards.

Table 135 shows all the Danish national accounts' explicit allowances for underreporting, VAT fraudconnected with underreporting, tips and gratuities with the associated VAT fraud and work in theblack economy, divided by product. For the products shown, the basic price value equals purchaseprice value. No VAT or other taxes on products are paid, of course. The allowances are added toboth output and value added, with intermediate consumption assumed to be declared.

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Table 135 Explicit allowances for underreporting and work in the black economy

Product No Text Value, DKK mill.H050000 Black-economy output, fishing 12H150037 Black-economy output, manufacturing 286H454001 Black-economy output, building repairs 1 487H454010 Housing construction in the black economy 67H502000 Black-economy output, repair and maintenance of

motor vehicles354

H524490 Underreporting in the retailing of foodstuffs 1 000H524491 VAT fraud connected with underreporting in retail

trade250

H527210 Black-economy repairs to household appliances 231H553000 Underreporting in restaurants 1 038H553001 VAT fraud connected with underreporting in

restaurants260

H553002 Underreporting connected with tips and gratuities 216H553003 VAT fraud connected with the underreporting of tips

and gratuities54

H602223 Black-economy output, taxi operation and coachservices

149

H741200 Black-economy output, accounting, bookkeeping etc. 86H747010 Industrial cleaning in the black economy 19H851400 Black-economy output, healthcare 34H923110 Black-economy output, live theatrical presentations,

concerts, etc.273

H930210 Underreporting, hairdressing salons 213H930211 VAT fraud connected with underreporting in

hairdressing salons53

T950000 Private households with employed persons 1 235Total 7 317

7.2 Implicit allowances

No explicit allowances for underreporting are made in agriculture etc, mining and quarrying,dwellings, the letting of non-residential premises, industries where public corporations predominateor general government. In mining and quarrying, financial activity and general government, the blackeconomy is assumed not to exist, since these activities are carried out either by public authorities orby very large entities which are closely monitored by public authorities.

For agriculture etc. and dwellings, output is estimated, as described in Chapter 3, using a price timesquantity calculation. This captures the value of underreporting and work in the black economyimplicitly, since the method ensures that all output in these areas is covered. But it is not possible toestimate concealed activity explicitly, neither is it possible to do so for the letting of non-residentialpremises, where the output value is estimated from the expenditure side.

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As explained in Section 3.25.3, the national accounts include an implicit correction for theunderreporting of value added which occurs when very small sole proprietorships, which are notobliged to submit SLS-E forms, overstate their intermediate consumption. These are cases whereexpenditure on private consumption is counted as operating costs in the enterprise.

7.3 Validation: comparisons with employment data from demographicsources

In connection with its implementation of the Commission Decision (94/168/EC, Euratom) of 22February 1994 on measures to be taken for the implementation of Council Directive 89/130/EEC,Euratom on the harmonization of the compilation of gross national product at market prices("exhaustiveness decision"), Denmark carried out a comparison of supply-side and demand-sideemployment for reference year 1991.

Demand-side employment (point of view of the enterprises) is the employment underlying theestimate of GDP using the output approach, i.e. employment in those producer units which arecovered by the estimate of the industries' gross value added. As described in Sections 3.1.1. and4.1.16, the employment underlying the estimate of the industries' value added before the allowancesfor activity in the black economy is employment according to the ERE [establishment-relatedemployment] statistics.

Supply-side employment is demographic employment figures reported by households in the form ofpopulation censuses and labour force surveys. Since Denmark has not carried out traditionalpopulation censuses since 1970 but has switched to register-based estimates, it has only onedemographic source, namely the EU-harmonised Labour Force Survey (LFS).

Denmark validated the GNI estimate with the help of employment data by comparing the ERE and theLFS statistics. The report entitled "Validering af den beskæftigelse, som ligger til grund fornuværende BNI-beregninger", ["Validation of employment underlying the current GNPcalculations"], which Denmark sent to the Commission in 1994 as required by the exhaustivenessdecision, discusses the methods used, including conceptual corrections, for the comparison of thestatistical sources in question. The comparison relates to 1991.

Table 136 gives the main results of this comparison.

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Table 136 Comparison of employment data from the demand side and from the supply side

Self-employed etc.

Employees Total

ERECalculated man-years (annual FTEs) 239 000 1 946 000 2 185 000+ employment< 10 hours 0 25 000 25 000+ certain primary self-employment 30 000 0 30 000+ secondary VAT payers 30 000 0 30 000Corrected FTEs 299 000 1 971 000 2 270 000

LFSCalculated FTEs 288 000 2 038 000 2 326 000

LFS – ERE -11 000 67 000 56 000% of LFS -3.8 3.3 2.4

The conceptually-corrected ERE statistics show that the volume of labour in Denmark in 1991 can beput at 2 270 000 FTEs, 299 000 of which were supplied by the self-employed etc. and 1 971 000 byemployees. The LFS-based estimate, however, gives 2 326 000 FTEs divided into 288 000 self-employed and 2 038 000 employees. There is thus a difference of 56 000 FTEs in the two estimates,or 2.4%. For the self-employed, the ERE figures are higher than the LFS, probably due to uncertaintyin the ERE statistics corrections and the LFS sampling uncertainty. There remains a difference foremployees, only some 20 000 of which can be explained by the statistical uncertainty in the LFS.

If we first look at the whole of the economy apart from general government, we see that the LFS hasrecorded 14 000 more FTEs than the register estimate. Almost the whole of this difference, 11 000,can be explained by the industry "Private households with employed persons". Employmentconnected with private help in the home is in the vast majority of cases work in the black economy,and this would therefore be a reasonable explanation of the difference here. The national accountsemployment estimate for the industry is close to the LFS estimate. In general, hidden activity isunlikely to be captured by the LFS (without specific extra questions), since in many cases it isequivalent to a second job for employees who are otherwise legally employed. The remainingdifference of 3 000 excluding general government is considered to be due to the fact that the LFScaptures a certain amount of work in the black economy by students, pensioners, etc.

There remains sector S.13, general government, where the difference is 53 000 FTEs. Since 10 000 atthe most can be explained by sampling uncertainty in the LFS estimate, it would seem that the LFSindicates slightly higher employment than the register estimate.

A substantial share of this difference may be attributed to the calculation of FTEs based on thecontribution to the Arbejdsmarkedets Tillægspension (ATP) social insurance scheme, which is used inthe ERE statistics. Since the general government sector has a relatively large share of part-timeemployees, the ATP-calculated FTEs are more uncertain in this sector, in particular. In addition,there is the widespread uncertainty about the allocation to industries. The calculated difference in thetwo estimates of employment in general government cannot therefore be taken as evidence of the factthat there are some units missing from the register-based statistics. All producer units belonging toinstitutional units in S.13 are included in the business register. The possibility that there is work inthe black economy in producer units owned and controlled by general government must, of course,also be ruled out.

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Finally, in the individual industries there are relatively large differences in the two FTE calculations.These virtually cancel each other out, however, and must be ascribed to different industry allocationsin the two estimates.

In 1995, the Commission approved the Danish comparison of employment as being totallysatisfactory as evidence of the degree of coverage of the GNP estimates. Since the 1994 employmentcomparison did not throw up any problems with coverage of productive activity in the Danishnational accounts, it was decided not to sacrifice resources to updating this comparison, but instead toconcentrate them in other areas.

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8. Transition from GDP to GNI

8.0 Introduction

Table 137 shows the transition from GDP to GNI.

Table 137 Transition from GDP to GNI, 1995

DKK mill.GDP 1 009 756

+ Compensation of employees from the ROW 6 847- Compensation of employees to the ROW 1 982+ Property income from the ROW 108 456- Property income to the ROW 134 271- Taxes on production and imports to the ROW 2 320+ Subsidies from the ROW 10 588= Nationally published GNI (ESA 95) 997 074- EU's third own resource (definitional difference) 5 323

= GNI according to ESA 95 991 751

8.1 Compensation of employees to and from the ROW

The source is the Nationalbank settlements statistics, which were discussed in Section 5.16. Thefigures are corrected for wages and salaries paid to Danish building workers employed on buildingsites in the ROW. Since these sites are considered to be producer units in the ROW, the wages andsalaries which go to Danish workers should be considered as coming from the ROW even thoughthey are paid by the Danish construction firm. The source for this correction is VAT statisticsinformation on tax-free export sales by Danish construction firms. A share of these "export sales" isconsidered to be wages and salaries from the rest of the world. The only other statistical problem isthat the ESA 95 requires the compensation of employees to and from the ROW to be recorded gross,i.e. before deductions for income tax and social security contributions which are deducted at source inthe rest of the world, whereas the settlements statistics record actual payments, i.e. the wages andsalaries paid out after tax etc. has been withheld in the ROW.

The settlements statistics figures for the compensation of employees to and from the ROW aretherefore corrected for income taxes and social security contributions paid. The correction estimatesthe shares of the total compensation accounted for by income tax and social security contributions,and these can be seen in Table 138.

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Table 138 Income tax and social security contributions withheld at source

% From the ROW To the ROWIncome tax 24.0 40.0Social security contributions 21.0 2.6Total 45.0 42.6

The 24% for income tax from the rest of the world reflects the fact that the share of income tax in theGDP of Sweden and Germany is on average 40% lower than in Denmark, where the tax rate is 40%.Similarly, the 21% of social security contributions from the ROW reflects the fact that the share ofthese contributions in the GDP of Sweden and Germany is around eight times higher than inDenmark. The social security contribution share of wages and salaries in Denmark is estimated fromthe ratio of contributions remitted to general government to aggregate wages and salaries according tothe national accounts.

8.2 Taxes on production and imports

These taxes to the EU are recorded directly in central government accounts, in gross terms, before thepayment of 10% of customs revenues which the Member States receive as payment for administrativeservices. These services are counted as exports of services.

8.3 Subsidies

Subsidies from the EU are recorded in central government accounts. The figures are exhaustive andthe subsidies are divided by scheme.

8.4 Interest

The source is Danmarks Nationalbank's settlements statistics – cf. Section 5.16. Under interestpayable to the ROW, a correction is made for losses on the issue price of discounted bonds and theindex-linked premiums on index-linked bonds. The ROW has large holdings of these types of bondsissued by Danish residents. In line with the ESA 95, the method used to break down losses ondiscounted bonds over their lifetime is the mathematical method based on the debtor's point of view.Conversely, there is no correction on the income side. Since these types of bond are much lesscommon in the ROW than in Denmark, and there is no information available on Danish residents'holdings of foreign bonds divided by fund code, it was decided not to make any correction on theincome side for the time being. As far as is known, Danish financial institutions' holdings of foreignbonds issued at prices very different from par and of foreign index-linked bonds are at presentinsignificant.

There is currently no correction for tax withheld at source on interest income received from and paidto the ROW. There is no such tax in Denmark and (for reasons of competition) it is not common inother countries, either. If the EU or any other international body decided to introduce a withholdingtax, the method of calculation would, of course, be amended in this respect.

In addition to actual interest, property income allocated to insurance policyholders to and from theROW is calculated. For sources and methods of insurance calculations, reference should be made toSection 3.16. All property income allocated to policyholders who are non-resident is assumed tocome from non-life insurance. The values for 1995 are as follows:

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Property income allocated to policyholders from the ROW: DKK 356 mill.Property income allocated to policyholders to the ROW: DKK 503 mill.

8.5 Distributed income of corporations

The source is Danmarks Nationalbank's settlements statistics – cf. Section 5.16. No correction ismade for withholding tax on income distributed to or from the ROW. It is therefore implicitlyassumed that tax is always refunded to ROW dividend recipients if there is a withholding tax on thosedividends. Since settlements statistics record dividends as at the date of payment, payments areperiodised in line with paragraph 4.55 of the ESA 95.

No correction is made for reinvested interest and dividend income in mutual funds which issueaccumulation units. Under Commission Decision 97/157/EC, Euratom, reinvested earnings in suchfunds are considered to be property income for the owners of the investment certificates. There are,however, no statistical sources which can provide information on Danish residents' holdings ofinvestment certificates in foreign mutual funds. Where appropriate, it should be up to the EUCommission to collect and pass on such information to the Member States.

In Denmark, as in most other countries, there is a range of resident mutual funds which enableinvestors to invest in virtually all types of domestic and foreign securities, and there is therefore noobvious incentive for residents to invest in foreign rather than domestic funds unless the motive is taxevasion. It must be considered likely that those Danes who may have such investment certificates inthe ROW have chosen countries with rules on banking secrecy such as Switzerland or Luxembourg.It goes without saying that the banking authorities in those countries do not readily discloseinformation which can shed light on the extent of possible tax evasion.

At present, the amounts in question are considered to be vanishingly small on both the income andexpenditure sides, since the Nationalbank's foreign exchange rules make it impossible to transferlarge sums to other countries via monetary institutions without the authorities' knowledge.Transporting large amounts of cash across national borders is, however, both difficult and risky. Thelack of any correction is therefore considered to be of very minor importance.

It is well known that some Danish citizens have large financial assets in the ROW, but the knowncases are Danish nationals resident in another country, and their property income from the ROWshould not be included in the Danish national accounts. For wealthy Danes who wish to avoid beingtaxed on their property income, emigration is an entirely legal way of avoiding the high Danish taxrates on positive property income.

If the Commission produces information collected from those European countries which havebanking secrecy, a correction will be made for reinvested earnings in foreign mutual funds withaccumulation units.

8.6 Reinvested earnings on foreign direct investments

For the balance of payments statistics, Danmarks Nationalbank estimates reinvested earnings on thebasis of questionnaire surveys, which in principle cover all inward and outward foreign directinvestment enterprises. The population for the questionnaire surveys is a register of allfirms/enterprises in Denmark which represent foreign direct investments, along with Danish firms'direct investments in the ROW. The source for register updating is the settlements statistics, the basic

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figures of which include information on payments to and from Denmark in connection with directinvestments at individual unit level.

Up to now, the settlements statistics have operated with a threshold value for reporting of DKK 60000. As of 1 January 2001, the minimum value was amended to DKK 100 000. These thresholdvalues are so low that it may be assumed that settlements statistics capture all transactions relating toboth inward and outward foreign direct investment.

The recording of financial transactions (direct investments) includes the following information:0 CVR (business register) number1 Branch code2 Sector code3 Type (inward or outward)4 Amount5 Currency involved6 Partner country7 Date entered in the books8 Indication of purpose.

It is thus possible to obtain information on the Danish corporation to which the direct investmentsrelate. For example, in the case of NKT's sale of Giga to the foreign Intel, Giga's CVR number willfeature. It will not be possible, however, to see who has sold the equity. To decide who the sellersare, we therefore have to use accounting information on the ownership structure of the corporationsold.

It will not be apparent, either, whether and to what extent part-payments are involved (for example, inconnection with an agreement that an investment will take place over several periods) or whether thetransaction is one-off.

The indications of purpose show whether the equity is being set up/extended or liquidated. Extendingequity from under 10% to over 10% also constitutes direct investment, even if the extension is under10% - and the same applies to liquidation.

The balance estimates for direct investments are based on the Nationalbank's annual questionnairesurvey (which is also used for the estimate of Denmark's foreign debt).

The questionnaire surveys include the following information:

0 CVR number (as from the census year 2000 – previously, recording by log entry number)1 Partner country2 Percentage share of capital3 Amount4 Result before tax/dividend retained/dividend paid out/operating surplus.

"Capital" means share capital plus reserves, including the undistributed share of previous years'results. For corporations quoted on the stock exchange, the quoted value is also reported.Investments in unlisted corporations are included in terms of the corporation's book value.

The reinvestment of earnings on foreign direct investments is calculated for each individual directinvestment enterprise as the difference between the surplus for the year and the dividends paid out

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during that same year. The information on equity collected by the questionnaire survey is used for theestimate of income and expenditure for Denmark.

377

9. Transition from GDP to GNP (ESA 79 definition)

Under the Commission Decision (97/178/EC, Euratom) on the definition of a methodology for thetransition between the European System of National and Regional Accounts in the Community (ESA95) and the European System of Integrated Economic Accounts (ESA second edition) and certaindecisions on the excessive deficit procedure, it was agreed that the transition from one system ofnational accounts to the other had to do with the following changes of concept which have an impacton GNP:

(1) Residence criteria(3) Insurance(4) Direct investment earnings(5) Interest income(6) Cultivated natural growth of plants(7) Computer software and large databases(8) Military equipment and vehicles, other than weapons(9) Work in progress on services(10) Mineral exploration expenditures(11) Consumption of fixed capital on roads, bridges, etc.(12) Government licences and fees(13) Valuation of output for own final use and output from

voluntary activity(14) Value threshold for capital goods(15) Market/non-market criteria(16) Subsidies(17) Entertainment, literary and artistic originals(18) Services associated with the licence to use entertainment,

literary and artistic originals(19) Garages(20) Car registration taxes paid by households(21) Wages and salaries in kind(22) Licences for the use of intangible non-produced assets

Commission Decision 98/501 (excessive deficit procedure):(23) Stamp taxes(24) Financial leasing(25) Pension funds

Eurostat Decision (excessive deficit procedure):(26) Changes in the due dates for payment of taxes etc.

Approval by the GNP Committee(27) Minor repairs and maintenance in owner-occupied housing

Table 139 shows how each of the definitional differences affects the estimate of GDP and itscomponents from each of the three points of view. According to the GNP Committee Decision, allcountries have to compile this table for 1995. The table complies with the layout and analysis inCommission Decision 97/178. First of all, the sources and methods for each of the above pointswhich is relevant in Denmark's case are discussed. The numbering corresponds to the numbering inthe Commission Decision. Only one point in this Decision, namely FISIM, has since proved to beirrelevant, since financial intermediation services paid for indirectly are not at present divided up byuser industry or sector.

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(1) Residence criteria

No difference in Denmark's case. In both systems, all building on building sites in the ROW iscounted as activity in quasi-corporations (notional resident units) in the ROW.

(3) Insurance

For both non-life and life insurance, property income transferred to policyholders is estimated asdescribed in Section 3.16. A corresponding estimate is made in line with ESA 79 definitions, whichbroadly speaking excludes property income transferred to policyholders in the case of non-lifeinsurance. The difference is then calculated. For 1992, there was a breakdown at the most detailedlevel for industries and types of insurance. For all years after 1992, this calculation of the definitionaldifference is projected for individual cells in the supply and use matrices on the basis of changes inthe total for the definitional difference relating to property income transferred to policyholders.

(4) Direct investment earnings

The sources and methods were described in Section 8.6.

(5) Interest income

The definitional difference relates to the treatment of losses on the issue prices of bonds issued atrates other than par and the index premium on index-linked bonds. The sources and methods weredescribed in Section 8.5.

(6) Cultivated natural growth of plants

At present, this is not relevant to the annual national accounts, since felling is currently considered tobe a reasonable approximation of the growth in the volume of wood in the forests. The exception isyears affected by serious storm damage. Hurricane-type storms occurred in 1967, 1981 and 1999.Corrections have been made for years affected by such storms, but 1995 was not such a year. Oncethe results of the latest forestry census are available and can be compared with the figures for tenyears previously, consideration will be given to switching over to a direct estimate of growth in thevolume of wood.

(7) Software and large databases

The sources and methods for the estimate of capital formation were discussed in Section 5.11.3. Forthe calculation of the consumption of fixed capital in government non-market activity, an averagelifetime of three years is assumed. In connection with a revision of the capital stock estimatespublished in 2001, software lifetimes have now been revised to three years for purchased and sixyears for own-developed software. These lifetimes will from now on also be used for generalgovernment estimates.

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(8) Military equipment and vehicles, other than weapons

Capital formation is estimated from information on purchases for military uses in central governmentaccounts, in a breakdown by type. A lifetime of 25 years is used for the calculation of fixed capitalconsumption.

(9) Work in progress on services

At present, this is not considered to be relevant in Denmark's case. When the questionnaire-basedaccounting statistics are extended to include consulting engineers and architects and other consultancyfirms, this point will be reviewed.

(10) Mineral exploration expenditures

The sources and methods were described in Section 5.11.2.

(11) Consumption of fixed capital on roads, bridges, etc.

The sources and methods were described in Section 4.12.

(12) Government licences and fees

For the transition from ESA 79 to ESA 95, the following government fees and taxes connected withcontrol and supervision, which were previously considered to be taxes or other unrequited transfers,were reclassified as sales of services from general government.

