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National Accounts - continuously struggling to catch-up with economic reality and policy needs Jorgen Elmeskov, Statistics Denmark Presentation at the conference on The Accounts of Society, Luxembourg, 12-13 June A time for celebration ESA2010 introduction is a major achievement More generally, national accounts have been tremendously successful Including to underpin economic policies Such success can lead to hubris Hence, perhaps justified to look at some weaknesses 2 Behind the curve National accounts are meant to describe continuously evolving economies But are slow-moving by construction Recognition lag before change is noticed Takes time to change a coherent and integrated framework New methods may have to be introduced Takes time to change or collect new primary statistics 3 Behind the curve – globalisation as an example Some enterprises undertake all or most production abroad They enter National Accounts mainly via earnings from foreign affiliates National Accounts are not very informative for analysis of policies that influence such enterprises Transborder internet activities are also a challenge 4 Some challenges are long-standing Such as the price-volume split for market services Affects productivity measurement ESA2010 has brought prominence to the pricevolume split for non-market services 5 Price-volume split for public services Statistics Denmark was slow in moving away from the input based method The move to ESA2010 raises a communications issue wrt. fiscal policy discussion And a substantive issue of whether change is sufficient? A further change down the line will raise a new communications issue 6 Fiscal rules meet redefined GDP Measured GDP is boosted by treating R&D as an asset as well as by other adjustments At the same time, GDP is the denominator of many ratios of interest to fiscal policy Actual and potential changes in the definition of GDP raises questions: Should fiscal rules be designed so as to be robust to changes in the definition of GDP? Is GDP the right denominator in fiscal rules? Would an income concept be preferable? 7 Where to draw the asset boundary? What about education, training, marketing and other intrangibles? Based on criteria such as return, appropriability, rivalry the boundary looks hazy Shifts in the boundary could lead us to re-write economic history with impacts for policy (including fiscal ratios if defined wrt. GDP) Hence, desirable to have clear criteria for what is in and what is out 8 Asset prices and valuation changes Some asset stocks do not fit into the core National Accounts, though they may be important for policy For those that do fit in, there are questions on how to account for valuation gains Consistency between creditors and debtors? Consistency between income and asset stocks? 9 Final words The introduction of ESA2010 is a major achievement But still plenty of unsettled issues Including some with an obvious policy angle Thank you for listening! 10