Training Session on National Accounts

ICP Global OfficeSeptember 2011

Approaches for Splitting GDP Expenditures

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ICP requirement: • detailed data needed• only once every several years

Disaggregating GDP into the detailed basic headings is the core part of the national accounts data needed for the ICP

Countries will experience some difficulties in providing estimates of final expenditure for all the basic headings required

Participating countries should assign weights to all basic headings

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National accounts data for 2011 need to be available by

July 2012 (some cases based on preliminary data)

Many basic heading details might have to be estimated by using data relating to years earlier than 2011 to split the major aggregates for 2011

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“Borrowing” a structure

Using expert opinion

“Borrowing” a per capita

quantity or volume

Extrapolation

Direct estimation

Adjust the “borrowed” structure by a vector of the price level indexes between the two

countries

Consult retailers, manufacturers, marketing experts, chambers of commerce and other sources

Multiply the per capita quantity or volume by the population of the “borrowing country” and the price level index between the two countries

Update an earlier expenditure breakdown using assumptions on population growth, price changes etc

The preferred method, if data sources exist

Requires clustering

countries for each BH or

group of BHs

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4

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Five approaches to splitting GDP

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Direct estimation

Estimation techniques used in compiling national accounts can assist in obtaining the detailed data required for the ICP:commodity-flow method supply-use tables (SUTs)

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Extrapolation

Common casesi) country to regularly compile annual production-based

measures of GDP but expenditure-based estimates are available infrequently

2011 level of expenditure GDP can be assumed to be equal to that measured from the production side of the accounts

The Global Office encourages countries to develop improved procedures to allocate expenditures to basic headings: Commodity-flow techniques and supply-use tablesthe experience and knowledge of the national accountants, can be invaluable in calculating the detailed splits required for the ICP

Last resort procedure: prorate the level of GDP according to the basic heading distribution from the 2005 ICP, if available

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Extrapolation

ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011

statistical surveys

Administrative records (Custom data for Exports and imports of goods, building approvals for gross fixed capital formation on buildings , credit cards for household final consumption expenditure, VAT data )

Other sources of information (publications of regulatory bodies and trade associations)

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Extrapolation

ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011

statistical surveys

Administrative records (Custom data for Exports and imports of goods, building approvals for gross fixed capital formation on buildings , credit cards for household final consumption expenditure, VAT data )

Other sources of information (publications of regulatory bodies and trade associations)

Consider a Basic

Heading

A Conditional Step-by-step Process

Is there data for the BH for the

year?

Is there country with similar per-

capita value?

Is there data for the BH for a

previous year?

Can you obtain data from expert?

Borrow per capita value3

Use Direct Approach

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Use Extrapolation2

Borrow from country with

similar structure4

Use Expert Opinion

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Yes

No

Yes

No

No

Yes

Yes

No

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Model Report on Expenditure Statistics

(MORES)

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Detailed expenditure values for each basic heading of the ICP classification.

The Model Report on Expenditure Statistics (MORES)

Information on the indicators that were used/or are going to be used to estimate the expenditure values

Information on the splitting approach

The MORES aims to assist countries to compile

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Parameters used in previous tabs

NA data information for the latest year available

NA data information for 2011

MORES’s Structure

Sheets 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values.

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Expanded Form 1

Code Heading

Initial Expenditure

Value

GDP Classification

100000 Gross Domestic Product

110000 Individual Consumption Expenditure by Households

110100 Food and non-alcoholic beverages

110110 Food

110111 Bread and cereals

110111.1 Rice

[...] […]

1 2 3

Estimated Expenditure

Value

Discrepancies

4 5

Sheets 2 and 5 compile, for each BH, the detailed information of the splitting approach and for all indicators used to collect data related to National Accounts and reveals the estimated expenditure values.

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Estimation of BH Expenditures

Code Name

Indicator name

MORES Template

100000 Rice

2 Extrapolation

Estimated Expenditure for

1 2

Splitting Approach

Sour ce

nameYear Value Unit#

3 4 5 6 7 8

Code

Sheets 3 and 6 summarize the final expenditure values for the latest year available or for 2011 respectively and it will be automatically filled with the discrepancy information of the initial and estimated expenditures values.