Type DKK mill.Fees paid by householdsPassport, visa and driving licence fees 270Hunting test fee 2Fees paid for exchange of driving licence 2Fees paid for change of name 2Fines etc.Court fees 348Municipal fees on distresses ·Fees paid for divorce decrees 8ConfiscationsConfiscations 17

Other taxes on productionFees connected with control and supervisionExports of meat etc. 303Imports and exports of livestock 5State control of dairy products 8Committee on quality control of grain 4Central government plant control agency.. 17Central government feedingstuffs control 27"En route" fees 332Heavy Current Act 31Commercial and savings banks 47Life and non-life insurance corporations 39Central government control of precious metalsCentral government supervision of ships and mustering 8Supervision of weapons etc.Film censor 1Type approval for motor vehicles 3Fees from producers etc. of insecticides, herbicides, etc. 31Meat and foodstuffs control 49

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Registration of pharmaceutical products andpharmaceutical enterprises 77Fees for testing steam boilers, tanks, lifts, etc. 24Milk testing 1Other control duties 55Fees relating to foundations etc.Approval of TIR motor vehiclesDuties connected with licences, authorisations, etc.Industritilsyn [Ministry of Fisheries Inspection Service] 15Medical personnel 3Accident insurance fee 156Vehicle logbooks 15Trading licences 2Fees for publicans' licences etc. 84Royal approval, admission to the Bar, etc.Fee for cinema authorisationDanmarks Gasmateriel Prøvning [testing of gasequipment] 10A/S De Danske Spritfabrikker [Danish distilleries]Teknologistyrelsen [Government Technology Agency] 1Road use 289Other compulsory feesPatent- og Varemærkevæsenet [Patents and TrademarksDirectorate] 124Justervæsenet [Standards Department]Government icebreaker service 19

Total fees 2 428

Fees for passports, visas, driving licences, hunting tests, replacement driving licences, changes ofname, divorce decrees and confiscations are considered to be sales of services for householdconsumption. For 1992, court fees are divided into intermediate consumption and final uses pro ratawith the breakdown of lawyers' services. For subsequent years, the 1992 breakdown is used for thesplit into intermediate consumption and final uses. All the "other taxes on production", which,according to the ESA 95, should be considered to be sales of government services, are counted asintermediate consumption.

(13) Valuation of output for own final use and output from voluntary activity

According to the ESA 95, output of capital goods for own use should be recorded at basic pricesincluding net operating surplus. A costs-based estimate is acceptable only as a last resort. For 1992,an allowance was added to total wages and salaries and materials for own-account construction andcivil engineering work, corresponding to the share of the consumption of fixed capital and netoperating surplus in construction and civil engineering firms. The value calculated for 1992 wasprojected for following years on the basis of changes in the output of construction activity.

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(14) Value threshold for capital goods

By far the largest share of the value of the definitional difference comes from general government.For 1992, a value was calculated for the difference in the treatment of consumables using thethreshold values in the ESA 79 and the ESA 95 respectively for both market activities and generalgovernment. For following years, levels are estimated for general government. Changes in thedefinitional difference for consumables for general government are used to project the definitionaldifference for market activities. The effect on the consumption of fixed capital in general governmentis calculated from the series compiled for deductions in government capital formation. The effect onGDP and its individual components was calculated as a level for 1992. For subsequent years, the1992 values are projected on the basis of changes in the difference in the consumption of fixed capitalin general government. In Denmark's case, most of the effect of the definitional difference forconsumables arises in general government, and thus the projection is not very different from anannual estimate of levels.

(15) Market/non-market criteria

For 1995, there is no difference, since the units reclassified in accordance with the 50% criterion inthe ESA 95 have no net operating surplus.

(16) Subsidies

No effect in Denmark's case.

(17) Entertainment, literary and artistic originals

The sources and methods were described in Section 5.11.4.

(18) Services associated with the licence to use entertainment, literary and artisticoriginals

The sources are the same as for (17). The whole of domestic output is assigned tointermediate consumption and therefore has no impact on GDP. External trade in theseservices is lumped together with royalties under (22) and is treated as described underthat point.

(19) Garages

The sources and methods were described in Section 3.17.

(20) Car registration taxes paid by households

The total revenue from the registration tax on passenger cars comes from tax statisticson an accruals basis. In the supply and use tables, the supply and use of passenger carsare balanced in the light of figures from the Register of Motor Vehicles and vehiclesstatistics figures for registrations for private consumers on the one hand and forbusinesses on the other. The definitional difference refers to the cells for taxes onproducts with the exception of VAT on passenger cars for private consumption inhouseholds. The values are taken from the balanced supply and use matrices.

(21) Wages and salaries in kind

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Not relevant in Denmark's case.

(22) Licences for the use of intangible non-produced assetsCommission Decision 98/501 (excessive deficit procedure)

The source is settlements statistics information on royalty payments to and fromDenmark and Danmarks Statistik's business register. Danish enterprises which,according to Nationalbank's settlements statistics, have royalty payments to or fromDenmark, are grouped together by industry via linkage with the business register.Royalties in the IT industries are considered as imports and exports of software andtransferred to point (7). The remainder are considered as imports and exports ofroyalties on patents and payments for services relating to the use of artistic originals.These two groups of services are processed together under point (22), since it is notpossible to separate out accurately the payments for use of artistic originals. Thedomestic transactions in the services in question are assumed to be between marketproducers and thus to have no effect on GDP. The GDP impact of ROW transactions isoffset by the opposite correction in primary income to and from the ROW, so that all inall the change in definition has no effect on GNP.

(23) Stamp taxes

Under the GNP Committee Decision, there is no definitional difference between theESA 79 and the ESA 95 as regards stamp taxes of the type occurring in Denmark. Thisis in fact a change from Commission Decision 97/178, which has not, however, led toan update of this legislation.

(24) Financial leasing

The effect on GNP comes solely from the effect on the consumption of fixed capital ingeneral government. Expenditure on financial leasing is estimated from variousitemisations in government accounts. For the calculation of the effect on theconsumption of fixed capital of general government, the average lifetime of capitalgoods leased under financial leasing arrangements is put at 25 years.

(25) Pension fundsEurostat Decision (Excessive deficit procedure)

Not relevant in Denmark's case.

(26) Changes in due dates for taxes etc.Approval by the GNP Committee

Not relevant in Denmark's case.

(27) Minor repairs and maintenance in owner-occupied housing

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For the balancing of supplies and uses of repairs and maintenance of dwellings, all minor repair andmaintenance work on dwellings is assigned to the final consumption expenditure of households underconsumption group 4300, Repair and maintenance of dwellings. This is expenditure which, in thecase of rented dwellings, is normally defrayed by the tenant. Such expenditure is allocated to finaluses as household consumption. According to the ESA 95, the same applies to the correspondingtype of expenditure in owner-occupied housing, whereas according to the ESA 79 the latter should becounted as intermediate consumption. The correction for the definitional difference is calculated bymultiplying the value of repairs and maintenance in consumption group 4300 by the share of actualplus imputed rentals accounted for by imputed rentals in owner-occupied housing.

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389

10. Main classifications used

10.1 Classifications by industry

Table 140 shows the link between the national accounts' grouping by industry and theNACE Rev. 1. There are four levels for publication of the final national accounts,covering 130, 53, 27 and 9 industries respectively.

Table 140 includes references to Danmarks Statistik's standard grouping at 111-industrylevel – a level of aggregation not used in the national accounts. The connection betweenthe 111 standard grouping and the most detailed six-digit DK-NACE industries isdocumented in the publication "Dansk Branchekode 1993, 2 udgave 1996" published byDanmarks Statistik, annexes 1 and 2 of which include the aggregation key.

There are two reasons why the national accounts cannot use the 111 standard groupingas their most detailed level of publication. Firstly, it does not match the functionalbreakdown of construction in the national accounts, and secondly, within some of the111 groups, the national accounts need to separate market activity and output for ownuse from (other) non-market activity.

390

Table 140 Industry groupings

Groupings Dansk branchekode

9 27 53 130 1993 (DB93)

1 Landbrug, fiskeri og råstofudvinding Agriculture, fishing and quarrying

0109 Landbrug, gartneri og skovbrug Agriculture, horticulture and forestry

01109 011009 Landbrug 53-standard Agriculture

01129 011209 Gartnerier, planteskoler og frugtplantager 53-standard Horticulture, orchards etc.

01400 014000 Maskinstationer, anlægsgartnere mv. 53-standard Agricultural services; landscape gardenersetc.

02000 020000 Skovbrug mv. 53-standard Forestry

050005000 050000 Fiskeri mv. 27-standard Fishing

1009 Råstofudvinding Mining and quarrying

11000 110000 Udvinding af råolier og naturgas mv. 53-standard Extr. of crude petroleum, natural gas etc.

14009 140009 Udvinding af grus, ler, sten, salt mv. 53-standard Extr. of gravel, clay, stone and salt etc.

2 Industri Manufacturing

150915009 Nærings- og nydelsesmiddelindustri Mfr. of food, beverages and tobacco151000 Slagterier mv. 111-standard Production etc. of meat and meat products152000 Forarbejdning og konservering

af fisk og fiskeprodukter152010-30 Processing etc. of fish and fish products

153000 Forarbejdning og konserveringaf frugt og grøntsager

153100-153300 Processing etc. of fruit and vegetables

154000 Fremstilling af vegetabilske oganimalske olier samt fedtstoffer

154100-154300 Mfr. of vegetable and animal oils and fats

155000 Mejerier og isfabrikker 111-standard Mfr. of dairy products156009 Fremstilling af stivelsesprodukter,

chokolade- og sukkervarer mv.156-157.1584-89 Mfr. of starch, chocolate and sugar products

158109 Fremstilling af brød, kager og kiks 158110, 158200 Mfr. of bread, cakes and biscuits158120 Bagerforretninger 111-standard Bakers' shops158300 Sukkerfabrikker og -raffinaderier 158300 Manufacture of sugar159000 Drikkevareindustri 111-standard Mfr. of beverages160000 Tobaksindustri 111-standard Manufacture of tobacco products

170917009 Tekstil-, beklædnings- og læderindustri Mfr. of textiles, wearing apparel, leather170000 Tekstilindustri 111-standard Mfr. of textiles and textile products180000 Beklædningsindustri 111-standard Mfr. of wearing apparel; dressing etc. of fur190000 Læder- og fodtøjsindustri 111-standard Mfr. of leather and leather products

2009 Træ-, papir- og grafisk industri Mfr. of wood products, printing and publ.

20000 200000 Træindustri 53-standard Mfr. of wood and wood products

21009 Papir og grafisk industri Mfr. of paper prod.; printing and publish.210000 Papirindustri 111-standard Mfr. of pulp, paper and paper products221200 Udgivelse af dagblade 111-standard Publishing of newspapers221309 Udgiver- og forlagsvirksomhed ekskl. dagblade 111-standard Publishing activities, excluding newspapers222009 Trykkerier 111-standard Printing activities etc.

2309 Mineralolie-, kemisk- og plastindustri. mv. Mfr. of chemicals, plastic products etc.

23000 230000 Mineralolieindustri mv. 53-standard Mfr. of refined petroleum products etc.

24000 Kemisk industri Mfr. of chemicals and man-made fibres etc.241109 Fremstilling af industrigasser og

uorganiske basiskemikalier241100, 241300 Mfr. of industrial gases and inorganic

basic chemicals241209 Fremstilling af farvestoffer, pigmenter

samt organiske basiskemikalier241200, 241400 Mfr. of dyes, pigments and organic

basic chemicals241500 Fremstilling af kunstgødning 241500 Manufacture of fertilizers etc.241617 Fremstilling af basisplast og syntetisk gummi 241600-241700 Mfr. of plastics and synthetic rubber242000 Fremstilling af pesticider og andre agrokemiske

produkter242000 Manufacture of pesticides and other

agro-chemical products243000 Fremstilling af maling, lak, trykfarver mv. samt

tætningsmaterialer243000 Mfr. of paints, printing ink and mastics

244000 Medicinalindustri 111-standard Mfr. of pharmaceuticals etc.245070 Fremstilling af rengøringsmidler samt

øvrige kemiske produkter245110-247000 Mfr. of detergents and other chemical

products

391

Table 140 (continued) Industry groupings

Groupings Danskbranchekode

9 27 53 130 1993 (DB93)

25000 Gummi- og plastindustri Mfr. of rubber and plastic products251122 Fremstilling af gummiprodukter

samt plastemballage mv.251100-252200 Mfr. of rubber products and plastic packing

goods etc.252300 Fremstilling af bygningsartikler af plast 252310-252390 Mfr. of builders' ware of plastic252400 Fremstilling af andre plastprodukter 252410-252490 Manufacture of other plastic products n.e.c.

2600 26000 Sten-, ler- og glasindustri mv. Mfr. of other non-metallic mineral products261126 Glas- og keramisk industri 261100-262600 Mfr. of glass and ceramic goods etc.263053 Fremstilling af cement, mursten,

tagsten, fliser, kakler mv.263000-265300 Mfr. of cement, bricks, tiles, flags etc.

266080 Fremstilling af produkter af beton,cement, asfalt, stenuld mv.

266110-268290 Mfr. of concrete, cement, asphalt and rockwoolproducts

2709 Jern- og metalindustri Mfr. of basic metals and fabr. metal prod.

27009 Fremstilling og forarbejdning af metal Mfr. and processing of basic metals271000 Jern- og stålværker 271000 Mfr. of basic ferrous metals272030 Forarbejdning af jern og stål 272100-273500 First processing of iron and steel274000 Fremstilling af ikke-jernholdige metaller 274100-274500 Mfr. of basic non-ferrous metals275000 Støbning af metalprodukter 275100-275400 Casting of metal products281009 Fremstilling af byggematerialer af metal 111-standard Mfr. of construct. materials of metal etc.286009 Fremstilling af håndværktøj, metalemballage mv. 111-standard Mfr. of hand tools, metal packaging etc.

29000 Maskinindustri Mfr. of machinery and equipment n.e.c.291000 Fremstilling af skibsmotorer, kompressorer mv. 111-standard Mfr. of marine engines, compressors etc.292000 Fremstilling af maskiner til generelle formål 111-standard Mfr. of other general purpose machinery293000 Fremstilling af landbrugsmaskiner 111-standard Mfr. of agricultural and forestry machinery294009 Fremstilling af maskiner til industri mv. 111-standard Mfr. of machinery for industries etc.297000 Fremstilling af husholdningsapparater 111-standard Mfr. of domestic appliances n.e.c.

30009 Elektronikindustri Mfr. of electrical and optical equipment300000 Fremstilling af kontormaskiner og edb-udstyr 300100-300200 Mfr. of office machinery and computers310000 Fremstilling af andre elektriske maskiner og apparater 311010-316290 Mfr. of other electrical machinery and apparatus320000 Fremstilling af telemateriel mv. 111-standard Mfr. of radio and communicat. equipm. etc.330000 Fremstilling af medicinsk udstyr, instrumenter, ure

mv.111-standard Mfr. of medical and optical instrum. etc.

35009 Transportmiddelindustri Mfr. of transport equipment340000 Fremstilling af biler mv. 341000-343000 Manufacture of motor vehicles etc.351000 Skibsværfter og bådebyggerier 111-standard Building and repairing of ships and boats352050 Fremstilling af transportmidler

ekskl. skibe og biler mv.352000-355000 Mfr. of transport equipment

excl. ships, motor vehicles etc.

3600 36000 Møbelindustri og anden industri Mfr. of furniture; manufacturing n.e.c.361000 Møbelindustri 111-standard Mfr. of furniture362060 Fremstilling af legetøj, guld- og sølvvarer mv. 362100-366390 Mfr. of toys, gold and silver articles etc.370000 Genbrug af affaldsprodukter 371000-372000 Recycling of waste and scrap

3 4009 40009 Energi- og vandforsyning Electricity, gas and water supply401000 Elforsyning 111-standard Production and distribution of electricity402000 Gasforsyning 111-standard Manufacture and distribution of gas403000 Varmeforsyning 111-standard Steam and hot water supply410000 Vandforsyning 111-standard Collection and distribution of water

4 4500 45000 Bygge- og anlægsvirksomhed Construction450001 Nybyggeri NR-definition Construction of new buildings450002 Reparation og vedligeholdelse af bygninger NR-definition Repair and maintenance of buildings450003 Anlægsvirksomhed NR-definition Civil engineering450004 Materialer til bygnings reparation NR-definition Construction materials for own-account repair

392

Table 140 (continued) Industry groupings

Groupings Danskbranchekode

9 27 53 130 1993 (DB93)

5 Handel, hotel- og restaurationsvirks. mv. Wholesale and retail trade;hotels, restaurants

5000 50000 Handel m. biler, autorep., servicestationer Sale and repair of motor vehicles etc.501009 Handel med biler, motorcykler mv. 111-standard Sale of motor vehicles, motorcycles etc.502000 Autoreparation 111-standard Repair and maintenance of motor vehicles505000 Servicestationer 111-standard Service stations

5100 51000 510000 Engros- og agenturhandel undt. m. biler 27-standard Ws. and commis. trade, exc. of m. vehicles

5200 Detailh. og reparationsvirks. undt. biler Re. trade and repair work exc. of m. vehicles

52109 521090 Detailhandel med fødevarer mv. 53-standard Retail trade of food etc.

52299 522990 Varehuse og stormagasiner 53-standard Department stores

52300 523000 Apoteker, parfumerier og materialister mv. 53-standard Re. sale of phar. goods, cosmetic art. etc.

52419 524190 Detailhandel m. beklædning og fodtøj 53-standard Re. sale of clothing, footwear etc.

52449 524490 Detailhandel i øvrigt, reparationsvirksomhed mv. 53-standard Other retail sale, repair work

5500 55000 Hotel- og restaurationsvirksomhed mv. Hotels and restaurants551009 Hoteller mv. 111-standard Hotels etc.553009 Restauranter mv. 111-standard Restaurants etc.

6 Transportvirksomhed,post og telekommunikation

Transport, storageand communication

6009 Transportvirksomhed Transport

60000 Landtransport, rørtransport Land transport; transport via pipelines601000 Jernbaner 601000 Transport via railways602100 Bustrafik mv., rutefart 602100 Other scheduled passenger land transport602223 Taxi- og turistvognmænd 602200-602300 Taxi operation and coach services602409 Fragtvognmænd mv., rørtransport 111-standard Freight transport by road and via pipelines

61000 610000 Skibsfart 53-standard Water transport

62000 620000 Lufttransport 53-standard Air transport

63000 Godsbehandling, havne mv., rejsebureauer Support. trans. activities; travel agencies631130 Hjælpevirksomhed i forb. m. transport,

rejsebureauvirksomhed631100-633040 Cargo handling, harbours etc., travel agencies

634000 Anden transportformidling 634010-634090 Activities of other transport agencies

6400 64000 640000 Post og telekommunikation 27-standard Post and telecommunications

7 Finansieringsvirksomhed mv.,forretningsservice

Financial intermediation,business activities

6509 Finansierings- og forsikringsvirksomhed Financial intermediation and insurance etc.

65000 Finansieringsvirksomhed Financial intermediation651000 Pengeinstitutter 111-standard Monetary intermediation652000 Realkreditinstitutter mv. 111-standard Other financial intermediation

66000 Forsikringsvirksomhed Insurance and pension funding660102 Livs- og pensionsforsikring 660100-660290 Life insurance and pension funding660300 Anden forsikringsvirksomhed 660310-660390 Non-life insurance

67000 670000 Servicevirksomhed for finanssektoren mv. 53-standard Activities auxiliary to finan. intermediat.

7009 Udlejning og ejendomsformidling Real estate and renting activities

70000 Ejendomsudlejning og -formidling Real estate activities701109 Ejendomsmæglervirksomhed mv. 7011;7012;7031;

703210Real estate agents etc.

702009 Boliger 702010-702030;703220

Dwellings

702040 Udlejning af erhvervsejendomme mv. 702040 Letting of non-residential buildings

71000 710000 Udlejning undtagen af fast ejendom Renting of machinery and equipment etc.

393

Table 140 (continued) Industry groupings

Groupings Danskbranchekode

9 27 53 130 1993 (DB93)

7209 Forretningsservice mv. Business activities etc.

72000 Databehandlingsvirksomhed Computer and related activities721009 Databehandlingsvirksomhed bortset fra

levering af software mv.721.723-726 Computer activities exc. software

consultancy and supply722000 Levering af programmel og

konsulentbistand i forb. med software722000 Software consultancy and supply

73000 Forskning og udvikling Research and development730001 Forskning og udvikling (markedsmæssig) NR-definition Research and development (market)730002 Forskning og udvikling (anden ikke-markedsmæssig) NR-definition Research and development (other non-market)

74000 Rådgivningsvirks. mv., rengøringsvirks. Consultancy etc. and cleaning activities741100 Advokatvirksomhed 111-standard Legal activities741200 Revisions- og bogføringsvirksomhed 111-standard Accounting, book-keeping, auditing etc.742009 Rådgivende ingeniører, arkitekter mv. 111-standard Consulting engineers, architects etc.744000 Reklame og markedsføring 111-standard Advertising747000 Rengøringsvirksomhed 111-standard Industrial cleaning748009 Anden forretningsservice 111-standard Other business activities

8 Offentlige og personlige tjenesteydelser Public and personal services

7500 75000 Offentlig administration mv. Public administration etc.751100 Generel offentlig administration 111-standard General (overall) public service activities751209 Offentlig sektoradm. bortset fra vedr. erhverv

og infrastruktur mv.7512;7514;7530 Regulation of public service activities

exc. for business751300 Offentlig administration vedrørende

erhverv, infrastruktur mv.751300 Regulation of and contribution to more

efficient operation of business752000 Forsvar, politi og retsvæsen 111-standard Provision of services to the community

8000 80000 Undervisning Education801000 Folkeskoler 111-standard Primary education802000 Gymnasier, erhvervsfaglige skoler 111-standard Secondary education803000 Videregående uddannelsesinstitutioner 111-standard Higher education804001 Voksenundervisning mv. (markedsmæssig) NR-definition Adult and other education (market)804002 Voksenundervisning mv. (anden ikke-markedsmæssig) NR-definition Adult and other education (other non-market)

8519 85109 Sundhedsvæsen mv. Health care activities851100 Hospitaler 111-standard Hospital activities851209 Læger, tandlæger, dyrlæger mv. 111-standard Medical, dental, veterinary activities etc.

