NIPA – Flow of Funds Accounts Integration

BEA Government Statistics Users Conference

Charlotte Anne BondSpecial Studies Branch

September 14, 2006

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Introduction

International standards call for these integrated accounts

In the U.S., the Bureau of Economic Analysis (BEA) produces income and capital accounts: National Income and Product Accounts (NIPAs)

The Federal Reserve Board (FRB) produces financial accounts: Flow of Funds Accounts (FFAs)

BEA and FRB are currently working to integrate the accounts to create a balance sheet that meets international guidelines

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Background

The NIPAs show nonfinancial accounts and the FFAs feature financial accounts; together they provide a comprehensive picture of the government sector.

While the concepts in both accounts are the same, differing data sources and estimation methods employed cause the results to differ

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Usefulness of Integration(illustration)

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Thrust of this Project

Improve the quality and usefulness

Ensure consistent boundaries

Identify more data sources

Increase communication while preparing estimates

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Flow of Funds Tables

Efforts to improve statistical consistency in the government accounts

FFA Tables F.105 (State and Local Government) and F.106 (Federal Government)

The focus of my example is on the Federal accounts; however, similar concerns exist for the State and Local accounts

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F.106 Federal Government Lines 1-21Billions of dollars

    2003 2004 2005  

1 Current receipts, NIPA basis 1,868.6 1,974.8 2,221.9 1

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10 Current expenditures, NIPA basis 2,251.4 2,381.3 2,548.4 10

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17 Net federal government saving, NIPA basis -382.7 -406.5 -326.5 17

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21 = Gross saving and net capital transfers -332.2 -350.7 -273.0 21

Federal Reserve Flow of Funds Accounts Z.1 Release June 8, 2006

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F.106 Federal Government Lines 22-52Billions of dollars

    2003 2004 2005  

22 Gross investment -385.3 -358.8 -270.1 22

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25 Net financial investment -478.1 -460.8 -377.7 25

26 Net acq. of financial assets 22.9 -30.1 -16.1 26

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38 Net increase in liabilities 501.0 430.6 361.6 38

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51 Discrepancy 53.1 8.2 -2.9 51

52 Change in cash balance (5) -24.8 -3.1 4.6 52

Federal Reserve Flow of Funds Accounts Z.1 Release June 8, 2006

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Statistical Discrepancy  Flow of Funds Accounts, Table F.106

 

Billions of Dollars, Quarterly Statistics are at Annual Rates, Calendar Years and Seasonally Adjusted Quarters

Line   2004 CY   2004 Q1 2004 Q2 2004 Q3 2004 Q4

10 Current Expenditures 2,381.4   2,347.2 2,364.9 2,387.0 2,426.2

51 Discrepancy 8.2   128.5 -24.1 -68.2 -6.4

 Discrepancy as Percent of Current Expenditures 0.34%   5.47% -1.02% -2.86% -0.26%

               

    2005 CY   2005 Q1 2005 Q2 2005 Q3 2005 Q4

10 Current Expenditures 2,548.4   2,494.9 2,525.2 2,563.7 2,610.0

51 Discrepancy -2.9   253.1 -178.4 -76.4 -9.9

 Discrepancy as Percent of Current Expenditures -0.11%   10.14% -7.06% -2.98% -0.38%

Data gathered from FFA Table F.106 December 8 2005 and June 8, 2006.

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What has been Accomplished

Teplin et al., “Integrated Macroeconomic Accounts for the United States: Draft SNA-USA”(2005) documents the past efforts in this project and lays out the future direction

Estimates are prepared for the draft SNA-USA structure for the period 1985 – 2002

Prospects are clear for improving the integration of the FFAs with the NIPAs and for bringing them closer into alignment with international standards

Progress on this project is described in a forthcoming article in the Survey of Current Business

Starting in late September, the two agencies will begin a regular, annual publication of the integrated estimates

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FCC Spectrum Auctions

Efforts are underway to develop estimates for the electromagnetic spectrum

Estimates are needed for the Federal non-produced non-financial assets and for corporate sector balance sheets

A priority is to measure correctly receipts from spectrum auctions

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Where We Go from Here

Improve estimates of changes in balance sheets that arise from sources other than transactions

Continue to investigate data sources and methods or concepts for real estate values in some sectors

Reconcile remaining differences between the current and accumulation accounts and the international transactions accounts

Improve alignment of U.S estimates with international standards

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Questions

How important a problem is the quarterly volatility in the NIPA - FFA discrepancy?

Is it more important, in this project, to address statistical problems first, and then methods and concepts or vice versa?