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Final Expenditure Values

Code Heading

Expenditure Value

GDP Classification

100000 Gross Domestic Product

110000 Individual Consumption Expenditure by Households

110100 Food and non-alcoholic beverages

110110 Food

110111 Bread and cereals

110111.1 Rice

[...] […]

1 2 3

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Completing the MORES in 6 Steps

Complete column 3 of sheet 1 with whatever aggregate estimates are available

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Apply 5 approaches2

GDP Classification Codes

Classification Headings Names

Initial Expenditures Values (GDP and main uses)

Basic heading values estimated using the proposed 5 approaches

Discrepancies

(3)-(4)

1 2 3 4 5         

Column 4 of sheet 1 receives expenditures values from sheet 2

4 Discrepancies between columns 3 and 4 appear under column 5

5 Make adjustments to resolve discrepancies

3

2

From 2 to 1

1

1 or 2

6 3 Read results if discrepancies solved

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Sheets

MORES – Case Study

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Completing MORES - Example

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Step 1

ICP Code HeadingInitial

Expenditure Value

Estimated11 Expenditure Values Discrepancies

100000 GROSS DOMESTIC PRODUCT 168527.54 168527.54 0

110000INDIVIDUAL CONSUMPTION EXPENDITURE BY HOUSEHOLDS 117081.29 117081.29 0

110100 FOOD AND NON-ALCOHOLIC BEVERAGES 59812.66 59812.66 0.002396110110 FOOD 0.00 51634.63

110111 Bread and cereals 0.00 19335.26

1101111 Rice 6370.77

1101112 Other cereals, flour and other products 3874.10

1101113 Bread 3435.03

1101114 Other bakery products 1907.83

1101115 Pasta products 3747.53

Complete Table1 with whatever aggregate estimates are available.

Completing MORES - Example

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Step 2 Name #Indicator Name Source Name Year Value

Rice 1Sales of Rice Retail Census 2007 5364

2Population increase from 2007 to 2011 Population Census 2011 5.30%Please indicate all the approaches

used in calculation of expenditure for this basic heading. Enter a number (1-

5).

3CPI price increase CPI 2011 12.1%

4Adjusted expenditure for rice (1,2,3) 2011 6331.74

2 Extrapolation 5Summation of adjusted basic heading values under "bread and cereals" 2011 19216.79

6Expenditure for "bread and cereals" subgroup

Household Expenditure Survey 2009 17965.00

7Population increase from 2009 to 2011 Population Census 2011 2.60% 8CPI increase for this subgroup CPI 2011 4.90%

9Adjusted expenditure for "bread and cereals" (6,7,8) 2011 19335.26

Estimated expenditure for 1101111 6370.77

Complete Table 2 for each basic heading using five splitting approaches.

Completing MORES - Example

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Step 3

ICP Code Heading

Expenditure Value

100000 GROSS DOMESTIC PRODUCT 168527.54

110000INDIVIDUAL CONSUMPTION EXPENDITURE BY HOUSEHOLDS 117081.29

110100 FOOD AND NON-ALCOHOLIC BEVERAGES 59812.66110110 FOOD 51634.63110111 Bread and cereals 19335.261101111 Rice 6370.771101112 Other cereals, flour and other products 3874.101101113 Bread 3435.031101114 Other bakery products 1907.831101115 Pasta products 3747.53

Table 3 will be automatically filled once discrepancies between aggregate figures and summation of BHs have been resolved.

Fictitious country case statisticsApproach Count

1 Direct estimation 1082 Extrapolation 203 Borrow per capita value 84 Borrow structure 135 Expert opinion 40

total 189

Indicator Count1 CPI 452 Government final accounts 343 Population Census 304 Expert opinion 295 Household Expenditure Survey 24

Summation of frequency of major indicators 162

48 indicators were used and five major indicators account for 46% (162 out of 351).22

Fictitious country case statistics

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Number of sources

Case study counts

Individual consumption expenditure by households 20 13Individual consumption expenditure by NPISHs 1 1

Individual consumption expenditure by government 8 1Collective consumption expenditure by government 1 1

Gross fixed capital formation 8 5Changes in inventories & net acquisitions of

valuables4 3

Balance of exports and imports 3 1

Multiple Approach Examples

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Name Indicator Name Source Name Year Value

Out-patient paramedical services 1Total outpatient servicesGovernment final accounts 2011 218

2Proportion of paramedical services Expert opinion 2011 25%1 Direct estimation 5 5 Expert opinion 6

Estimated expenditure for 1302123 54.50

Name Indicator Name Source Name Year Value

Actual and imputed rentals for housing 1Expenditure value for 2008 Rental survey 2008 450.45

2Rents increase CPI 2011 11%3Actual rents Own-estimation 2011 500.00

4Number of dwellings (no change in the number of dwellings since 1996) Population Census 1996 1

2 Extrapolation 5Ratio of average rent to household income

Structure of a neighboring country 2011 22%

4 Borrowing structure 6Annual household incomeGovernment statistics 2011 15000.00

7Imputed rents Own-estimation 2011 3300.00

Estimated expenditure for 1104111 3800.00

Issues

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Lack of sources Lack of overall resources, heavy dependence on expert opinions

Iterative process Iterative process occurs when borrowing a structure from another country

Distribution of specific BHs

Distribution of specific basic headings such net expenditures abroad

Limited adoption of imputing

methodsLimited adoption of imputing methods including the user cost method (housing)

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THANK YOU