8539 Sociale institutioner mv. Social work activities

85319 853109 Sociale institutioner mv. for børn og unge 53-standard Social institutions etc. for children

85329 853209 Sociale institutioner mv. for voksne 53-standard Social institutions etc. for adults

9009 Renovation, foreninger og forlystelser mv. Other community, social and personal act.

90000 Renovationsvæsen Sewage and refuse disp. and similar act.900010 Kloakvæsen og rensningsanlæg 900010 Sewage removal and disposal900020 Renovation og renholdelse 900020 Refuse collection and sanitation900030 Lossepladser og forbrændingsanstalter 900030 Refuse dumps and refuse disposal plants

91000 910000 Organisationer og foreninger 53-standard Activities of membership organiza. n.e.c.

92000 Forlystelser, kultur og sport Recreational, cultural, sporting activities920001 Forlystelser, kultur og sport (markedsmæssig) NR-definition Recreational, cultural, sporting activities

(market)920002 Forlystelser, kultur og sport

(anden ikke-markedsmæssig)NR-definition Recreational, cultural, sporting activities

(other non-market)

93009 Anden servicevirksomhed Other service activities930009 Servicevirksomhed i øvrigt 9300 Service activities n.e.c950000 Private husholdninger med ansat medhjælp 950000 Private households with employed persons

394

10.2 Classifications of consumption

Table 141 shows the grouping of household consumption in the Danish nationalaccounts and Table 142 the link between the consumption groups at the most detailed72-level and COICOP at 4-digit level.

Table 141 Consumption groupings

Groupings

13 41 72 Durability

10 110 Fødevarer Food1110 IV Mel, gryn, brød og kager Bread and cereals1120 IV Kød Meat1130 IV Fisk Fish1141 IV Æg Eggs1142 IV Mælk, fløde, yoghurt mv. Milk, cream, yoghurt etc.1143 IV Ost Cheese1150 IV Smør, margarine og olie mv. Butter, oils and fats1160 IV Frugt go grøntsager Fruit and vegetables except potatoes1171 IV Kartofler mv. Potatoes etc.1181 IV Sukker Sugar1182 IV Flødeis, chokolade og sukkervarer Ice cream, chocolate and confectionery1190 IV Salt, krydderier,supper mv. Food products n.e.c.

20 Drikkevarer og tobak Beverages and tobacco120 Ikke-alkoholiske drikkevarer Non-alcoholic beverages

1210 IV Kaffe, the og kakao Coffee, tea and cocoa1220 IV Mineralvand og sodavand Mineral waters, soft drinks and juices

210 Alkoholiske drikkevarer Alcoholic beverages

2110 IV Vin og spiritus Wine and spirits2130 IV Øl Beer

220 2210 IV Tobak Tobacco

30 Beklædning og fodtøj Clothing and footwear310 Beklædning Clothing

3110 HV Beklædning Garments and clothing materials etc.3140 T Vask, rensning Laundering, dry cleaning etc.

320 3200 HV Fodtøj Footwear

40 Boligbenyttelse Housing410 4100 T Husleje Actual rentals for housing

420 4200 T Beregnet husleje af egen bolig Imputed rentals for housing

430 4300 T Reparation og vedligeholdelse af boliger Regular maintenance and repair of the dwelling

440 Tjenester i forb. med boliger Other services relating to the dwelling

4410 T Renovation mv. Refuse collection, other services n.e.c.4430 T Vand og vandafledningsafgift Water supply and sewerage services

45 450 Elektricitet og brændsel Electricity, gas and other fuels4510 IV Elektricitet Electricity4520 IV Gas Gas4530 IV Flydende brændsel Liquid fuels4540 IV Fjernvarme mv. Hot water, steam etc.

50 Boligudstyr, husholdningstjenester mv. Furnishing, household equipment etc.510 5100 V Møbler og gulvtæpper mv. Furniture, furnishings, carpets etc.

520 5200 HV Gardiner, sengelinned mv. Household textiles

530 Husholdningsmaskiner mv. Major household appliances and repairs

5310 V Husholdningsmaskiner Major household appliances5330 T Reparation af husholdningsmaskiner Repair of major household appliances

540 5400 HV Service, køkkenudstyr Glass, tableware and household utensils

395

550 5500 HV Husholdnings- og haveredskaber Tools and equipment for house and garden

396

Table 141 (continued) Consumption groupings

Groupings

13 41 72 Durability

560 Andre varer og tjenester til husholdningen Goods and services for routine household maintenance

5610 IV Rengøringsmidler mv. Non-durable household goods5620 T Hushjælp mv. Domestic services and home care services

60 Medicin, lægeudgifter o.l. Medical products, health services610 Medicin, vitaminer, briller mv. Medical products, appliances and equipment

6111 IV Medicin, vitaminer mv. Medical and pharmaceutical products6112 V Briller, høreapparater mv. Therapeutic appliances and equipment

620 6200 T Læge, tandlæge mv. Out-patient services630 6300 T Hospitaler, sanatorier Hospital services

71 710 7100 V Anskaffelse af køretøjer Purchase of vehicles

79 Anden transport og kommunikation Other transport and communication720 Drift af individuelle transportmidler Operation of personal transport equipment

7210 T Vedligeholdelse af køretøjer Maintenance and repairs of motor vehicles7220 IV Benzin og olie til køretøjer Fuels and lubricants7240 T Biludlejning, køretimer mv. Other services in respect of personal transport equipment

730 7300 T Køb af transportydelser Transport services

810 8100 T Telefon, telefax og porto mv. Communications

91 Fritidsudstyr, underholdning og rejser Recreation and culture910 Elektronisk fritidsudstyr mv. Audio-visual, photographic and data proc. equipment

etc.

9110 V Radio- og tv-apparater mv. Radio and television sets etc.9120 V Fotoudstyr, videokameraer mv. Photographic equipment etc.9130 V Pc'ere mv. Data processing equipment9140 HV Cd'ere, videobånd mv. Recording media for pictures and sound9150 T Reparation af radio, tv, pc mv. Repair of a/v and data processing equipment

920 9200 V Musikinstrumenter, både mv. Other major durables for recreation and culture

930 9300 HV Sportsudstyr, legetøj, kæledyr mv. Other recreational items and equipment

940 9400 T Forlystelser, tv-licens mv. Recreational and cultural services

950 Bøger, blade, papir mv. Newspapers, books and stationery

9510 IV Bøger, aviser og blade Books, newspapers and periodicals9530 HV Papir og skriveudstyr mv. Stationery and drawing materials etc.

960 9600 T Pakkede ferierejser Package holidays

97 Andre varer og tjenester Other goods and services970 9700 T Undervisning Education

981 9810 T Udgifter på restauranter mv. Catering

982 9820 T Udgifter til hoteller mv. Accommodation services

991 Personligt pleje Personal care

9911 T Frisører mv. Hairdressing salons etc.9912 HV Toiletartikler, barbermaskiner mv. Appliances, articles and products for personal care

992 Personlige effekter Personal effects n.e.c.

9921 V Smykker og ure mv. Jewellery, clocks and watches9922 HV Kufferter, tasker mv. Other personal effects

993 Sociale foranstaltninger Social protection services

9931 T Plejehjem, dagcentre mv. Retirement homes, day-care centres etc.9932 T Daginstitutioner for børn Kindergartens, creches etc.

994 9940 T Forsikring Insurance

995 9950 T Finansielle tjensteydelser Financial services n.e.c.

996 9960 T Advokater, andre tjenesteydelser Other services n.e.c.

99 Turistbalance Balance of tourism, net998 9980 Turistindtægter mv. Consumption of non-residents on the economic territory

999 9990 Turistudgifter mv. Consumption of residents in the ROW

397

V Varige DurableHV Halvvarige Semi-durableIV Ikke varige Non-durableT Tjenester Services

Table 142 Link between consumption grouping and COICOP (continued)

Main Consump-tion

Durability Text 4-digit

group group COICOP

10 110 Food1110 IV Bread and cereals 01111120 IV Meat 01121130 IV Fish 01131141 IV Eggs 0114 (part)1142 IV Milk, cream, yoghurt etc. 0114 (part)1143 IV Cheese 0114 (part)1150 IV Butter, oils and fats 01151160 IV Fruit and vegetables except potatoes 01161160 IV Fruit and vegetables except potatoes 0117 (part)1171 IV Potatoes etc. 0117 (part)1181 IV Sugar 0118 (part)1182 IV Ice cream, chocolate and confectionery 0118 (part)1190 IV Food products n.e.c. 0119

20 120 Non-alcoholic beverages1210 IV Coffee, tea and cocoa 01211220 IV Mineral waters, soft drinks and juices 0122

20 210 Alcoholic beverages2110 IV Wine and spirits 02112110 IV Wine and spirits 02122130 IV Beer 0213

20 220 Tobacco2210 IV Tobacco 0220

30 310 Clothing3110 HV Garments and clothing materials, etc. 03113110 HV Garments and clothing materials, etc. 03123110 HV Garments and clothing materials, etc. 03133110 HV Garments and clothing materials, etc. 0314 (part)

3140 T Laundering, dry cleaning, etc. 0314 (part)

30 320 Footwear3200 HV Footwear 03213200 HV Footwear 0322

40 410 Housing4100 T Housing 04114100 T Housing 0412

40 420 Imputed rentals for housing4200 T Imputed rentals for housing 04214200 T Imputed rentals for housing 0422

398

40 430 Regular maintenance and repair of the dwelling4300 T Regular maintenance and repair of the dwelling 04314300 T Regular maintenance and repair of the dwelling 0432

40 440 Other services relating to the dwelling4410 T Refuse collection, other services n.e.c. 04424410 T Refuse collection, other services n.e.c. 04434410 T Refuse collection, other services n.e.c. 04444430 T Water supply and sewerage services 0441

45 450 Electricity, gas and other fuels4510 IV Electricity 04514520 IV Gas 04524530 IV Liquid fuels 04534540 IV Hot water, steam, etc. 04544540 IV Hot water, steam, etc. 0455

50 510 Furniture, furnishings, carpets, etc.5100 V Furniture, furnishings, carpets, etc. 05115100 V Furniture, furnishings, carpets, etc. 05125100 V Furniture, furnishings, carpets, etc. 0513

50 520 Household textiles5200 HV Household textiles 0520

50 530 Major household appliances and repairs5310 V Major household appliances 05315310 V Major household appliances 05325330 T Repair of major household appliances 0533

50 540 Glass, tableware and household utensils5400 HV Glass, tableware and household utensils 0540

50 550 Tools and equipment for house and garden5500 HV Tools and equipment for house and garden 05515500 HV Tools and equipment for house and garden 0552

50 560Goods and services for routine householdmaintenance

5610 IV Non-durable household goods 05615620 T Domestic services and home care services 0562

60 610 Medical products, appliances and equipment6111 IV Medical and pharmaceutical products 06116111 IV Medical and pharmaceutical products 06126112 V Therapeutic appliances and equipment 0613

60 620 Out-patient services6200 T Out-patient services 06216200 T Out-patient services 06226200 T Out-patient services 0623

60 630 Hospital services6300 T Hospital services 0630

71 710 Purchase of vehicles7100 V Purchase of vehicles 0711

399

7100 V Purchase of vehicles 07127100 V Purchase of vehicles 07137100 V Purchase of vehicles 0714

79 720 Operation of personal transport equipment7210 T Maintenance and repairs of motor vehicles 07217210 T Maintenance and repairs of motor vehicles 07237220 IV Fuels and lubricants 0722

7240 TOther services in respect of personal transportequipment 0724

79 730 Transport services7300 T Transport services 07317300 T Transport services 07327300 T Transport services 07337300 T Transport services 07347300 T Transport services 07357300 T Transport services 0736

79 810 Communication8100 T Communications 0810

08200830

90 910Audio-visual, photographic and data proc.equipment etc.

9110 V Radio and television sets etc. 09119120 V Photographic equipment etc. 09129130 V Data processing equipment 09139140 HV Recording media for pictures and sound 09149150 T Repair of a/v and data processing equipment 0915

90 920 Other major durables for recreation and culture9200 V Other major durables for recreation and culture 09219200 V Other major durables for recreation and culture 09229200 V Other major durables for recreation and culture 0923

90 930 Other recreational items and equipment9300 HV Other recreational items and equipment 09319300 HV Other recreational items and equipment 09329300 HV Other recreational items and equipment 09339300 HV Other recreational items and equipment 09349300 HV Other recreational items and equipment 0935

90 940 Recreational and cultural services9400 T Recreational and cultural services 0941

09420943

90 950 Newspapers, books and stationery9510 IV Books, newspapers and periodicals 09519510 IV Books, newspapers and periodicals 09529530 HV Stationery and drawing materials etc. 09539530 HV Stationery and drawing materials etc. 0954

90 960 Package holidays9600 T Package holidays 0960

98 970 Education

400

9700 T Education 10109700 T Education 10209700 T Education 10309700 T Education 10409700 T Education 1050

98 981 Catering9810 T Catering 1111

1112

98 982 Accommodation services9820 T Accommodation services 1120

98 991 Personal care9911 T Hairdressing salons etc. 12119912 HV Appliances, articles and products for personal care 12129912 HV Appliances, articles and products for personal care 1213

98 992 Personal effect n.e.c.9921 V Jewellery, clocks and watches 12319922 HV Other personal effects 1232

98 993 Social protection services9931 T Retirement homes, day-care centres etc. 1240 (part)9932 T Kindergartens, crèches etc. 1240 (part)

98 994 Insurance9940 T Insurance 12519940 T Insurance 12529940 T Insurance 12539940 T Insurance 12549940 T Insurance 1255

98 995 Financial services n.e.c.9950 T Financial services n.e.c. 1262

1261

98 996 Other services n.e.c.9960 T Other services n.e.c. 1270

99 998Consumption of non-residents on the economicterritory

9980Consumption of non-residents on the economicterritory

99 999 Consumption of residents in the ROW9990 Consumption of residents in the ROW

401

11. Main data sources used

11.1 Sources for the output-based estimate of GDP

Declaration of contents∗∗∗∗, accounting statistics

0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct

0.1 Nam e0.1 Nam e0.1 Nam e0.1 Nam e

Accounting statistics

0.2 Heading0.2 Heading0.2 Heading0.2 Heading

General economic statistics

0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.

Business Structure DivisionBjarne Moesgaard, tel. (+45) 39 17 31 78, e-mail: bmo@dst.dk

0.4 Purpose and history0.4 Purpose and history0.4 Purpose and history0.4 Purpose and history

The statistics are intended as an indicator of the activity level and of the structure of theDanish business sector. They should be seen as a primary source of financial data foranalytical studies of Danish business enterprises, and are an essential input to the Danishnational accounts statistics. They provide the bulk of Denmark's contribution toEurostat's structural business statistics at European level.

Previously, Danmarks Statistik produced questionnaire-based accounting statisticscovering manufacturing industries, construction and the distributive trades. Apart fromthose for manufacturing, these statistics were discontinued after a new tax reportingsystem, called SLS-E, was introduced in 1986, whereby Danish business enterpriseswere ordered to submit to the tax authorities a standardised list of items from theiraccounts. A few years later, the list of items was cut drastically and many firms wereexempted from the system, so it became necessary to reintroduce statisticalquestionnaires and use the SLS-E data as a supplement only, otherwise it would nothave been possible to satisfy national and Eurostat requirements in the field ofaccounting information.

The new type of business accounting statistics started with the reference year 1994,covering construction and retail trade at the enterprise level. Manufacturing was added

∗ With acknowledgements to the translators of the "Declarations of contents" on Danmarks Statistik'swebsite, on which the English version of this Chapter is based.

402

from 1995, when the former type of statistics for that sector was discontinued.Wholesale trade was added from 1998 and the remaining private secondary and tertiaryindustries ("urban industries") from 1999.

Results are published annually at firm level, and as from 1995 accounting statistics havealso been published annually in a regional breakdown relating to workplaces.

0.5 Users and application0.5 Users and application0.5 Users and application0.5 Users and application

Users: public authorities, Eurostat, employers' and employees' federations, private firms,politicians, economists, journalists and students.

Applications: studies of business economics and geographical analyses. The primarydata are a key input for the Danish national accounts.

0.6 Sources0.6 Sources0.6 Sources0.6 Sources

− Questionnaires− Told- og Skattestyrelsen [Central Customs and Tax Administration] (SLS-E data)− Danmarks Statistik's business registerLægemiddelstyrelsen [The Drugs Administration Agency] for pharmacy accounts.

0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection

Act on Danmarks Statistik (Act No 599 of 22 June 2000).

0.8 Response burden0.8 Response burden0.8 Response burden0.8 Response burden

For 1999, the response burden for enterprises reporting data for the accounting statisticswas estimated at 3.9 man-years.

0.9 EU Regulation0.9 EU Regulation0.9 EU Regulation0.9 EU Regulation

Council Regulation No 58/97 concerning Structural Business Statistics. This requiresthe EU countries to send Eurostat information on turnover, value added, employment,wages and salaries, investment, etc. In Denmark, the bulk of this information isobtained from the accounting statistics.

1 Contents1 Contents1 Contents1 Contents

1.1 Description ofcontents1.1 Description ofcontents1.1 Description ofcontents1.1 Description ofcontents

The statistics cover construction and retail trade from the reference year 1994 (from1995 at establishment, i.e. workplace, level). The coverage was extended tomanufacturing from 1995, to wholesale trade from 1998, and to the remaining urbanindustries from 1999. Prior to 1999, another type of accounting statistics was publishedas well (see under SLS-E-based accounting statistics).

403

The statistics are essentially aggregations of items from the annual accounts of businessenterprises, notably from the profit and loss account, the balance sheet and the statementof fixed assets, at firm, workplace and kind-of-activity unit levels.

Detailed accounting items are included, e.g. turnover, purchases, costs, profits, assets,liabilities and capital formation. The most important distribution variables are branch,form of ownership, size group and geography.

The source material is processed so that detailed accounting information is calculatedfor all individual enterprises and their workplaces, and the statistics can easily yieldalternative breakdowns in addition to the tables published.

1.2. Statistical concepts

Accounting items:

These are derived from the accounts of the enterprises and include turnover, varioustypes of costs, consumption of goods, assets, liabilities and capital formation.

Kind of activity:

The basic statistics include the 6-digit code numbers found in the Danish classificationDB93. For publishing purposes, however, the most detailed level consisting of 111standard groups is used.

Form of ownership:

Legal form of ownership, such as sole traders, partnerships, limited liabilitycorporations, etc.

Size groups:

The size groups may refer to employment in terms of full-time equivalents (man-years).The most frequently used categories are 0-9, 10-19, 20-99 and 100+ persons inemployment.

Regions:

The regions used when publishing the accounting statistics at workplace level are theDanish counties ("amter").

2 Time

2.1 Reference period

The accounting statistics for a given year t are based on accounts closing in the period1 May (year t) to 30 April (year t + 1).

404

2.2 Date of publication

The statistics at both firm and workplace levels (accounting statistics broken down byregion) are published once a year. They appear a good year after the end of the latestaccounting period, and are scheduled to appear within 12 months of the end of thereference year.

2.3 Punctuality

1997 and 1998 statistics at both firm and workplace levels were publishedapproximately 14 months after the end of the reference year.

2.4 Frequency

Annual.

3. Accuracy

3.1 Overall accuracy

The accounting statistics are a reliable indicator of the activity level and of the structureof the Danish business sector. The highest data quality is achieved at firm level,primarily because the firms prepare their annual accounts at that level. But at workplacelevel, too, the published results for major activity groups and for counties are deemed tobe reliable in spite of some elements of uncertainty.

Remarks on data sources:

A. The information which Danmarks Statistik collects directly from the enterprisesusing questionnaires (or extracts from specified accounts which the enterprises send in)is the most detailed. The questionnaire is modelled on the list of items set out in theDanish annual accounts legislation and the information collected is subject to errordetection and verification procedures. When the data are keyed in, they are checked foraccounting inconsistencies, and warning messages are written out if significantdeviations are found when they are checked against the previous year's data or withfigures for other enterprises in the same stratum (form of ownership/activity/size group).These errors or improbable information are checked and corrected, where necessary viacontacts with the respondents. The resulting data must be regarded as highly reliable. Interms of turnover, this group (including firms in B below) accounted for 67 % of thetotal for 1998.

B. All Danish pharmacies must submit a standardised set of accounts toLægemiddelstyrelsen, which sends copies to Danmarks Statistik. On some points, thepharmacy accounts differ from the items on Danmarks Statistik's questionnaire, but it ispossible to estimate the missing data, so the overall quality is high.

405

C. The SLS-E system does not comprise as many items as Danmarks Statistik'squestionnaire, but the quality of the data is regarded as high, because they are used forindividual tax assessment. By stratified imputation, the data aggregates of the SLS-Esystem are distributed among the more detailed items, and in the opinion of DanmarksStatistik the resulting item values are reasonably reliable for profit and loss accounts aswell as balance sheets. However, the SLS-E system does not include information aboutinvestment (spending on fixed capital). The enterprises covered by the SLS-E systemaccounted for 23 % of total turnover in 1998.

D. Enterprises not covered by the questionnaire information and not included in theSLS-E figures are included via stratified imputation based on employment size groups,but this method yields results with large margins of error. However, the firms of the"remainder" population accounted for only 10 % of turnover in the 1998 survey, so thenegative effect on the overall quality of the accounting statistics is limited.

3.2. Sources of inaccuracy

Some items on the statistical questionnaire go beyond the level of disclosure prescribedby the annual accounts legislation. A case in point is the question concerningexpenditure on fuel and energy. In those cases it may be more difficult or more troublefor the enterprises to provide the information requested, and it is likely that someunderreporting occurs.

Investment is another subject which is not itemised in the annual accounts, butinformation on the subject can be deduced from a separate table in the notes to theaccounts. So investment, too, could be underreported to some extent by thoserespondents who fill in and return the questionnaires. Moreover, no investmentinformation is available for the firms of the SLS-E and the "remainder" groups, whichmeans that for them the investment estimates are not entirely reliable.

The accounting statistics are less reliable at workplace level than at firm level becausethe allocation procedures are based on assumptions. But despite this the publishedresults for major activity groups and for counties are deemed to be reliable.

3.3 Measures of accuracy

No measures of uncertainty have been calculated, since this is simply a random sample.

4 Comparability

4.1 Com parability overtim e4.1 Com parability overtim e4.1 Com parability overtim e4.1 Com parability overtim e

At firm level, comparable statistics (time series) are available from 1994 forconstruction and retail trade and from 1995 for manufacturing.

The previous type of accounting statistics for manufacturing, which ended with the year1994, covered all manufacturing enterprises with 20 or more employees. The new typeof accounting statistics covers all enterprises irrespective of size. Consequently, the twotypes of statistics are not directly comparable.

406

At workplace level, comparable statistics are available from 1995 for construction, retailtrade and manufacturing.

4.2 Com parability w ith otherstatistics4.2 Com parability w ith otherstatistics4.2 Com parability w ith otherstatistics4.2 Com parability w ith otherstatistics

The new type of accounting statistics is largely comparable at firm level with theSLS-E-based accounting statistics. Danmarks Statistik also publishes statistics onvarious subjects related to business accounts, notably turnover, manufacturers' sales ofcommodities, and short-term statistics of order books and sales. However, thesestatistics are not directly comparable with the accounting statistics, because ofdifferences in units, coverage or concepts.

4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics

No provisional results are published.

5 Accessibility

5.1 Form s ofdissem ination5.1 Form s ofdissem ination5.1 Form s ofdissem ination5.1 Form s ofdissem ination

The statistics are first published in Nyt fra Danmarks Statistik [News from DanmarksStatistik] and subsequently with more detail in Generel erhvervsstatistik [Generaleconomic statistics] in the series Statistiske Efterretninger [Statistical News].Summaries are given in the Statistisk Årbog (Statistical Yearbook) and in the StatistiskTiårsoversigt (Statistical Ten-Year Review). In 2001, the new accounting statistics areexpected to be input into in Danmarks Statistikbank.

5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability

The survey data are organised in annual files comprising a complete set of accountingitems for every single firm covered by the statistics. This allows for a good deal offlexibility as regards use, not least for user services. There are also files ("sum files")containing aggregations for activities, forms of ownership, size groups and regions.

5.3 Docum entation5.3 Docum entation5.3 Docum entation5.3 Docum entation

A description of concepts and methods is available each year in the article published inthe Statistiske Eferretninger series. In-depth documentation will be available during2000/2001 in Danmarks Statistik's TIMES system.

407

5.4 Other5.4 Other5.4 Other5.4 OtherInform ationInform ationInform ationInform ation

For more information (in Danish) regarding the questionnaire, accounting concepts, etc,see:Regnskabsstatistik 1998 (Generel erhvervsstatistik 2000:10) andRegionalfordelt regnskabsstatistik 1998 (Generel erhvervsstatistik 2001:12).

© Danmarks Statistik, 13-3-2001

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Declaration of contents, SLS-E-based accounting statistics

0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct0 Adm inistrative inform ation aboutthe statisticalproduct

0.1 Nam e0.1 Nam e0.1 Nam e0.1 Nam e

SLS-E-based accounting statistics

0.2 Heading0.2 Heading0.2 Heading0.2 Heading

General economic statistics

0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.0.3 Responsible authority,office,person,etc.

Business Structure DivisionBjarne Moesgaard, tel. 39 17 31 78, e-mail: bmo@dst.dk

0.4 Purpose and history0.4 Purpose and history0.4 Purpose and history0.4 Purpose and history

The statistics are intended as an indicator of the activity level of the Danish businesssector. They form the basis for analytical studies of Danish businesses, for businesspolicy decisions and for assessing the outcome of those policies. They are also anessential input to the Danish national accounts.

Since 1986, Danish enterprises have been obliged to submit to the tax authorities astandardised list of items from their accounts (the SLS-E system). As from the 1988accounting year, this information formed the basis for the SLS-E-based accountingstatistics, which cover (virtually) all the urban industries. Since, over the years, the listof items has been cut drastically and many firms have been exempted from the system,in accounting year 1994 new statistics were set up (see "Accounting statistics"), inwhich the information from the SLS-E system was supplemented by information fromquestionnaires which Danmarks Statistik itself sends out. As from 1999, these statisticsare intended to cover all urban industries and from then on replace the SLS-E-basedaccounting statistics altogether. During the transition period, the results for the branchescovered by the new accounting statistics are included in the SLS-E-based accountingstatistics.

0.5 Users and application0.5 Users and application0.5 Users and application0.5 Users and application

Users: public authorities, Eurostat, employers' and employees' federations, private firms,politicians, economists, journalists and students.

Applications: studies of business economics. The primary data are also a key input forthe Danish national accounts.

0.6 Sources0.6 Sources0.6 Sources0.6 Sources

− Told- og Skattestyrelsen [Central Customs and Tax Administration] (SLS-E data),questionnaires and Danmarks Statistik's business register.

409

0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection0.7 Legalauthority fordata collection

Act on Danmarks Statistik - cf. Consolidated Act No 599 of 22 June 2000.

0.8 Response burden0.8 Response burden0.8 Response burden0.8 Response burden

No separate response burden, since all the information comes from other sources.

0.9 EU Regulation0.9 EU Regulation0.9 EU Regulation0.9 EU Regulation

Council Regulation No 58/97 concerning Structural Business Statistics.

1 Contents

1.1 Description of contentsThe statistics provide information on the firms' results and balance sheets divided bybranch and form of ownership.The most important items are turnover, wages and salaries, consumption of goods,profit/loss for the year, assets and liabilities.

1.2 St1.2 St1.2 St1.2 Statisticalconceptsatisticalconceptsatisticalconceptsatisticalconcepts

Accounting items:See 1.1 above.

Kind of activity:Defined on the basis of the six-digit branch numbers in Dansk Branchekode 1993(DB93). Normally calculated and published at the 111 standard grouping level.

Form of ownership:Legal forms of ownership, i.e. corporations with share capital, private companies,cooperative societies and sole proprietorships, etc.

2 Tim e2 Tim e2 Tim e2 Tim e

2.1 Reference period2.1 Reference period2.1 Reference period2.1 Reference period

For any given year (year t), the accounting statistics are based primarily on accountswhich closed during the period 1 April (year t) to 31 March (year t+1), but the methodof grossing up aims to ensure that the statistics cover the calendar year.

2.2 Date ofpublication2.2 Date ofpublication2.2 Date ofpublication2.2 Date ofpublication

The statistics are published annually around 18 months to 2 years after the calendar year.

410

2.3 Punctuality2.3 Punctuality2.3 Punctuality2.3 Punctuality

The date of publication in Statistike Efterretninger may vary from year to year, since thedata and method of grossing up assume that various other statistics are completed.

2.4 Frequency2.4 Frequency2.4 Frequency2.4 Frequency

Published once a year.

3 Accuracy3 Accuracy3 Accuracy3 Accuracy

3.1 Overallaccuracy3.1 Overallaccuracy3.1 Overallaccuracy3.1 Overallaccuracy

There is a certain amount of uncertainty, especially in the case of those branches whichare based solely on returns to the tax authorities, primarily because some firms areexempt from reporting. Those which do report are therefore not totally representative ofall firms.

3.2 Sources ofinaccuracy3.2 Sources ofinaccuracy3.2 Sources ofinaccuracy3.2 Sources ofinaccuracy

Various firms are exempt from reporting standardised accounting information to the taxauthorities. As from the accounting year 1991, the most important exemptions are:− firms with net turnover under DKK 500 000 during the present or previous income

year;− corporations quoted on the stock exchange;− ordinary partnerships;− firms which started up or ceased trading during the income year.

In general, the firms submitting figures cover at least half of total turnover, but thisfigure conceals wide variations from one branch to another. Attempts are made tocollect information from other sources on firms which do not report but which carry agood deal of weight in a given branch.The grossing up for missing firms is based primarily on VAT turnover information,which we try to collect at firm level. Since aggregate VAT turnover amounts coveringmore than one firm may be reported, there is a certain amount of uncertainty about thebreakdown of these amounts at firm level. For areas where there are partial or totalexemptions from VAT, other methods of grossing up have to be used, with varyingdegrees of uncertainty.The quality of the information from the firms submitting reports must generally beconsidered high, but some of the information, such as the breakdown of wages andsalaries into production and administration, is a rough estimate.

3.3 M easures ofaccuracy3.3 M easures ofaccuracy3.3 M easures ofaccuracy3.3 M easures ofaccuracy

No statistical uncertainty measures have been calculated.

411

4 Com parability4 Com parability4 Com parability4 Com parability

4.1 Com parability overtim e4.1 Com parability overtim e4.1 Com parability overtim e4.1 Com parability overtim e

The statistics have been produced as from the 1988 accounting year. Changes witheffect from 1991 as regards who has to submit returns to the tax authorities and at whatlevel of detail, changes in branch coding as from 1993 and the inclusion of thequestionnaire-based information from the new accounting statistics as from 1995 willaffect comparability over time, however.

4.2 Com parability w ith othe4.2 Com parability w ith othe4.2 Com parability w ith othe4.2 Com parability w ith otherstatisticsrstatisticsrstatisticsrstatistics

For those branches which are covered by the new accounting statistics, the two sets ofstatistics are comparable where items are defined in the same way. Other businessstatistics, in particular on VAT sales, are used for the grossing up, but the accountingstatistics are not comparable with the other business statistics owing to differences in thedelimitation of units, degree of coverage and definitions.

4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics4.3 Consistency ofprovisionaland finalstatistics

No "provisional" figures are worked out.

5 Accessibility5 Accessibility5 Accessibility5 Accessibility

5.1 Form s ofdissem ination5.1 Form s ofdissem ination5.1 Form s ofdissem ination5.1 Form s ofdissem ination

Generel erhvervsstatistik (Statistiske Efterretninger) and Danmarks Statistikbank.Annual publications: Statistisk årbog.

5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability5.2 Basic m aterial:storage and usability

The primary material and totals data are kept on tape and disk. It is possible to producemore detailed statistics ad hoc, at DB93 branch level, for example.

5.3 Docum entation5.3 Docum entation5.3 Docum entation5.3 Docum entation

The individual years are described in an article in Statistiske Efterretninger.

5.45.45.45.4 Otherinform ationOtherinform ationOtherinform ationOtherinform ation

For further information on accounting items etc, reference should be made toGenerel erhvervsstatistik 2000:16 (Statistiske Efterretninger).

© Danmarks Statistik, BMO, 13-10-2000

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Declaration of contents, public sector finance

0 Administrative information about the statistical product

0.1 NamePublic sector finance

0.2 HeadingPublic Finance

0.3 Responsible authority, office, person, etc.Public Finances and PricesCarsten Petersen, tel. 39 17 34 61, e-mail: cpe@dst.dkMartin Brun-Fuglsang, tel. 39 17 34 54, e-mail: mbn@dst.dk

0.4 Purpose and historyThe statistics aim to provide both information on activities owned or effectivelycontrolled by general government and a picture of an economic area known as the publicsector. The statistics thus include data on general government, and aim to producestatistical information on the whole of the public sector.

The statistics were first published in March 1998 for a five-year period (1992-1996).

0.5 Users and applicationThe users are expected to be financial ministries, interest groupings, politicians and thegeneral public.

There is currently a small amount of service activity in the statistical sphere.

0.6 SourcesCentral and local government (municipal) accounts. Accounting reports from around250 enterprises and from two industry organisations (Danske Energiselskabers Foreningand Danske Varmeværkers Forening).

0.7 Legal authority for data collectionAct on Danmarks Statistik, §8 (1), cf. Consolidated Act No 599 of 22 June 2000.

0.8 Response burdenLarge accounting questionnaire: 240 minutes a year.Small accounting questionnaire: 120 minutes a year.

0.9 EU Regulation

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EU: Reg. 2223/1996EU: Reg. 58/1997.

1 Contents

1.1 Description of contentsThe statistics are processed for national accounts purposes to show the institutionaldistribution of activities carried out by publicly owned enterprises, both in total anddivided into industry groups. There is also an institutional and sectorised breakdown ofthe total public sector into general government, public quasi-corporate enterprises andpublic corporations. Inter alia, production and generation of income accounts areproduced, i.e. output, value added, gross factor income and gross operating surplus.

1.2 Statistical conceptsUnits and population:All public quasi-corporate enterprises are included in these statistics, along with publiccorporations. The aim is 100% coverage, so that information is available on the wholeof the public corporate sector.

Variables:Definition of gross fixed capital formation:

Acquisition of new fixed assets+ purchases of existing buildings (net)= gross fixed capital formation

Definition of gross factor income:

Output – intermediate consumption= Gross value added

Gross value added + taxes on production (net)= Gross factor income

Definition of net figures:

Gross – consumption of fixed capital= net

DB93 groupings:

Breakdowns by branch are based on Dansk Branchekode 1993, the aim being the six-digit DB93 code level. However, for reasons of confidentiality it is sometimesnecessary to group DB93 codes and in some cases they are lumped together into a largergrouping because they include only a few public enterprises:

• Agriculture, fishing and quarrying, together with manufacturing: 011110-145000, 151110-372000

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• Electricity, gas and water supply: 401000-410000• Construction, and wholesale and retail trade, hotels and restaurants: 451100-

455000, 501010-555200• Transport, storage and communication: 601000-642000

of which:• Transport via railways: 601000• Other scheduled passenger land transport: 602100• Traffic and fishing harbours and yachting harbours: 632210, 632220• Airports etc.: 632300• Financial intermediation, business activities and public and personal services:

651100-950000, 990000

of which:• Sewage plants, refuse collection and refuse dumps: 900010-900030.

Grouping by unit:

• General government: Those authorities and institutions which are included incentral and local government (municipal) accounts, plus the Danish nationalchurch and social funds. Some institutions which are financed mainly via publicfunds and produce public services are also included, even though they areofficially private and have their own accounts.

• Public quasi-corporate enterprises: The accounts are integrated with the centraland local government accounts, but they can be split into independent units.They are therefore public institutional units. The general government sectorcontrols these corporations and has the corresponding statutory obligations, aswell as covering the corporations' operating deficit or receiving any surplus.Output is market, i.e. income from sales accounts for at least 50% of currentoperating expenditure.

• Public corporations: These are organised under private law in the form ofcorporations or quasi-corporations. Government has control over them and/orowns more than 50% of the enterprise. Control may be exercised on a legalbasis, for example, or it may be laid down that a fixed percentage of themembers of the board of directors have to be appointed by government.

415

2 Time

2.1 Reference periodThe figures refer to a given accounting year. Where this is not the same as the calendaryear, it has been decided that if more than half of the accounting period is included in acalendar year, that calendar year is chosen as the accounting year.

2.2 Date of publicationThe statistics are published annually at the end of the year after closure of a givenaccounting period.

2.3 PunctualityThis cannot be determined at present, as the statistics are comparatively new.

2.4 FrequencyAnnual statistics.

3 Accuracy

3.1 Overall accuracyOverall reliability is considered to be high, since many branches have 100% coverage.However, there may be an uncertainty factor in reporting errors and the grossing up forbranches which are not covered 100%.

3.2 Sources of inaccuracyDegree of coverage:The aim is full coverage, but this may be difficult. However, the difficulties areminimised by annual checks of the population against various sources (such as anextract from the business register or information from the Ministry of the Interior oncorporations which are in joint local authority ownership)

Collection/measurement:Central and local government accounts and questionnaire reporting. The questionnaireused and the notes on completion are available. Individual items of accountinginformation are adjusted to national accounts terminology and therefore do not complyin full with the Annual Accounts Act. In addition, public corporations at present havevarious kinds of accounting methods, which makes for some degree of uncertainty in thefigures reported.

416

Processing:The incorrect classification of accounting items is a possible source of error, butattempts are made to minimise this by comparing accounting information from a givenyear with information from previous years. If it is deemed necessary, the enterprise iscontacted. Attempts are made further to reduce errors by having the informationreported in the previous year added to the form, and there are automatic procedures tocheck for balancing errors.

3.3 Measures of accuracyNone calculated as yet.

4 Comparability

4.1 Comparability over timeThe statistics are comparatively new, and therefore comparability is good, since it isnatural for the concepts and methods still to be uniform and in the main to comply withinternational accounting rules.

4.2 Comparability with other statisticsComparisons can be made with statistics for general government.

4.3 Consistency of provisional and final statisticsNo provisional figures are worked out, but there may be revisions to the previous twoyears' published figures when the following years' accounting information is reported.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik and Offentlige finanser (Statistiske Efterretninger).

Statistisk tiårsoversigt.

Not reproduced at present in the Statistisk årbog.

5.2 Basic material: storage and usabilityFigures for public quasi-corporate enterprises are taken directly from the DIOR databasefor government finance. Public corporations report via the questionnaire, on paper.These forms are stored together with the other information on government finance in theDIOR database and thus original microdata are available in the base.

417

5.3 DocumentationFurther documentation can be found in Statistiske Efterretninger: Den offentlige sektorsfinanser.

5.4 Other information

© Danmarks Statistik, MAU, 11-7-2001

418

Declaration of contents, general government finance

0 Administrative information about the statistical product

0.1 NameGeneral government finance

0.2 HeadingPublic finance

0.3 Responsible authority, office, person, etc.Public Finances and PricesKarsten Werner Nielsen, tel. 39 17 34 63, e-mail: kwn@dst.dkRaija Tellervo Oldrup, tel. 39 17 34 56, e-mail: rol@dst.dk

0.4 Purpose and historyThe statistics aim to analyse the economic activities of general government as a wholeand to show what work is done within the public sector and how the burden isdistributed. They also aim to show the interplay between this sector and the rest of thesocial economy. Thus the national accounts format can be extracted directly from thestatistics.The statistics were first produced in this form in 1975. Figures are available from 1971inclusive. From 1971 to around 1975, the period 1.4.19xx - 30.3.19xx+1 was used, andas from 1976 the calendar year.

0.5 Users and applicationMinistries, political parties, interest groups, local authorities, public and privateenterprises and the general public.

There is an ever-increasing amount of service activity in this field, some of it large-scaleindividual assignments and some in the form of subscriptions, where customers receivedetailed tables when new figures are released.

0.6 SourcesFinal accounts of central government, counties and municipalities and social securityfunds. In May there are no figures yet available for quasi-institutions. In the Octoberversions, accounts are available for 19xx-2, whilst 19xx-1 figures are still grossed up.

0.7 Legal authority for data collectionAct on Danmarks Statistik §6.

419

0.8 Response burdenNone.

0.9 EU RegulationEU: Reg. 2223/1996EU: Reg. 3605/1993EU: Dec. 2204/1998.

1 Contents

1.1 Description of contentsThe statistics provide information on total general government operating and capitalexpenditure/income. The balance (net lending/borrowing) is determined. In addition toa breakdown in terms of the real economy, operating and capital expenditure are dividedby purpose so that the areas of government commitment can be determined. In addition,there is a breakdown by type of scheme involved within the following categories: taxesand duties, subsidies and transfers.Provisional accounting figures are produced for the government economy.

1.2 Statistical conceptsUnits and population:The statistics cover units relating to general government, so all authorities producingnon-market services are included.

Variable:Expenditure sideCompensation of employeesFigures cover both direct gross wages and salaries and employer contributions to socialschemes, including an imputed pensions contribution corresponding to the value of thepension entitlement which civil servants etc. have accumulated.

Gross fixed capital formationThis is estimated as expenditure on the construction of new buildings and civilengineering projects and for the purchase of transport equipment, other equipment andmachinery etc.

Consumption of fixed capitalThis is also referred to as depreciation or reinvestment and is an estimate of wear andtear and technical obsolescence of general government production apparatus.

Intermediate consumptionThis is defined as purchases of goods and services for current consumption includingexpenditure on the rental of premises and buildings etc., insurance premiums andindirect taxes and duties paid by government itself. In addition, some acquisitions ofdurable goods for military uses (weapons systems) are still, by convention, considered tobe intermediate consumption.

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Capital accumulationThis covers actual capital activities in the general government sector.It is estimated as:New fixed capital formation + purchases of buildings (net)= Gross fixed capital formation

Gross fixed capital formation+ increases in inventories (net)+ purchases of land and intangible assets (net)= Capital accumulation

Capital transfersThese affect either the donor's or the recipient's assets. Examples would be investmentgrants, certain forms of compensation payment and the writing down of loans andsimilar payments, which are frequently non-recurrent.

Purchases of buildings, netThese are acquisitions of real estate, where the existing buildings are the most importantfactor in terms of value, less corresponding sales.

Purchases of land and intangible assets, netThis covers primarily acquisitions of real estate, where the land is the crucial figure, lesssales. Also included is expenditure on the permanent acquisition of various exploitationrights.

Increases/decreases in inventoriesThese consist primarily of purchases of goods for intervention and strategic stocksminus sales from such stocks.

Current transfersThese affect current disposable income. They consist primarily of transfers tohouseholds, divided into social transfers such as old-age and early retirement pensions,civil service pensions, daily unemployment benefits, post-employment wages [voluntaryearly retirement], supplementary benefits, payments for sick leave and maternity leave,children's allowances and rent support and housing allowances. There are also otherincome transfers such as educational grants, and transfer payments to privateinstitutions, to the Faeroe Islands and Greenland, the EU and the rest of the world.

General government final consumption expenditureThis is estimated from the costs point of view as follows:

Compensation of employees + consumption of fixed capital= Gross domestic product at factor cost

Gross domestic product at factor cost + intermediate consumption + social benefits inkind= Output

Output – sales of goods and services= General government final consumption expenditure.

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General government final consumption expenditure, or consumption, covers actualoperating activities in the general government sector. Over half of government finalconsumption expenditure can be broken down by specific persons. The remainder iscollective final consumption expenditure.

Also covered are effective or nominal interest and distributed losses on issue prices, aswell as expenditure on rents for land and intangible assets. Issue price losses are entered(written down) in line with instalments on loans.

Sales of goods and servicesThese comprise sales of output. To qualify as sales of goods and services, there must beremuneration in return, and there must be some element of voluntary purchase.

Social benefits in kindThis is the designation for benefits such as health insurance benefits and aids which thegeneral government sector purchases on the market and distributes to households in theform of total or partial payments to market producers for the supply of certain specificproducts to the households.

SubsidiesThese cover all current transfers to enterprises with market output. Total subsidies aredivided between public quasi-corporations and private enterprises, as appropriate. Theyare divided up on the basis of whether they are product subsidies, i.e. distributed pro ratawith the output of goods, or other subsidies on production. Coverage of deficits inpublic quasi-corporations is classified as a product subsidy.

Income side:Other current transfersThese come from other domestic sectors, the EU and the rest of the world.

Gross operating surplusThis is that share of gross domestic product at factor cost which accrues to governmentitself. Since the sector's output is estimated from the costs point of view, the remainingincome is by definition depreciation, also known as reinvestment or consumption offixed capital, in general government.

Voluntary contributions to social security schemesThese are contributions which give the person paying them the right to public socialsecurity benefits. "Voluntary" means that the contributions are not taxed. Voluntaryschemes cover contributions to voluntary health and daily sickness benefit insurance andvoluntary contributions to the ATP, primarily from self-employed persons who havevoluntarily joined the scheme.

Imputed social contributionsThese are from civil servants etc. They correspond to the value of earned pensionentitlement which is added to their wages or salaries. In practice, the contribution iscalculated as the pension paid out for current pension schemes.

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Income from land and intangible assetsThis covers essentially payments for the leasing of land, royalties to owners of mineraldeposits etc.

Interest income, dividends, etc.In addition to nominal interest, dividends etc, this item covers revaluation gains minusany losses.

Taxes and dutiesThese are defined as compulsory payments levied by the general government sectorwithout any link between payment and the acquisition of services. In the generalstatistics, taxes and duties are broken down by, inter alia, kind of tax and nationalaccounts group. The allocation of taxes and duties to the various parts of the nationalaccounts is an attempt to reflect the way in which different kinds of taxes and dutiesaffect the social economy. The taxes and duties are divided into taxes on productionand imports, current taxes on income and wealth and capital taxes, and further into finesand compulsory fees as well as compulsory contributions to social security schemes.For the grouping of taxes and duties by kind, only the tax base is taken into account.

Withdrawals from income of quasi-corporationsThese are calculated for public quasi-corporate operating companies which feature inpublic accounts but are not included in general government, such as port authorities andFinanstilsynet. Profits are calculated to include depreciation as current expenditure. Inaddition, the central government share of the Nationalbank profits is included.

Statistical measures:Consolidation:This statistical procedure ensures that the flows between and within the individualsubsectors are balanced. Some of the adjustments are of transfers (such as block grantsor refunds) and some are of actual flows (e.g. purchases of goods by one institution fromanother). There will typically be inconsistencies in the primary statistical data. In thestatistical system for public finance, it is assumed that the source of this problem isperiodisation, arising from the fact that a single transaction is entered in the accounts intwo different accounting periods. The adjustment is always against the localgovernment (municipality) figures.

Grouping by unit:General government covers those authorities and institutions whose main function is toproduce non-market (public) services for collective consumption and/or to distributesociety's income and wealth. Non-market services are understood to be those which areeither actively controlled by public authorities or are made available free of charge, orvirtually so, to the general public or groups comprising members of the general public.In other words, the authority or institution producing non-market services must have itsmain income from sources other than market sales, i.e. over 50% of its income mustcome from public transfers etc.

Most of the authorities and institutions producing public benefits are officially alsopublic, i.e. they are integrated (incorporated) into central government, county ormunicipal accounts. They are therefore referred to as integrated public institutions.

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There are some institutions, however, which are not integrated into central government,county or municipality accounts but which have their own independent accounts. Thenational church and social security funds are not covered by central or local governmentaccounts, and are referred to as non-integrated public institutions.

Some of the institutions which produce public services are officially private, withindependent accounts. The criterion for inclusion in general government is that they areprimarily financed by public funds. Private schools, private hospitals etc. would beexamples of these officially private but actually public institutions. These are referred toin the national accounts as quasi-public institutions.

Grouping by transactionReal-economy distributionThe purpose of the real-economy distribution by kind is to group general governmenttransactions together according to their effect on the social economy. The socialeconomy is affected by real transactions and income distribution and redistributiontransactions. The real transactions aim at public output whilst the income distributionand redistribution transactions are carried out to finance real transactions or toredistribute income or wealth.

Functional breakdown:The breakdown by function provides information on the purpose of the publicexpenditure, showing what the kroner from the public purse are used for.

Principal public servicesThis major group consists of activities which by their very nature are public, i.e. theycannot be carried out by individuals or enterprises. The main group covers, forexample, the legislative assembly, local authorities, local and higher executive bodies,major monetary and financial policy activities and the bodies involved, general public-sector staffing policy, centralised buying and selling activities, international relationsand police and defence activities. All these activities must be considered to be essentialin any organised society.

Social servicesThis major group covers various services offered to households or individual persons. Itcovers education, health, social security, various welfare services, housing and theenvironment as well as cultural, leisure and religious services.

Business economicsThis major group covers public activities connected with government monitoring andregulation of industries, with the declared aim of creating a more socially effective useof society's resources. The main group covers activities promoting economicdevelopment, providing for regional balance and creating better business and jobopportunities.

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Expenditure not divided by functionThis major group includes primarily interest payments and other costs connected withgeneral government debt. The payment of interest on debts indicates that certainexpenditure previously defrayed was financed by taking out loans rather than throughcurrent taxation. This expenditure is not linked to current activities and cannot thereforebe classified under a particular function with absolute certainty.

Breakdowns of subsidies, taxes and duties and transfers are also published.

2 Time

2.1 Reference periodThe statistics include provisional accounting data for the financial year just past and datafor previous financial years which have already been published and further processed.The statistics thus contain both provisional and final data.

2.2 Date of publicationThe statistics are published twice a year, at the beginning of June and the beginning ofNovember of the year following the end of the financial year in question.

2.3 PunctualityThe statistics are generally published on schedule.

2.4 FrequencyAnnual publication.

3 Accuracy

3.1 Overall accuracyStatistical accuracy is generally very high.

3.2 Sources of inaccuracyMisclassification due to insufficient information about the content of a given account.

In provisional accounts, VAT is divided at the level of accounting items.

In both the May and the October versions, provisional tax estimates are used.

Subsidy accounts may be classified with some inaccuracy, since it is not always possibleto define the recipient of the subsidy.

3.3 Measures of accuracyNo measures have been calculated.

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4 Comparability

4.1 Comparability over timeThe data are comparable according to the ESA 95 from 1988 onwards.

4.2 Comparability with other statisticsThe figures are fully comparable with other statistics in the national accounts becausethey comply with international standards, i.e. the ESA 95 and the SNA 93.

4.3 Consistency of provisional and final statisticsThere are both provisional and final data for accounts-based statistics.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik and Offentlige finanser (Statistiske Efterretninger) as well asDanmarks Statistikbank.Annual publications: Statistisk årbog and Statistisk tiårsoversigt.

5.2 Basic material: storage and usabilityData are stored in the DIOR database for public finance.

5.3 DocumentationFurther documentation can be found in Statistiske Efterretninger and in SU46 fordocumentation on the main revision.

5.4 Other information

© Danmarks Statistik, CPE, 13-10-2000

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Declaration of contents, accounting statistics for shipping

0 Administrative information about the statistical product

0.1 NameAccounting statistics for shipping

0.2 HeadingService sector

0.3 Responsible authority, office, person, etc.Service sectorChristian Ørsted Brandt, tel. 39 17 31 15, e-mail: cbr@dst.dkKjestine Jørgensen, tel. 39 17 32 56, e-mail: kjo@dst.dk

0.4 Purpose and historyThe purpose of the statistics is to illustrate the level of and changes in gross earnings byshipping companies from shipping activities.The statistics have been published since 1967.

0.5 Users and applicationUsers:Ministries, organisations and private enterprises.Some of the data collected are included in the balance of payments statistics.

Purpose:Market surveillance and the formulation of transport policy.

0.6 SourcesAccounting data are collected on an annual basis from the entire population of privatelyowned shipping companies with a minimum total tonnage of 250 GT.

0.7 Legal authority for data collectionAct on Danmarks Statistik, cf. Consolidated Act No 599 of 22 June 2000.

0.8 Response burden0.4 man-years.

0.9 EU RegulationNone.

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1 Contents

1.1 Description of contentsThe statistics aim to show the level of and changes in gross earnings by shippingcompanies from shipping activities.The most important variables are: gross freight entered, time charter earnings and otherearnings from shipping activities, operating costs, administrative costs and grossearnings.

1.2 Statistical conceptsPopulationThe statistics cover privately-owned shipping companies with a minimum gross tonnageof 250 GT.

Definitions

Gross tonnage is an abstract concept that expresses the volume of all covered holds inthe ship.

Time charter earnings are earnings from the leasing of ships.

Earnings from passenger transport include earnings from the sale of tickets forpassengers and the transport of motor vehicles as well as from restaurant and kiosksales, etc.

Other earnings include those from insurance, salvage operations, towing, forwarding ofgoods etc. provided the shipping firm includes such earnings in its annual accounts.Earnings from offshore search activities are included on a net basis (i.e. gross earningsless costs).

Operating costs, like earnings, are exclusive of VAT. Bonuses, discounts, etc. are alsodeducted.

Direct costs include the cost of loading and unloading and expenditure on harbour,customs and shipping dues. Also included are goods consumed in own restaurants andshops on board.

Salaries etc. for staff on board comprise holiday allowances, subsistence allowancesand bonuses as well as wages and salaries.

Other staffing expenditure covers, inter alia, statutory or other contributions andpayments to social funds, pensions, the ATP and to medical and other health schemes.

Time charter salaries are expenses for the leasing of tonnage.

Other operating expenditure consists of insurance, repairs and maintenance, certaincommissions and the forwarding of goods, etc.

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Administrative costs consist of wages and salaries and other staffing costs foradministrative staff, plus other administrative costs such as rent (paid or estimated),office expenses, marketing, fees paid to managing owners, lawyers and accountants.

Gross earnings are calculated as gross income less operating and administrative costs.

2 Time

2.1 Reference periodAccounting year, which for most shipping firms is the calendar year.

2.2 Date of publicationThe statistics are published annually, approximately 300 days after the end of the year,in Statistiske Efterretninger, in the series Samfærdsel og turisme [Transport andTourism] (as from January 1999: Transport).

2.3 PunctualityPublication is normally on schedule.

2.4 FrequencyAnnual.

3 Accuracy

3.1 Overall accuracyTotal count.

3.2 Sources of inaccuracy

3.3 Measures of accuracy

4 Comparability

4.1 Comparability over timeFor the general estimates, the statistics are comparable with previous annual estimatesof accounting figures.

4.2 Comparability with other statistics

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4.3 Consistency of provisional and final statistics

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik and Transport (Statistiske Efterretninger).Annual publications: Statistisk årbog.

5.2 Basic material: storage and usabilityThe data reported for each shipping company are stored electronically back to 1990.

5.3 DocumentationSee details in the publication series Transport (Statistiske Efterretninger).

5.4 Other information

© Danmarks Statistik, CBR, 3-7-2001

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11.2 Sources for the income-based estimate of GDP

Declaration of contents, establishment-related employment (ERE)statistics

0 Administrative information about the statistical product

0.1 NameEstablishment-related employment statistics

0.2 HeadingGeneral economic statistics

0.3 Responsible authority, office, person, etc.Business structureLeif Sten Nielsen, tel. 39 17 38 41, e-mail: lsn@dst.dk

0.4 Purpose and historyThe purpose is to produce business statistics containing information on the number ofworkplaces (establishments) and jobs at the end of November in a breakdown byindustry and region.

The ERE statistics have been compiled since 1990, when they replaced the register-based workplace statistics which had been compiled for years 1980-1989. Thesecovered only workplaces with employees. With the introduction of the ERE statistics,information on the self-employed and assisting spouses was added, and thus workplaceswith no employees are included in the figures as from 1990. The statistics also includeinformation on socioeconomic status, sex, age and education.

0.5 Users and applicationUsers: municipalities, counties, ministries, national and international organisations, thepress, private enterprises and individuals.Applications: public and private planning and research.

0.6 SourcesRegisters operated by Told- og Skattestyrelsen - the Centrale Oplysningsseddel Register[Salary Information Register, COR] and the Centrale Pensions System (CPS); reports toDanmarks Statistik from local government agencies on their salary payments; DanmarksStatistik's business register; the education classification model (UKM), the employmentclassification module (AKM) and the register of population statistics.

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0.7 Legal authority for data collectionAct on Danmarks Statistik, cf. Consolidated Act No 599 of 22 June 2000.

0.8 Response burden2.7 man-years in 1999.

0.9 EU RegulationNone.

1 Contents

1.1 Description of contents

The ERE statistics are published annually, giving information on the number ofworkplaces and the number of jobs as at the end of November, plus figures for full-timeequivalent employment and wages and salaries during the year. The workplaces aredefined on the basis of Danmarks Statistik's business register on the date of the census.The number of workplaces at the end of November is the number where there were jobson that date. The jobs may be filled by self-employed persons, assisting spouses oremployees.

1.2 Statistical concepts

Units and population:A workplace (establishment) is defined as an organisational unit of a firm located at aspecific address and producing one - or one main - kind of good or service. The EREstatistics cover all workplaces where there are jobs at the end of November. Thenumber of jobs corresponds to a headcount of persons in employment listed in theCentral Population Register in year x+1. They may be self-employed, assisting spouses,or employees classified as having primary and/or secondary jobs at the end ofNovember.

Variables:Workplace variables: size, industry, municipality, form of ownership and sector.Personal variables: socioeconomic status, education, age and sex.

Statistical measures:Number of workplaces and of jobs at the end of November plus the number in full-timeemployment and total wages and salaries during the year.

Groupings:Size, industry, municipality, form of ownership, sector, socioeconomic status,education, age and sex.

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2 Time

2.1 Reference period

Workplaces and jobs at the end of November. Full-time equivalent employment andtotal wages and salaries during the calendar year.

2.2 Date of publication

The statistics are published annually.

For the 1998 ERE statistics, the publication timelag was 419 days.

2.3 Punctuality

In 1998, the ERE statistics were published on the date announced in advance.

2.4 Frequency

Annual.

3 Accuracy

3.1 Overall accuracy

Most of the data come from the Salary Information Register (COR) and from localgovernment agency salary systems. The data are considered to be of high quality.

3.2 Sources of inaccuracy

The population of employees in central government and private firms included in theERE statistics is defined on the basis of the Salary Information Register (COR) operatedby Told og Skattestyrelsen. The quality depends entirely on whether the informationforms have been filled in correctly. If an employee's A-income is not entered correctlyin cell 13 on the information form, that person will not be included as an employee inthe statistics. Conversely, if income is reported in cell 13 whereas it should have beenreported in another cell, an employee record will be created incorrectly. .

The individual employee's link with a workplace is also obtained from the COR.Enterprises with more than one workplace must report on the information form aworkplace code corresponding to the workplace to which the individual employee islinked. Error searches are carried out to check that this workplace code actually hasbeen reported, and if necessary the enterprises are contacted so that corrections can bemade. This will only be done, however, if the enterprise has ten or more forms withmissing/incorrect (unknown) workplace codes In other cases, the employees are

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distributed among the workplaces by imputation, which is not, of course, entirelyaccurate in every case.

When it has to be decided whether an individual job is valid at the end of November ornot, the working periods entered on the information form are used. If the forms comefrom Dataløn or other professional agencies, it is very likely that the periods reportedare correct. In other cases, where the forms are filled in manually by the firms surveyed,the quality of this information is not known.

A workplace can be included in the statistics only if it is in the business register. We donot know for sure how many firms there are which actually have more than oneworkplace but only one recorded in the register. The number is believed to be relativelysmall, however, partly as a result of various error checking procedures in the workplaceproject.

Information on employees in municipalities is collected from local government agenciesresponsible for staff salaries. There is a certain amount of uncertainty about employeesworking at town halls. It is difficult to make a firm distinction between staff actuallyworking at the town hall and those who are allocated to the town hall because theycannot easily be linked to a more appropriate address (e.g. roadworkers employed bylocal government). We use the qualification-related (DISCO) pay code of each personin an attempt to shift the jobs away from town halls to alternative (notional) workplacesin the municipality with a branch code other than administration.

3.3 Measures of accuracy

It is not possible to calculate error measures.

4 Comparability

4.1 Comparability over time

The ERE statistics have been compiled since 1990, when they replaced theregister-based workplace statistics for reference years 1980 to 1989. These covered onlyworkplaces with employees. The methodology of the workplace statistics wasunchanged between 1980 and 1989 and for that period comparability is therefore good.

The introduction of the ERE statistics meant that the self-employed and assistingspouses were added, and thus workplaces with no employees have been included asfrom 1990. Information about socioeconomic status, sex, age and education was alsoadded. It is not possible to use the new method for previous data. It was thereforedecided to compile two register versions of ERE statistics in 1990, one excluding andone including the self-employed and assisting spouses.

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In 1993, the Danish classification Danmarks Statistiks Erhvervsgrupperingskode/DSE77 was replaced by Dansk Branchekode 1993, 1st edition (DB93), and this hasaffected comparability over time. It was decided to incorporate both branch codes intothe 1992 ERE statistics and in databanks there are matrices for 1992 based on bothDSE77 and DB93.

4.2 Comparability with other statistics

The ERE statistics are based on the same data as the register-based labour forcestatistics (RAS), but with some major conceptual differences. The RAS consider onlyprimary employment whereas the ERE statistics include secondary jobs as well. TheRAS cover several groups of the self-employed: the AKM [Employment ClassificationModule] and CRAM [Register of unemployment statistics] self-employed are includedonly in the RAS. Persons on leave from their jobs at the end of November are includedin the RAS but not in the ERE statistics.

Full-time equivalent employment is in principle calculated in the same way for the EREand the ATP-based employment statistics, but the two sets are not fully comparable.Primary data for the ATP statistics are obtained directly from the pension fundadministration agency and the census unit is the SE number, whereas the ERE statisticsare calculated at workplace level on the basis of personal information in the COR. Thismeans that there will be differences in the figures for full-time employment by branch.

4.3 Consistency of provisional and final statistics

No provisional results are compiled.

5 Accessibility

5.1 Forms of dissemination

Nyt fra Danmarks Statistik, Generel erhvervsstatistik (Statistiske Efterretninger) andDanmarks Statistikbank.Annual publications: Statistisk årbog

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5.2 Basic material: storage and usability

The ERE statistics are based on three workplace registers:• GEREåå1A: In addition to workplace identification numbers and standard

information from the business register, this includes information on jobs at theworkplace grouped by sex and socioeconomic status.

• GEREååUDD: In addition to workplace identification numbers and standardinformation from the business register, this includes information on jobs at theworkplace grouped by sex and groups defined in terms of the highest level ofvocational training completed.

• GEREååAKHD: In addition to workplace identification numbers and standardinformation from the business register, this includes information on jobs at theworkplace grouped by sex and age as well as by sex and insurance category (full-time or part-time insured).

The record and data descriptions are in Word templates.

5.3 Documentation

The error-searched and processed Salary Information Register (COR) is one of theregisters in the report from the Register Committee "Hovedveje i det personstatistiskeregistersystem" [Main roads in the system of registers of personal statistics] of30 September 1998.

Other than the methodological section in Statistiske Efterretninger, no furtherdocumentation is available.

5.4 Other information

Reference should be made to Statistiske Efterretninger, Generel erhvervsstatistik oghandel, 2000:4, which includes a description of the basic data and methods underlyingthe ERE statistics.

© Danmarks Statistik, LSN, 13-10-2000

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11.3 Sources for the expenditure-based estimate of GDP

Declaration of contents, retail sales (index)

0 Administrative information about the statistical product

0.1 NameRetail sales (index)

0.2 HeadingService sector

0.3 Responsible authority, office, person, etc.Service SectorKaren Reif Andersen, tel. 39 17 38 81, e-mail: kaa@dst.dk

0.4 Purpose and historyThe statistics aim both to obtain a quick overview of developments in an important areaof private consumption in Denmark and to measure changes in turnover in the differentbranches of retail trade.A retail sales index has been prepared for three main branches since 1939. In 1945, thepublication was extended to include 40 branches. As from 1971, seasonally-adjustedquantity indices have been calculated as well. The sample and calculation methods havebeen revised several times, the most recent revision of the sample dating from 1 January2000.

0.5 Users and applicationThis index is of great importance for public and private institutions/enterprisesmonitoring current business trends. It provides significant input for the nationalaccounts statistics published quarterly by Danmarks Statistik. Eurostat also uses theindex. Finally, it is of great interest to many retail trade enterprises, as it allows them tocompare their own sales figures with those of their branch as a whole.

0.6 SourcesThe index is based on questionnaires completed by the firms in the sample.

0.7 Legal authority for data collectionThe index started out as a voluntary survey. The legal basis for collecting the data iscurrently the Act on Danmarks Statistik, §8.

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0.8 Response burdenThe respondent burden for 2000 is 2.5 man-years.

0.9 EU RegulationThe index comes under Council Regulation (EC) No. 1165/98 of 19 May 1998concerning short-term statistics.

1 Contents

1.1 Description of contentsThe statistics show in index form changes in current prices for retail sales within 46different branches. In addition to these value indices, an adapted expression of changesin volume is prepared by converting the value indices into fixed prices on the basis ofprice inflation. This is not done at branch level, but only for a number of productgroups: food and other basic commodities (food, beverages and tobacco andconvenience goods), clothing etc. and other consumer goods. For the publication ofvolume indices for the product groups, a final seasonal adjustment is made, to takeaccount of certain public holidays (e.g. Easter) and of the number of business days ineach month.

1.2 Statistical conceptsUnits and population. The units in the retail sales index are kind-of-activity units, i.e.those units in the firm whose activity comes within one and the same branch. Thismeans that if there are two or more retail trade outlets in a firm in the same branch, theyare treated as a single unit in the statistics. For large firms with retail stores in differentbranches, each of the branches is split up into units of analysis. The total number ofenterprises in the population is approximately 11 000. A test sample is taken from thispopulation and used as the basis for calculating the indices.

Variables. In the questionnaire, the enterprises are asked to divide their sales inclusiveof VAT into 1) sales to private individuals and 2) sales to institutions, enterprises andfor export. It is sales to private individuals that are defined as retail sales.

Statistical aims. In the publications, the indices in each branch are given as valueindices. For the main branch groups, deflated indices and deflated, seasonally adjustedindices are also given.

Groupings. The publication uses the following groupings:-Discount stores-Other grocers' shops-All-night shops-Supermarkets-Retail sale of fruit and vegetables-Retail sale of meat and meat products-Retail sale of fish, game, crustaceans and molluscs-Retail sale of bread, cakes and flour confectionery-Retail sale of chocolate and sugar confectionery

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-Retail sale of alcoholic and other beverages-Retail sale of tobacco products and wine-Retail sale of cheese-Other retail sale of food and beverages in specialised stores-Department stores-Dispensing chemists-Perfumery shops-Chemists (not licensed to dispense medicines)-Retail sale of textiles-Retail sale of ladies' clothing-Retail sale of men's and ladies' clothing-Retail sale of baby articles and children's clothing-Retail sale of footwear-Retail sale of leather goods-Retail sale of furniture-Retail sale of carpets-Retail sale of furnishing fabrics-Retail sale of kitchen utensils, glass and china-Retail sale of electric household appliances-Retail sale of radio and television goods-Retail sale of records, CDs, cassettes, etc.-Retail sale of hardware-Retail sale of building materials-Retail sale of paints and wallpaper-Retail sale of books, newspapers and stationery-Retail sale of watches and clocks-Retail sale of watches, clocks and jewellery-Retail sale of spectacles-Retail sale of photographic equipment-Gift shops-Retail sale of sports goods-Retail sale of toys and games-Retail sale of bicycles and mopeds-Florists' shops-Retail sales via mail order houses.

2 Time

2.1 Reference periodThe questionnaires are sent out on the last day of the even months, and questions areasked about sales for each of the previous two months. In the publication, indices aregiven every second month for each of the two months since the previous publication.

2.2 Date of publicationThe statistics are published every other month in Nyt fra Danmarks Statistik andGenerel erhvervsstatistik (Statistiske Efterretninger).

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Publication time, i.e. the time which elapses between the end of the reference period(the second of the two reporting months) and the publication date in Nyt isapproximately 40 days.

2.3 PunctualityThe Efterretninger article is published around 20 days after the Nyt article (cf. point2.2). It is rare for the actual publishing date to be different from the scheduled date.

2.4 FrequencyNyt and Efterretninger articles are published every other month.

3 Accuracy

3.1 Overall accuracyThe population selected is based on Danmarks Statistik's Central Business Register andthe branch codes used therein. It is based on firms whose activities include retailing, butsome retail branches are not included in the survey owing to insignificant sales and/orbecause they are operating under special conditions. The branches not included accountfor approximately 5% of total turnover in retail trade. Bakers' shops are also covered,despite their branch classification in manufacturing.

3.2 Sources of inaccuracy• Coverage

The total number of enterprises in the population is approximately 11 000. From thispopulation, a sampling frame is selected and used as a basis for calculating the indices.The frame contains those units which generate annual sales of at least DKK 2.5 millioninclusive of VAT. It covers approximately 28% of enterprises and 70% of total turnoverin firms whose main activity is retailing.

• Sample/selectionFrom the sample, a selection is first made of all enterprises with annual sales in excessof DKK 20 million and all enterprises in branches with fewer than 30 units. The numberis around 750 in total.The remaining sample is based on stratified random selection. The sampling frame isdivided into from one to four strata, the intervals being DKK 2.5 to 5 million, 5 to 10million, 10 to 20 million and 20 million plus. The number of enterprises in the samplein the different branches is determined according to the weight of the branch in terms ofnumbers of enterprises. The distribution over the individual strata is proportional to totalturnover. A minimum of 10 enterprises is selected in each stratum, however, and aminimum of 15 enterprises in each branch.The total sample comprises approximately 3 000 enterprises.

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• Collection/measuringThe sales data are obtained from completed questionnaires sent in by the enterprisesincluded in the sample. The questionnaires are sent out shortly after the end of the two-month period for which data are to be submitted. If the questionnaires have not beenreceived within a few days of the deadline, a reminder is sent to the enterprises inquestion, together with a new deadline. If this deadline is exceeded as well, theenterprises are reminded by telephone. Completion of the questionnaires is obligatory,i.e. the enterprises must return a completed form. Some enterprises fail to meet thisobligation. In such situations, Danmarks Statistik sends a registered letter in which itpoints out that if the information required is not returned within a week, it will notify thepolice in the area in which the enterprise is situated, requesting that a fine be issued.

In the questionnaire, each enterprise is asked to separate its turnover including VAT into1) sales to private individuals and 2) sales to institutions, enterprises and for export. It issales to private individuals that are defined as retail sales. They include repairs carriedout at the premises of the enterprise in question. For example, watch repairs are includedin the total sales of clock- and watchmakers. Sales to institutions, enterprises and forexport comprise large deliveries on special terms to military barracks, schools and otherinstitutions, and all kinds of wholesalers.Supermarkets, variety and department stores sell a wide variety of goods. In order for asummary to be made of changes in sales by major product group, the firms in the threebranches are requested to separate their sales into three groups: "food, beverages andtobacco and convenience goods", "clothing, footwear etc." and "other consumer goods".If the enterprises are unable to submit accurate breakdowns, they are asked to estimate abreakdown of sales.The data submitted undergo a probability check for errors. If sales are markedlydifferent from the figures sent in previously, the enterprise is asked to check whether thesale figures submitted are accurate. It is assumed that not all errors on forms sent in willbe detected, and therefore the statistics may be subject to a certain amount ofuncertainty.

• Maintenance of the sample.Owing to the strict reminder procedure, only very few enterprises do not return thecompleted questionnaire.The sample is changed/renewed every third year according to schedule. New enterprisesare not included in the current sample. These are enterprises established after thereference date for selection of the sample. New outlets in already established enterprisesare not included, as these are generally automatically included in the total turnover ofthe enterprise in question, and since the great majority of enterprises with two or moreoutlets take part in the survey, sales from the new outlets are included in the turnoverfigures returned by the enterprise.To the extent that new enterprises generate significant sales which are not matched byan equivalent fall in sales by enterprises closing down, which are not included in thesample, the non-inclusion of these new enterprises will result in an underestimate ofsales figures in the retail sales index.All in all, it is likely that, as a result of the procedures for handling changes in thepopulation and sample, movements in sales figures in the retail sales index will beunderestimated. During periods when business trends are positive, when a relativelylarge number of new enterprises are being set up, the underestimate would be greaterthan in other periods. The scale of the underestimate cannot be calculated accurately,

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since no records exist that precisely describe the parameters affecting the over- orunderestimation. Comparisons have to be made all the time, therefore, betweenmovements in the retail sales index and other sources describing private consumption.

• Method of calculationThe calculations are based on the returns and total basic sales figures. The latter are theaverage monthly retail sales inclusive of VAT for the year forming the basis for thesample selection. The calculation is made for each stratum by multiplying the quotientwhich consists of the ratio of total sales in the sample in the current month and thecorresponding basic sales by the total basic sales figures for the total number ofenterprises in the sampling frame in the stratum in question.In the ongoing monthly statistics, the calculated sales are converted to a value index. Inorder to obtain an appropriate expression of changes in volume, the value indices areconverted to fixed prices via a correction for inflation. Volume indices are notcalculated at branch level but solely on the basis of an appropriate product breakdowninto food, beverages and tobacco and convenience goods, clothing etc. and otherconsumer goods. For the publication of the volume index for the main product groups,the figures are also seasonally adjusted.Since the survey is sample-based, some uncertainty attaches to the results. For totalsales, the uncertainty is considered small, since coverage is extensive. There is,however, a risk of a higher level of sampling uncertainty when it comes to individualbranches, where coverage may be low. Any assessment of changes in the individualbranches based on monthly figures will therefore be uncertain, especially for thosebranches in which many enterprises generate annual sales of under DKK 2.5 million, theminimum turnover for inclusion in the sample.

3.3 Measures of accuracy

4 Comparability

4.1 Comparability over timeThe survey has been carried out since 1939, since when the sample selection, calculationprocedures and base periods have been adjusted many times. Since the primary aim is toprovide an indication of short-term business trends, the statistics are not suitable for useas time series data over a long period.

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4.2 Comparability with other statisticsOther business trend statistics also show movements in retail trade. Below is a briefdescription of the relationships between the retail sales index and a number of otherstatistics which can be used to assess movements in retail sales.

• VAT statistics. In addition to being a quarterly total count, VAT statistics differfrom retail sales index statistics in that different sales and unit concepts are used.In the VAT statistics, total sales are total domestic sales by the enterpriseswhich, according to the business register, have retail sales as their main activity.In the retail sales index, sales cover only those to private individuals in theabove-mentioned branches.

In the VAT statistics, the branch definition is based on the unit paying VAT. Largeunits with different types of activity can choose to pay VAT via a single unit, and totalsales are therefore allocated to the branch linked to the unit in question.

VAT statistics are based on current payments of VAT. This means that changes in thepopulation (new enterprises added, existing enterprises closing down and existingenterprises changing branch out of or into retail trade) in principle have an immediateeffect on sales figures. The same is not the case with the retail sales index.

• Consumption of goods in the national accounts statistics.. The quarterly nationalaccounts state private consumption, including household consumption of producttypes traded in enterprises whose sales are measured in the retail sales index(approximately 40% of total private consumption). In the national accountsstatistics, figures are given for quarterly changes in consumption by producttype.

• Other statistics. Apart from the above statistics which can be used to assesschanges in retail trade as a whole, a number of other statistics cover certain areasof private consumption:

- annual sample-based statistics giving the distribution of sales in the motor vehiclesbranch;- for assessments of business trends, monthly statistics of sales of newly-registeredmotor vehicles, based on information from the Central Register of Motor Vehicles;- annual sample-based statistics showing sales in a number of service trades (e.g. retailsales in personal computers etc, wholesale trade in office machinery, etc.).A number of branch organisations within retail trade prepare statistics on sales on thebasis of data from their own members.

4.3 Consistency of provisional and final statisticsThe figures published in Nyt are based on a high percentage of returned questionnaires,and hence there are usually only minor differences between the preliminary and the finalfigures.

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5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik, Generel erhvervsstatistik (Statistiske Efterretninger),Konjunkturstatistik and Danmarks Statistikbank.

5.2 Basic material: storage and usabilityBasic material (in schematic and electronic form) is kept for approximately two years.

5.3 DocumentationThe present method is described in more detail in Statistiske Efterretninger, GenerelErhvervsstatistik og handel 1998:4.

5.4 Other information

© Danmarks Statistik, KAA, 10-10-2000

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Declaration of contents, household budget survey (FU)

0 Administrative information about the statistical product

0.1 NameHousehold budget survey [Danish abbreviation FU]

0.2 HeadingIncomes, consumption and prices

0.3 Responsible authority, office, person, etc.Income and ConsumptionBo Møller, tel. 39 17 34 11, e-mail: bom@dst.dk

0.4 Purpose and historyThe survey has been conducted at varying intervals since the 19th century. As from1994, there have been substantial methodological changes.Similar surveys are carried out in most other countries.The survey provides information on the economic conditions of private households andthus statistics which illustrate living standards as well as being purely economic.

0.5 Users and applicationIn addition to serving the general public interest, the survey has a wide range of uses:- internally in Danmarks Statistik for the compilation of national accounts and prices;- planning by government bodies and analyses of the consequences of new legislation

etc;- research in many areas;- marketing purposes;- internationally, where Eurostat is particularly active in compiling figures which are

comparable from one country to another.

0.6 SourcesThe survey is based on a sample.Three main data sources are used: a comprehensive interview with the householdstaking part, a detailed diary and information from various registers.

The interview covers, among other topics, the fixed payments made by the households,major expenditure, stocks of consumer durables, the use of healthcare, childcare andeducation systems, certain incomes and pension schemes.

The detailed diary-keeping means that households write down every single expense overa period of two weeks. This information is used to capture the more common dailyexpenditure and ensure total coverage.

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The most important part of the register-based information is on incomes.

0.7 Legal authority for data collectionData are collected under the Act on Danmarks Statistik.The survey is voluntary for households.

0.8 Response burdenParticipation in this survey is voluntary.Around 1 000 households (effectively) take part every year.Data from three years are put together to form a single sample of about 3 000households.Households taking part are visited twice, each visit taking about one hour. They alsokeep accounts for two weeks, and so the total burden is quite large.

0.9 EU RegulationNo direct regulation exists, but the Regulation on the harmonised index of consumerprices indirectly assumes that some kind of household budget survey is carried out.

1 Contents

1.1 Description of contentsThe survey gives detailed information on the economic conditions of privatehouseholds. The following main topics are covered in an exhaustive and comprehensivefashion:1. Consumption2. Incomes3. Stock of consumer durables4. Use of health services, education and childcare services5. Pension schemes6. Direct taxes7. Taxes paid on imports and production8. Indirect public subsidies (where households do not pay the full price for the services

mentioned under 4).

This information can then be combined in a variety of ways with backgroundinformation on the households in question, including

Size and composition of the householdHousehold incomeHousing conditionsEmployment etc.Level of educationRegionEtc.

1.2 Statistical concepts

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The typical statistics from the survey are in the form of averages per household within agiven type of household.Many other concepts can be used for more specific purposes, for example consumptionper unit of consumption (weighted by equivalence), consumption per person, totalconsumption in the country, etc.

2 Time

2.1 Reference periodData are collected over a period of three years, so the real reference period is this three-year period.To make it easier to use the data, all figures are recalculated to the level in the middle ofthe three years, so that for practical purposes the reference period for flows(consumption, income, etc.) may be taken to be a specific calendar year and for stocks(composition of households, housing, etc.) the end of the same calendar year.

2.2 Date of publicationThe statistics are updated annually.

Publication date is a good two years after the reference year (i.e. the middle of the threeyears covered by each survey).It is therefore one year after the last of the three years in question.

In addition, special articles are published annually in Indkomst, forbrug og priser[Income, consumption and prices] (Statistiske Efterretninger) with a more detailedanalysis of a selected area. These articles are published around 2½ years after thereference year.

2.3 PunctualityUpdates of the survey results will normally be available in February each year.

2.4 FrequencyData are collected continuously.Data from three years are recalculated to cover the middle year.Annual updating means that the earliest year is removed and a new year added, and atthe same time there is a recalculation so that the data refer as closely as possible to themiddle year.Comparisons between two annual estimates cannot directly provide any informationabout changes from one year to the next, however, since, as already mentioned, onlyaround one-third of households change.

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3 Accuracy

3.1 Overall accuracyBecause of the large number of different data collected in very different ways, it is notpossible to give information on the overall accuracy of the statistics.Data collected from the diary-keeping will be more inaccurate than data from theinterviews (the diaries cover just 14 days whereas the interviews normally cover a 12-month period).Data for smaller groups of households will be more inaccurate because of samplingerrors.

3.2 Sources of inaccuracyMany sources of inaccuracy exist, including:General sampling errors. The survey covers around 3 000 households.Errors and omissions in information from the households.Errors and omissions in the registers used.

3.3 Measures of accuracySince there are many other, unquantifiable forms of uncertainty, in addition to samplinguncertainty as such, and since at the same time the uncertainty varies considerably indifferent parts of the survey data, it has not been thought appropriate to carry outuncertainty calculations.

4 Comparability

4.1 Comparability over timeAs from the start of the new survey in 1994, the data for the various years will becomparable, with no particular problems.Comparisons back over time with previous household budget surveys (the latest beingthe 1987 survey) are somewhat difficult in that the definition and classification ofconsumption have been radically revised, the content of other survey concepts haschanged and the methods of data collection etc. have also been reorganised to a largeextent.A more detailed description of comparison problems – including quantification – can befound in Indkomst, forbrug og priser 1998:11.

4.2 Comparability with other statisticsThe aim is to use the classifications etc. of the national accounts wherever possible, butwith a few necessary differences. The methods in these two sets of statistics are,however, very different, and some of the figures calculated are more easily harmonisedthan others.The classification of consumption, which is based on the international COICOPclassification, is largely the same as the classification used in the consumer pricefigures.

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It is difficult to make comparisons with general population statistics since the definitionof households in the household budget survey is different: the economic unit as decidedby the household members themselves, as opposed to the household in the generalpopulation statistics, which can be derived from register-based information.

4.3 Consistency of provisional and final statisticsNo provisional figures are produced.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik and Indkomst, forbrug og priser (Statistiske Efterretninger).Annual publications: Statistisk årbog and Statistisk tiårsoversigt.

Eurostat also publishes (at present roughly every five years) data from the Danishhousehold budget survey along with data from the surveys of the other countries. Butthese Eurostat publications do not always use exactly the same classifications etc. as inthe national publications, since the aim is comparability with other Member States.

5.2 Basic material: storage and usabilityThe basic survey figures – i.e. individual data on the households taking part – are storedin the form of SAS data sets on the PC network.On the basis of the microdata, special tabulations etc. can be produced.

It is also possible for researchers to access the microdata under certain restrictiveconditions.

A special brochure has been produced about user service possibilities.

5.3 DocumentationThe general documentation is published in Statistiske Efterretninger, Indkomst, Forbrugog priser, [Income, Consumption and Prices] in connection with the main publication ofthe survey results.

Comprehensive and detailed documentation is published in the book entitledForbrugsundersøgelsen, Metodebeskrivelse. Fra dataindsamling til offentliggørelse[The Household Budget Survey, methodological description, from data collection topublication], Danmarks Statistik, 1999.

5.4 Other informationOther information can be obtained by contacting the Household Budget Survey unit.

© Danmarks Statistik, BOM, 12-9-2000

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Declaration of contents, census of buildings, 1 January

0 Administrative information about the statistical product

0.1 NameCensus of buildings, 1 January

0.2 HeadingConstruction and housing

0.3 Responsible authority, office, person, etc.Manufacturing and ConstructionNiels Otto Lindskrog, tel. 39 17 33 17, e-mail: nol@dst.dkJesper Lauritzen, tel. 39 17 31 86, e-mail: jel@dst.dk

0.4 Purpose and historyThe purpose is to produce statistics on the total stock of buildings.This became possible when the central register of buildings and dwellings (BBR) wasset up on 1 April 1997.Danmarks Statistik published tables of the stock of buildings as of 1 April 1977 and1 January 1981, and has produced figures every year since 1 January 1986.

0.5 Users and applicationUsers: municipalities, counties, government departments, the press, private enterprisesand individuals.Application: public and private planning, education and public debate.

0.6 SourcesThe central register of buildings and dwellings (BBR).

This was set up in 1977 (Act No 243 of 12 May 1976) to ensure that there wassystematic registration of buildings and housing for the use of both central and localgovernment administration and planning. The main uses were first of all for the publictax assessments of real estate and the population and housing census. Various otherpurposes, mainly administrative ones at municipal level, have since been added.

0.7 Legal authority for data collectionDanmarks Statistik Act, § 6.According to the BBR Act (cf. above), the municipalities are obliged to set up andupdate a register of buildings and dwellings and business units.

0.8 Response burden

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None.

0.9 EU RegulationNone.

1 Contents

1.1 Description of contentsThe statistics are a total census as at 1 January. Small buildings (garages, car-ports andouthouses) are not included.The statistics describe the stock of buildings analysed by type of use, size, ownership,heating installation, roof covering and external cladding materials, year of constructionand water and drainage installations.

1.2 Statistical conceptsThe statistical unit is the building.

Definition of a building:

A building is defined as a coherent construction built on a separate piece of real estate,essentially using uniform materials and with approximately the same number of storeys.In addition, there must be entrance facilities from the street.

Area of buildings:

All areas are measured to the outer edge of outside walls or adjoining roof areas.The areas of roof spaces which cannot be used as living or business areas because oflow rafters etc. (non-usable attic) and of semi-basements are not included.

The built area is equal to the area of the ground floor and is measured to the outer edgeof the outer walls. Open terraces, open balconies and entrance areas are not included.

The area above the ground excluding attics is equal to the sum of the areas of thevarious storeys (not including basements).

The utilisable attic area consists of a used and an unused area.

The total basement area is the area of the storey(s) below the ground floor.The total area of the building equals the sum of the area above the ground, the utilisableattic area and the basement area.

The living area is that part of the total area of the building which is used for residentialpurposes.

The business area is that part of the total area which is used for business purposes.

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Main use of the building:

It is the actual use which should be registered. If the building is used for more than onepurpose, the use which takes up the greatest space is registered. It is not possible atpresent to differentiate between buildings for office use and buildings for commercialpurposes.

External cladding materials

These are the materials used for the outside surface of the building. For example, abuilding with a concrete wall and a facing wall of bricks will be registered as brick. Ifthe outer walls consist of various different materials, the material taking up the largestarea is registered.

2 Time

2.1 Reference periodThe reference date is 1 January.

2.2 Date of publicationThe statistics are published annually. Summary information is published in Nyt fraDanmarks Statistik in the July of the census year.More detailed figures are published in the series Bygge- og anlægsvirksomhed[Construction] (Statistiske Efterretninger).

2.3 PunctualityThe buildings census is based on the same data delivery from the municipalities as thehousing census, i.e. the delivery date is just under four months after the reference date,and so a realistic publication date is 7 to 8 months after the reference date.

2.4 FrequencyAnnual.

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3 Accuracy

3.1 Overall accuracyThere has never been any survey of the overall accuracy of the BBR, but there are veryfew unknown variables.

According to the rules and regulations laid down by the Housing Ministry, publicauthorities and owners of registered units have to provide the information used tomaintain the register. This means that owners are obliged to ensure that the content isaccurate and up-to-date.

In addition, extensive administrative use of the register by the municipalities ensuresthat data quality is generally high.

3.2 Sources of inaccuracySince the information in the BBR was originally collected in 1977 from the owners ofreal estate, the figures on areas and year of construction may be subject to errors in thecase of older buildings, especially if the building has not subsequently been the subjectof a building permit etc. This is due to the lack of accurate data from the owners back in1977.

3.3 Measures of accuracyNone.

4 Comparability

4.1 Comparability over timeThe statistics have the same basis back to 1 January 1986, but with the followingproviso:

The ownership information in the BBR was not updated with information from the ESR[real estate taxation register] on changes in ownership connected with transfers ofownership (sales) during the period 1981-1987, but has only included changes whicharose from the issue of municipal building permits etc. Since January 1988, there havebeen monthly updates of ownership via the ESR.

4.2 Comparability with other statisticsFor various reasons, complete comparability with the construction statistics figures fornew buildings (based on the BBR register changes) in the individual years and thebuildings census information on year of construction is not possible.

- The statistics on building stocks contain information on the number of buildings andtheir size as at 1 January, with an indication of the year of construction. This means thatthe number of buildings and the total area for a given year of construction are obtainedas additions minus deductions since the last census. The statistics on the number ofbuildings completed and the areas of those buildings are an indication of completed

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construction projects (including additions to existing buildings and rebuilding) in agiven calendar year, i.e. the figures are gross additions.- Changes in the use of the building, for example, are entered directly in the BBRprovided that no municipal building permit is required.- The time horizon for the estimate of construction projects completed in a given year isconsiderably (over one year) longer than for the buildings census.

4.3 Consistency of provisional and final statisticsOnly final statistics are published.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik, Bygge- og anlægsvirksomhed (Statistiske Efterretninger)and Danmarks Statistikbank.Annual publications: Statistisk årbog.

5.2 Basic material: storage and usabilityFor each individual building, the following information is stored on disk:

Identification and geographical breakdown:- Address (municipality number, road number, house number/letter)- Property identification number- Building number- Postal number- Parish number- Town number.

Building information:- Use of the building (all-year-round residence, production, office, trade and liberalprofessions, cultural purposes, education and hospitals, leisure)- Year of construction- Type of heating installation- Type of roof and external cladding materials- Area in square metres- Number of dwellings in the building- Number of storeys.

Information on property:- Type of ownership- Water and drainage installations.

This information can be combined in a variety of ways for statistical estimates andanalyses.

5.3 Documentation

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A description of the variables in the BBR can best be found in the "BBR instruks"produced by Kort- og Matrikelstyrelsen, which also gives guidelines on how themunicipalities should report for the register, legal basis, etc.

Other variables and the record layout are documented in TIMES.

5.4 Other information

© Danmarks Statistik, NOL, 28-9-2000

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Declaration of contents, statistics on rent

0 Administrative information about the statistical product

0.1 NameStatistics on rent [housing rentals]

0.2 HeadingIncomes, consumption and prices

0.3 Responsible authority, office, person, etc.Manufacturing and ConstructionNiels Otto Lindskrog, tel. 39 17 33 17, e-mail: nol@dst.dk

0.4 Purpose and historyThe purpose is to produce statistics monitoring the average rents for housing withdifferent characteristics on the reference date.Before 1981, information on rentals was compiled as part of the questionnaire-basedpopulation and housing censuses which were carried out every five years until 1970.Since the BBR has been set up, information has been collected, primarily for propertyassessments, in 1981, 1986, 1991, 1995 and 1999.

The statistical office of the municipality of Copenhagen began to compile informationon rents in 1880. In 1895, the compilation was expanded to cover the municipality ofFrederiksberg and in 1901 Gentofte.With the 1911 population census, Danmarks Statistik also collected information onprovincial towns and in 1920 100 parishes with substantial urban areas were included inthe census.Not until 1955 was information collected for all Danish municipalities. The data werepublished only in a processed version covering a representative 10% sample.

0.5 Users and applicationUsers: municipalities, counties, government departments, organisations, the press,lawyers, private enterprises and individuals.Application: public and private planning, education, public debate and in connectionwith tenancy disputes.

0.6 SourcesThe Central Register of Buildings and Dwellings (BBR).

This register was set up in 1977 (Act No 243 of May 12 1976) to provide for thesystematic registration of information on buildings and housing for use by both centraland local government administration and planning. The main purposes were property

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assessment and the population and housing censuses. Several other purposes were lateradded to use of the register, primarily administration at municipal level.

The information on rents is collected from owners and recorded in the BBR for eachindividual address.

0.7 Legal authority for data collectionAct on the assessment of real estate in Denmark;Act on Danmarks Statistik.

0.8 Response burdenNone.

0.9 EU RegulationCommission Decision 309/95 states that information on rents should be included in thecalculation of the output value of dwelling services in the national accounts.

1 Contents

1.1 Description of contentsInformation on rents is collected from the owner for the following categories ofproperty:

• Properties which are purely residential, with three or more units• Residential and commercial properties with three or more units• Residential and commercial properties owned by municipalities• Owner-occupied flats which are sub-let.

Private cooperative flats are not included in these statistics, since in this case the tax ondwellings is not considered to be rent.The statistics give information on the level of rent by type of ownership, year ofconstruction, size, facilities and situation (towns).Up to now, the information on rents, which also includes rents for commercial units andbuildings, has been used only for statistics on housing rentals.

1.2 Statistical conceptsThe statistical unit is the actual dwelling (unit with own kitchen).

DwellingThis is defined as a cohesive area in a building, with its own entrance and own address.

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AreaThe area of a dwelling is measured to the outside of the exterior walls or adjoining roofsurfaces. A proportional share of access areas (staircases etc.) is included in the area ofa flat in a block of flats.The area of the dwelling may possibly include areas used for commercial purposes.

RentThis is the rent converted to all-year-round rent which the owner is lawfully entitled toclaim on the reference date, excluding payment for heating.

In most cases, rents are shown in the statistics as annual rents in kroner per m2.

Urban areaAn urban area is defined as a cohesive built-up area which, on the reference date, has atleast 200 inhabitants; "cohesive" means primarily that the space between the houses isunder 200 metres, unless it is used for public parks, cemeteries, industrial sites, etc.

2 Time

2.1 Reference periodThis is an ad hoc analysis. The authorities responsible for property assessment decideon the reference date and the statistics are normally published around one year after theend of the reference period.

2.2 Date of publicationAround one year after the end of the reference period.

2.3 Punctuality

2.4 FrequencyThe information is used for general property assessments.The date of the next data collection has not yet been fixed.

3 Accuracy

3.1 Overall accuracyThe information on rents is collected from the owners in two ways:

1. Owners may, if they wish, transmit data electronically to the municipal data centre.2. Forms are printed by the municipal data centre, which are then, through themunicipalities, mailed to the owners of the properties concerned.

Both the municipal data centre and the municipalities carry out probability checks.

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There has never been an in-depth survey of the accuracy of the BBR, but the degree ofuncertainty for the individual variables is very low.

Public authorities and the owners of registered units are obliged, according to rules laiddown by the Ministry of Housing, to report information for the maintenance of theregister. This means that the owner is obliged to ensure that accurate, up-to-date figuresare given.

In addition, extensive administrative use of the information at municipality level ensuresthat quality is generally high.

3.2 Sources of inaccuracyThe municipalities have a time limit (maximum 3 months) for checking and, ifnecessary, correcting the data reported.

Since the information in the BBR was originally collected in 1977 from the owners ofthe property, there may be some uncertainty about the area and year of construction ofolder buildings which have not since been the subject of any building permit etc, sincethe owners in many cases did not have reliable information on these variables.

3.3 Measures of accuracyThe statistics are available on the same basis back to 1 January 1981. For earlier dates,information is available in publications on the population and housing censuses.

These censuses only collected information on dwellings which were occupied, whereasthe current statistics also include information on vacant dwellings.

4 Comparability

4.1 Comparability over timeYes.

4.2 Comparability with other statisticsNo.

4.3 Consistency of provisional and final statisticsOnly final statistics are published.

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5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik and Indkomst, forbrug og priser [Income, consumption andprices] (Statistiske Efterretninger).Annual publications: Statistisk årbog.

5.2 Basic material: storage and usabilityFor each individual housing unit, the following information, inter alia, is stored onmagnetic tape:

Identification and geographical areaAddress (municipality number, road number, house number/letter, floor, door number)Property numberBuilding numberTown code (in 1995 and 1999), see the census of 1 January.

Information on the dwelling:Type of dwelling (detached house, terraced house, block of flats, etc.)Type of ownershipYear of constructionType of heating installationToilet, bathroom and kitchen facilitiesOwner-occupied/letSize in square metresNumber of rooms (excluding kitchen)

Annual rent in kroner.

This information can be combined in a variety of ways for statistical reports andanalyses.

5.3 DocumentationThe best description of the individual variables in the BBR is in Kort- ogMatrikelstyrelsen's "BBR-instruks", which also gives guidelines on how themunicipalities should report for the register, the legal basis, etc.

5.4 Other informationNone.

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Declaration of contents, changes in rents (housing)

0 Administrative information about the statistical product

0.1 NameChanges in rents (housing)

0.2 HeadingIncomes, consumption and prices

0.3 Responsible authority, office, person, etc.Public Finances and PricesMerete Nielsen, tel. 39 17 34 59, e-mail: mrn@dst.dk

0.4 Purpose and historyThe purpose of the statistics is to measure changes in rents for housing.The survey has been carried out since the end of the 1950s. Up to 1982, the informationwas collected via interviews with households in the dwellings selected. Since a newsample was drawn in the autumn of 1982, questionnaires have been sent to the ownersor administrators of the dwellings.

0.5 Users and applicationThe information is used to calculate sub-indices in the consumer and net price indicesand the HICP (the EU's harmonised index of consumer prices).

0.6 SourcesThe rent survey is based on a sample of approximately 4 200 dwellings.

0.7 Legal authority for data collectionAct on Danmarks Statistik, §11.

0.8 Response burdenThe response burden is 0.2.

0.9 EU RegulationThe rent survey is covered by the same regulations as the HICP.

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1 Contents

1.1 Description of contentsThe statistics provide information on changes in rents, both including and excluding rentsubsidies. For use in the consumer price index, average rent increases are measuredexclusive of subsidies. For the net price index, the measure is the increase including thesubsidy.

1.2 Statistical conceptsUnits and populationThe population consists of flats and houses which are let and cooperative flats(multi-ownership). The rent is for a particular dwelling.

The sample - from 1982 - is maintained by adding 40 newly constructed flats everyyear.

Variables

The change in rents before the subsidy and after the subsidy.

Statistical measure

The increase in rents when rental terms remain unchanged from January to July andfrom July to January.

Groupings

None.

2 Time

2.1 Reference periodEnd of January and end of July.

2.2 Date of publicationThe statistics are published twice a year approximately six weeks after the end of thereference period.

2.3 PunctualityThe statistics are published according to schedule.

2.4 FrequencyTwice a year.

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3 Accuracy

3.1 Overall accuracyOverall accuracy is considered to be acceptable.

3.2 Sources of inaccuracyOne source of inaccuracy is the fact that the sample is poorly maintained as regards theform of heating variable used for stratification.

Estimates frequently have to be made of the share of total rents attributable toimprovements which have been carried out.

The sample constitutes approximately 0.4% of the population.

Collection/measuresThe following information is collected on questionnaires:

• Monthly rental/housing tax during the census month excluding payments forheating, electricity and other special services (garages, parking spaces, etc.).

• If a rent increase is due solely or partly to improvements or modernisation, therespondent is asked to state how large a share of the increase is due to theimprovement and what the improvement consists of.

Non-responseInsignificant.

Model assumptionsThe sample represents the population.

3.3 Measures of accuracyNot available.

4 Comparability

4.1 Comparability over timeThe statistics have been compiled in the same way since 1982.

4.2 Comparability with other statisticsThere are no other statistics covering this field.

4.3 Consistency of provisional and final statistics

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5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik.

5.2 Basic material: storage and usabilityThe questionnaires are discarded after 2 years.

In computer form, only results from the latest survey are available, since older data setsare overwritten for each survey.

5.3 DocumentationThe method of data collection and processing of the survey figures is described in thepublication "Stikprøveundersøgelser i Danmarks Statistik" [Sample surveys inDanmarks Statistik] published by Danmarks Statistik in 1989.

5.4 Other information

© Danmarks Statistik, MRN, 9-4-2001

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Declaration of contents, EU trade (Intrastat)

0 Administrative information about the statistical product

0.1 NameEU trade (Intrastat)

0.2 HeadingExternal trade

0.3 Responsible authority, office, person, etc.External trade.Peter Ottosen, tel. 39 17 33 25, e-mail: pot@dst.dkRewal Schmidt Sørensen, tel. 39 17 30 21, e-mail: rss@dst.dk

0.4 Purpose and historyThe statistics provide information on Denmark's total trade in goods (imports andexports) with other EU Member States, at detailed commodity level.They were introduced at the start of the EU Single Market on 1 January 1993.Previously, these flows of goods were analysed via customs and shipping documentsreported by enterprises to Told og Skat.

0.5 Users and applicationPublic authorities, private organisations and firms, the press and individuals. Detailedfigures in a breakdown by commodity and country are used by trade and industry formarket analyses.

0.6 SourcesMonthly reports from approximately 10 800 firms.

0.7 Legal authority for data collectionCouncil Regulation (EEC ) No 3330/91 of 7 November 1991 on the statistics relating tothe trading of goods between Member States, with subsequent amendments andaddenda. Act on Danmarks Statistik and Consolidated Act No 1190 of21 December 1992 from the Ministry of Economic Affairs.

0.8 Response burden161.4 man-years in 2000.

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0.9 EU RegulationCouncil Regulation (EEC) No 3330/91 of 7 November 1991 on the statistics relating tothe trading of goods between Member States, with later amendments and addenda.

1 Contents

1.1 Description of contentsThe statistics show Denmark's imports and exports of goods from/to the other EuropeanUnion countries, in a breakdown by partner country and approximately 10 500 differentgoods recorded in terms of value, net weight in kilograms and/or supplementary units.Quarterly unit values and volume indices are also published at a more aggregate level(SITC chapters, but not broken down by partner country).

1.2 Statistical conceptsThe statistics are prepared on the basis of reports from Danish enterprises with totalannual imports and/or exports of goods to the value of DKK 1.5 million andDKK 2.5 million respectively. There are separate obligations to report for imports andexports.

For each commodity flow (imports or exports) and month, the following statisticalinformation is gathered:- Combined Nomenclature (CN) commodity code- Partner country (imports = country of dispatch, exports = country of destination)- Nature of the transaction- Invoice value in Danish kroner (whole numbers)- Net weight in kilograms and/or supplementary units, e.g. litres, individual items (if

indicated in the CN).

The statistics are published at the most detailed level as totals of statistical value(estimated on the basis of invoice value), net weight and any supplementary unit foridentical occurrences of product code and partner country. Some types of transactionare, however, shown separately (e.g. repair goods). Quarterly unit values and volumeindices are published at a more aggregate level (SITC chapters, but not broken down bypartner country).

For each commodity flow (imports or exports), grouping is primarily in terms ofcommodity group (e.g. all goods for which the first two digits are identical, i.e. chapterlevel). Various classifications are used for the grouping (CN, SITC Rev. 3, BEC andKONJ).

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2 Time

2.1 Reference periodThe month in which the goods are received (imports) or dispatched (exports) from/toanother EU country.

2.2 Date of publicationThe statistics are published monthly, but unit values and volume indices are publishedquarterly.

2.3 PunctualityAlways published on schedule, as announced at least one month in advance.

2.4 FrequencyPublished monthly, with unit value and volume indices published quarterly.

3 Accuracy

3.1 Overall accuracyThe first publications of the external trade figures are subject to considerableuncertainty, since approximately 15-20% of the data are either missing entirely or haveso many errors that they cannot be included at the time of publication. To make up forthis, estimates have to be made. The figures for a given month are much more reliablein later publications, as estimates are made for missing reports via VAT figures. Thefinal totals are considered to be very reliable, but not really at a detailed level.

3.2 Sources of inaccuracyThe figures for total imports and exports from/to EU countries are considered to be ofhigh quality in the final compilation, as information can be added via estimates frominformation on VAT returns covering all transactions of goods between Denmark andother EU countries. However, the possibility that some companies give incorrectinformation on the VAT returns cannot be ruled out.

At detailed level, the reliability of the figures is affected by:- the lack of reports from enterprises below the threshold limits;- the lack of response from those who should report;- imperfect returns from respondents;- the submission of inconsistent information: the ratio of value and net weight in

kilograms and/or supplementary units appears unlikely.For lack of resources, it is not possible to examine all reports on which (probably)inconsistent information has been given .

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3.3 Measures of accuracyThe uncertainty of the final import and export figures cannot be quantified, but variouscomparisons with alternative statistical sources do not indicate any systematic qualityproblem. Please see the paper "Kvaliteten af udenrigshandelstallene" [The quality ofthe external trade figures].

The uncertainty about the detailed figures in a commodity-country breakdown is onaverage around 10%, corresponding to the addition to the reports from the VAT figures.

4 Comparability

4.1 Comparability over timeAny gap in times series as a result of a change in collection methods etc. is corrected forvia estimation, and therefore the external trade figures are comparable over time.

It goes without saying that data comparability does not apply at the most detailedcommodity level, since the content of many product codes changes over time.

4.2 Comparability with other statisticsThe external trade figures are comparable with several other sources:

- The partner country's recording of the same transaction (the mirror transaction). Thecomparison is hampered by differences in the level of value for the recording ofimports and exports (cif and fob respectively).

- Payments in connection with external trade in goods. Differences in periodisationand valuation hamper comparisons.

- Information on EU purchases and sales of goods on the VAT returns. These statisticsare not published but are used for the ongoing monitoring of the returns toINTRASTAT.

- For exports of manufactures, figures from manufacturing statistics on turnover onexport markets. The comparison is made difficult by the fact that the manufacturingstatistics records are not broken down by country.

4.3 Consistency of provisional and final statisticsSince the share of estimated figures is of the order of 15-20% when the statistics arepublished for the first time, there are a number of discrepancies between the first andfinal publications of external trade figures for any given month. The difference isaround 0-5%.

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5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik (monthly), Statistiske Efterretninger (monthly and quarterly),Statistikservice (quarterly), Konjunkturstatistik (monthly) and Danmarks Statistikbank(monthly).Annual publications: Statistisk årbog, Statistisk tiårsoversigt, Danmarks vareimport og-eksport [Denmark's imports and exports of goods] and Statistik uden grænser[Statistics across borders].

The external trade figures are published as follows:-------------------------------------------------------------------------------------------------Publication Frequency Scope--------------------------------------------------------------------------------------------------NYT fra Danmarks Statistik Monthly Summary tablesStatistiske Efterretninger Monthly Very detailed breakdown by country,

2-digit commodity groupingStatistiske Efterretninger Quarterly Very detailed breakdown by country,

BEC/KONJ commodity grouping+ unit values and quantity index

StatistikService Quarterly Detailed figures broken down bycommodity and country

Danmarks vareimport Annual All countries, 2-digit SITC,og -eksport totals 5-digit SITCStatistisk årbog Annual Approximately as in Statistiske EfterretningerStatisktisk Tiårsoversigt Annual Summary tables (plus index)Konjunkturstatistik Monthly Slightly more detailed than in NytDSTB Monthly Approximately as in KonjunkturstatistikESDB Monthly Detailed figures in a breakdown by

commodity and countryDanmarks Statistikbank Monthly Detailed figures in a breakdown by

commodity and countryStatistik uden grænser Annual Summary tables----------------------------------------------------------------------------

Access to data is in accordance with Danmarks Statistik's standard terms for theproducts in question.

Data can also be supplied via special subscriptions, where subscribers receive selecteddata according to their requirements.

5.2 Basic material: storage and usabilityIn addition to the statistical material, cf. Section 1.2, the basic figures contain a range ofidentifier information (e.g. SE number) and a breakdown by nature of the transaction.

The identifier information, in particular, makes the figures suitable for comparisons withother economic statistics.

5.3 DocumentationThe procedure used in compiling the external trade statistics is described in the textsection of the annual publication.

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The INTRASTAT system is described in: Vejledning til INTRASTAT for 2000 [Guide toINTRASTAT for 2000].

The quality of the figures is analysed in the paper: Kvaliteten af udenrigshandelstallene[The quality of the external trade figures], which is updated quarterly.

The principles for the compilation of external trade statistics are laid down in the UNinternational guidelines: International Merchandise Trade Statistics, Concepts andDefinitions, Statistical Papers, Series M No 52, rev. 2 (United Nations, New York1998). Also available in a Danish translation with comments, Danmarks Statistik:Metodemanual for udenrigshandelsstatistik (Copenhagen 1999).

5.4 Other informationThe Danish external trade figures are accessible via various international publications,e.g. from the OECD, UN, IMF and Eurostat, including Eurostat's COMEXT database(published on CD-ROM).

© Danmarks Statistik, RSS,

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Declaration of contents, trade with the rest of the world

0 Administrative information about the statistical product

0.1 NameTrade with the rest of the world

0.2 HeadingExternal trade

0.3 Responsible authority, office, person, etc.External trade.Peter Ottosen, tel. 39 17 33 25, e-mail: pot@dst.dkRewal Schmidt Sørensen, tel. 39 17 30 21, e-mail: rss@dst.dk

0.4 Purpose and historyThe statistics provide information at detailed commodity level on changes in Denmark'strade in goods (imports and exports) with non-EU (third) countries. The statistics havebeen published regularly since 1838. Before the introduction of the EU Single Marketon 1 January 1993, the statistical system also covered trade in goods with the EUcountries.

0.5 Users and applicationPublic authorities, private organisations and firms, the press and individuals. Detailedfigures in a breakdown by commodity and country are used by trade and industry formarket analyses.

0.6 SourcesCustoms and shipping documents (the Single Administrative Document) which areprepared in connection with imports and/or exports of all goods from/to countriesoutside the EU.

0.7 Legal authority for data collectionCouncil Regulation (EC) No 1172/95 of 22 May 1995 on the statistics relating to thetrading of goods by the Community and its Member States with non-member countries,plus later amendments and addenda; Act on Danmarks Statistik and Consolidated ActNo. 1190 of 21 December 1992 issued by the Ministry of Economic Affairs.

0.8 Response burdenNone, since the statistics are based on customs and shipping documents.

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0.9 EU RegulationCouncil Regulation (EC) No 1172/95 of 22 May 1995 on the statistics relating to thetrading of goods by the Community and its Member States with non-member countries,plus later amendments and addenda.

1 Contents

1.1 Description of contentsThe statistics show Denmark's imports and exports of goods from/to non-EU countries.They are broken down by partner country (country of origin/country of dispatch forimports, country of destination for exports) and approximately 10 500 different goodsrecorded by value, net weight in kilograms and any supplementary units (e.g. litres,individual items or square metres). Unit values and volume indices are also publishedquarterly at a more aggregate level (SITC chapters, but not in a breakdown by partnercountry). Greenland's external trade statistics are also published.

1.2 Statistical conceptsThe statistics are prepared on the basis of reports to Told og Skat in connection withimports and exports of goods to/from Denmark from/to non-EU countries. Alltransactions must be declared and therefore the statistics provide total coverage. Forsmall transactions below the statistical threshold (DKK 6 500 and/or 1 000 kg; forexports to Greenland and the Faeroes, the statistical threshold is DKK 3 000 and/or1 000 kg), a simplified declaration may be used. The external trade statistics forGreenland are prepared on the basis of the Danish figures for imports and exportsfrom/to the country, plus a supplement in the form of data collected by Greenland'sHome Rule customs.

For each commodity transaction (import or export), the following information, which isused in the external trade statistics, is collected:- Combined Nomenclature (CN) commodity code or TARIC code (imports only)- Partner country (country of origin/dispatch for imports, country of destination for

exports)- Procedure code- Statistical value in whole Danish kroner (cif for imports and fob for exports)- Net weight in whole kg- Any supplementary units such as litres, individual items (if indicated in the CN)- Mode of transport at the border.Various other information is collected which is used primarily for fiscal purposes.

The statistics are published at the most detailed level as totals of statistical value, netweight and any supplementary unit for identical occurrences of product code and partnercountry transactions. However, transactions under certain procedure codes (forexample, goods for/from repair and movements of goods between different stocks) areshown separately. In addition, unit values and volume indices are published quarterly ata more aggregate level (SITC chapters, but not in a breakdown by partner country).However, this does not apply to Greenland's external trade statistics.

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For each flow of goods (imports or exports), groupings are based primarily oncommodity groups (e.g. all goods for which the first two digits are identical, i.e. atchapter level). Various classifications are used for the grouping (CN, SITC Rev. 3,BEC and KONJ), and figures are also recorded for various groups of countries (EFTA,OECD, etc.).

2 Time

2.1 Reference periodThe month in which the commodity is released by Told og Skat for import or exportfrom/to a non-EU country.

2.2 Date of publicationThe statistics are published monthly, but unit value and volume indices and Greenland'sexternal trade statistics are published quarterly.

Around 9-10 weeks after the end of the reference month in Nyt and data banks. Theexternal trade statistics for Greenland are published quarterly only in StatistiskeEfterretninger and in annual publications.

2.3 PunctualityAlways published on schedule, as announced at least one month in advance.

2.4 FrequencyMonthly, but quarterly for unit values and volume indices and external trade statisticsfor Greenland.

3 Accuracy

3.1 Overall accuracyThe first publications of the external trade figures are subject to considerableuncertainty, since some of the items have so many errors that they cannot be included atthe time of publication. To make up for this, estimates have to be made. The figures fora given month are much more reliable in later publications, and the final figures areconsidered to be very reliable, both in terms of totals and at detailed level.

3.2 Sources of inaccuracyThe final total figures may be considered to be of almost optimum quality.

At detailed level, the reliability of the figures is affected by the fact that:- The breakdown by commodity of transactions below the statistical threshold must be

estimated.- A certain bias towards higher quality for import than for export figures is likely, as

import transactions are subject to more thorough checks than export transactions.

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3.3 Measures of accuracyThere are no figures for uncertainty at total level, but the distribution by commodity oftransactions below the statistical threshold must be presumed to be a little imprecise.However, these items cover only around 2-4% of total trade with non-EU countries.

4 Comparability

4.1 Comparability over timeAny gap in times series as a result of a change in collection methods etc. is corrected forvia estimation, and therefore the external trade figures are comparable over time.

It goes without saying that data comparability does not apply at the most detailedcommodity level, since the content of many product codes changes over time.

4.2 Comparability with other statisticsThe external trade figures are comparable with several other sources:- The partner country's recording of the same transaction (the mirror transaction). The

comparison is hampered by differences in the level of value for the recording ofimports and exports (cif and fob respectively).

- Payments in connection with external trade in goods. Differences in periodisationand valuation hamper comparisons.

- For exports of manufactures, figures from manufacturing statistics on turnover onexport markets. The comparison is made difficult by the fact that the manufacturingstatistics records are not broken down by country.

4.3 Consistency of provisional and final statisticsA number of reports are inaccurate to such a degree that they cannot be included directlyin the external trade statistics. At present, no adjustments are made for this, andtherefore the provisional valuations will generally be underestimated by 0-2%.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik (monthly), Statistiske Efterretninger (monthly and quarterly),Statistikservice (quarterly), Konjunkturstatistik (monthly) and Danmarks Statistikbank(monthly).Annual publications: Statistisk årbog, Statistisk tiårsoversigt, Danmarks vareimport og-eksport [Denmark's imports and exports of goods] and Statistik uden grænser[Statistics across borders].

The external trade figures are published as follows:-------------------------------------------------------------------------------------------------

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Publication Frequency Scope--------------------------------------------------------------------------------------------------NYT fra Danmarks Statistik Monthly Summary tablesStatistiske Efterretninger Monthly Very detailed breakdown by country,

2-digit commodity groupingStatistiske Efterretninger Quarterly Very detailed breakdown by country,

BEC/KONJ commodity grouping+ unit values and quantity index

StatistikService Quarterly Detailed figures broken down bycommodity and country

Danmarks vareimport Annual All countries, 2-digit SITC,og -eksport totals 5-digit SITCStatistisk årbog Annual Approximately as in Statistiske EfterretningerStatisktisk Tiårsoversigt Annual Summary tables (plus index)Konjunkturstatistik Monthly Slightly more detailed than in NytDSTB Monthly Approximately as in KonjunkturstatistikESDB Monthly Detailed figures in a breakdown by

commodity and countryDanmarks Statistikbank Monthly Detailed figures in a breakdown by

commodity and countryStatistik uden grænser Annual Summary tables----------------------------------------------------------------------------

Access to data is in accordance with Danmarks Statistik's standard terms for theproducts in question.

Data can also be supplied via special subscriptions where subscribers receive selecteddata according to their requirements.

5.2 Basic material: storage and usabilityIn addition to the statistical material, cf. Section 1.2, the basic figures contain a range ofidentifier information (e.g. SE number) and a breakdown by nature of the transaction.

The identifier information, in particular, makes the figures suitable for comparisons withother economic statistics.

5.3 DocumentationThe procedure used in compiling the external trade statistics is described in the textsection of the annual publication.

The quality of the figures is analysed in the paper: Kvaliteten af udenrigshandelstallene[The quality of the external trade figures], which is updated quarterly.

The principles for the compilation of external trade statistics are laid down in the UNinternational guidelines: International Merchandise Trade Statistics, Concepts andDefinitions, Statistical Papers, Series M No 52, rev. 2 (United Nations, New York1998). Also available in a Danish translation with comments, Danmarks Statistik:Metodemanual for udenrigshandelsstatistik (Copenhagen 1999).

5.4 Other information

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The Danish external trade figures are accessible via various international publications,e.g. from the OECD, UN, IMF and Eurostat, including Eurostat's COMEXT database(published on CD-ROM).

© Danmarks Statistik, RSS, 17-5-

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Declaration of contents, balance of payments

0 Administrative information about the statistical product

0.1 NameBalance of payments

0.2 HeadingNational accounts and balance of payments

0.3 Responsible authority, office, person, etc.National accountsPoul Uffe Dam, tel. 39 17 34 91, e-mail: pud@dst.dkJytte Jeppesen, tel. 39 17 34 92, e-mail: jyj@dst.dk

0.4 Purpose and historyThe balance of payments describes economic movements across the national border. Ithas been calculated for Denmark since 1934.

0.5 Users and applicationTraditionally, the balance of payments statistics are some of the most importantbackground information for the planning of the country's economic policy. Oneimportant user is thus the Ministry of Economic Affairs.

0.6 SourcesThe statistics are prepared on the basis of external trade statistics and Nationalbanksettlements statistics. Additional information from public authorities, banks and otherbusiness enterprises is used. Some of the sources are used as they stand while others areused as indicators of changes over time.

0.7 Legal authority for data collection

0.8 Response burdenNone.

0.9 EU RegulationThe national accounts rest-of-the-world account, which is derived from the balance ofpayments, is prepared in accordance with Council Regulation (EC) No 2223/96 of25 June 1996 on the European system of national and regional accounts in theCommunity (ESA 95) (OJ L 310, 30.11.96, p. 1).

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1 Contents

1.1 Description of contentsThe balance of payments records the value of economic transactions between Denmarkand the rest of the world over a given period. Up to September 2000, the statistics alsocovered the Faeroes and Greenland.

1.2 Statistical conceptsThe balance of payments can be divided into three main accounts, the current account,which shows income and expenditure, the capital account and the financial account,which shows how a deficit/surplus on current account is financed/spent, or transactionswithin these two accounts. The following items are entered under the current account:goods, services, earnings and property income and current transfers.

The most frequently used statistical measure is the balance on current account.

Since 1949, the compilation of the Danish balance of payments has been adapted to theform used by the IMF with the limitations imposed by the primary statistical material.In 1998, the compilation was adapted to the 1993 IMF balance of payments manual(fifth manual).

The balance is compiled according to the double-entry system. Every transactioninvolves both a credit and a debit entry. Use of this principle means that the balance ofpayments, i.e. all three main accounts taken together, will always be in equilibrium, i.e.that total income equals total expenditure apart from any inaccuracies in the statisticalreturns, the "errors and omissions".

2 Time

2.1 Reference periodIn the balance of payments statistics, data referring to the month and the quarter arepublished.

2.2 Date of publicationInformation about the balance of payments is published monthly.The statistics are published approximately 45 days after the end of the reference period.

2.3 PunctualityExceptional delays in the publication of the statistics reflect delays in the appearance ofthe data used.

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2.4 FrequencyInformation about the balance of payments is published monthly.

3 Accuracy

3.1 Overall accuracyThe balance of payments is calculated mainly on the basis of the settlements statisticsfrom the Nationalbank and external trade statistics.

The settlements statistics are a total count of payments to/from the rest of the world.The payments are recorded at the time of payment, and for goods only also after the dateof the transaction. Thus both pre-payments and deferred payments are included in themonthly statistics.

For trade with the other EU countries (intra-EU trade), the external trade statistics arebased on questionnaires filled in by Danish enterprises whose annual trade with othercountries exceeds certain threshold values. Adjustments include those for enterpriseswhose trade is below the thresholds and for incorrect returns. Trade with countriesoutside the EU (extra-EU trade) is based on a total count of all trade, using customsdata.

The statistics are revised on the basis of information from other statistics, such as theannual accounts of the shipping trade and international cooperation (EU, developingcountries, etc.).

3.2 Sources of inaccuracyThe uncertainty about the calculation of Denmark's balance of payments increased afterthe introduction of the EU Single Market in 1993. The uncertainty has, inter alia, beenlinked to an increasing difference between total payments for goods according to theNationalbank's settlements statistics and the values in external trade statistics. Thisproblem was thoroughly investigated at detailed level in 1999-2000, to improve thequality of both sets of statistics.

3.3 Measures of accuracyNone are calculated.

4 Comparability

4.1 Comparability over timeGenuine balance of payments statistics have been prepared since 1934. As from 1949,the statements have been adapted to the form used by the IMF. Up to 1997, there arevery long series for the main items without any noticeable breaks.

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4.2 Comparability with other statisticsThe Danish balance of payments are compiled according to the international standardsoutlined in the IMF's Balance of payments manual, cf. point 1.2.

In external trade statistics, imports are calculated cif whilst in the balance of paymentsthey are calculated fob, deducting sea freight charges. In addition, goods are delimitedslightly differently in the balance of payments statistics in that, inter alia, some smallitems not covered by current external trade statistics are included.

4.3 Consistency of provisional and final statisticsAfter the first publication of the balance of payments, the figures are continuallyadjusted as additional or corrected statistics become available. This supplementaryinformation means that the final balance is not published until two to three years afterthe end of the reference year.

5 Accessibility

5.1 Forms of disseminationNyt fra Danmarks Statistik, Nationalregnskab og betalingsbalance [National accountsand balance of payments] (Statistiske Efterretninger) and Danmarks Statistikbank.Annual publications: Statistisk årbog and Statistisk tiårsoversigt.

5.2 Basic material: storage and usability

5.3 DocumentationSummary information on the preparation of the balance of payments is given inconnection with publication of the balance. More detailed information can be found in"Metodologi for Danmarks Betalingsbalance" ["Methodology for Denmark's Balance ofPayments"], Eurostat, 1985 (sold out). The documentation is available in Danish,English and French.

5.4 Other information

© Danmarks Statistik, PUD, 7-2-2001