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Discussion of
”Common Uses of National Accounts for
Economic Policy and Some Implications for the
Next SNA”
by
Derek Blades
and
”A New Presentation of the National Accounts”
by
Jacques Bournay
Helen Stone Tice
25 August 2006
Common goal, to simplify the 1993 SNA, but
rather different approaches
• Blades wants national accountants to provide . .
.”the kinds of data that their coustomers actually
want rather than elaborating a comprehensive
set of national accounts most of which may be of
purely academic interest.”
• Bournay wants to change the traditional
presentation to accommodate a more intuitive
and theoretically satisfactory treatment of taxes
and government production.
Outline of Derek Blades’ Paper
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•
•
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Recent history
Statistics needed for macroeconomic policy
Statistics for structural adjustment policies
Lessons for the next SNA
Recent History. . .since the 1930s
• Accounts initially used to show relationships
between consumption, investment and saving
and how governments could manipulate these
aggregates to influence overall economic activity
and employment.
• Subsequent shifts in fashion, but since 1980s
economic role for government has been
provision of (1) stable macroeconomic
conditions and (2) appropriate regulatory
systems.
Statistics Needed for Macroeconomic Policy
• Using the OECD Economic Outlook as a model,
the kinds of economic statistics on which
macroeconomic policy is based fall into 4 groups
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–
–
–
Employment, income and inflation
Financial indicators
Demand and output
External indicators
• Table 1 in the paper shows the 29 Economic
Outlook variables in these 4 groups.
Table1 National accounts and other economic variables used
in OECD semi-annual forecasts
Employment, income
and inflation
Employment, unemployment rate,
compensation per employee, unit labour
cost, labour productivity
External indicators
Merchandise exports, merchandise
imports, Invisibles (net), current account
balance, merchandise export volumes,
merchandise import volumes, export
performance, terms of trade
Financial indicators
Household saving ratio
General government financial balance
Short term interest rates
Long term interest rates
Table1 . . . comtinued
Demand and output
Private consumption
Government consumption
Gross fixed investment
Public
Residential
Non-residential
Final domestic demand
Stockbuilding
Total domestic demand
Exports of goods and services
Imports of goods and services
GDP at market prices
Macroeconomic Policy . . .continued
• Of the 29 variables in table 1, only 14 drawn
directly from the national accounts
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–
–
–
Goods and services account at constant prices
General government sector account up to net lending
Household sector account up to saving
Rest of the world account (current account balance)
• Some national accounts aggregates not in SNA
– Final domestic demand
– Total domestic demand
– Breakdown of gross fixed investment
Macroeconomic Policy . . .continued
• Central banks need more timely data, so they
may not even use national accounts aggregates,
focusing instead on high-frequency indicators
– CPI
– Employment
– Unemployment rate
– Unit labor cost
– ”Confidence”
Statistics for Structural Adjustment
• Structural adjustment policies aimed at
– Improving efficiency of markets for labor, capital,
products
– Improving efficiency of government provision of
health, education, social services
– Ensuring sustainability of economic growth
• Most use specialized statistics drawn from
administrative records, but they
– Use GDP as reference point for indicators
– Use growth accounting to identify areas in which such
adjustments are needed.
The Bottom Line: National Accounts Statistics
Needed for Macroeconomic and Structural
Adjustment Policies
• Macroeconomic policy
– Final expenditure on GDP at current and constant
prices
– Rest of world, government, and household sector
accounts
• Structural adjustment policy
– GDP at current and constant prices
Lessons for 1993 SNA, Rev. 1
1. Get the level of GDP right
2. Get priorities right—bring back milestones
3. Keep it simple – ”can half the UN member
nations implement this in the forseeable
future?”
4. Meet economists half way
5. Learn from ICP experience
Outline of Jacques Bournay’s Paper
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•
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•
Introduction:
GDP at basic prices
The sequence of accounts
Another allocation of government production
Conclusions
Basic Premise
”Apart from non-financial market sectors for which
direct information on sales and prices are
available, the measure of production of the other
sectors needs theoretical and practical
conventions that are of consequence in the
results.”
Early use of indirect taxes as measure of
nonmarket output of government, now use costs
Change Focus from ”Market” to ”Basic”
GDP_bp + Imports + (Taxes – Subsidies on
products) = GDP_mp
GDP at basic prices—producer prices
GDP at market prices—acquisition prices
Taxes less subsidies on products now an
adjustment item
Changing The Conventions on the Treatment of
Taxes and Government Production
1. Make GDP_bp the primary measure, not
GDP_mp.
2. Put all redistribution in a redesigned
Secondary Distribution of Income Account
•
•
A tax is a tax and a subsidy is a subsidy
A transfer is a transfer
3. Allocate that part of government production
now shown as collective consumption between
intermediate consumption and household final
consumption.
New Secondary Distribution of Income
Account
Advantages of Focus on GDP_bp
• GDP is now the sum of value added over all
sectors
• GDP is also equal to the sum of compensation
of employees and gross operating surplus
• Net taxes on products made explicit
Advantages of New Sequence of Accounts
• Highlights two functions of government
– Production of nonmarket services
– Redistribution of the national income
• Subsidies shown as positive uses and
resources, not negative taxes
• All transfers shown as positive, with no
distinction between current and capital
• No need for nominal sector for taxes on products
Allocation of Actual Final Consumption of
Government
• Currently there is no clear sense of who uses
this output
• Some government production is intermediate
consumption, not final demand
• As a first approximation, why not allocate it in
proportion to intermediate and final consumption
of each sector
Comments on the Blades Paper
• Nice overview of evolution of the accounts and
their use for policy.
• Some of the items in table 1 that aren’t bolded
come from datasets that are supposed to be
harmonized with SNA. This contextual role for
the accounts needs to be featured both in this
discussion and in practice.
• If you keep things too simple, will policy makers
eventually decide just to add up the major
indicators for themselves and forget about
GDP—and the rest of the national accounts?
Comments on the Bournay Paper
• The allocation of the present actual final
consumption of government is appealing in
principle, but the method proposed is too crude.
• Replacing GDP_mp with GDP_bp is an
intuitively appealing and elegant streamlining of
what many have found to be a murky thicket in
the sequence of accounts, but . . .
• Data sources for GDP_mp are available on a
more timely basis than those for GDP_bp.
Can we combine the two suggestions?
• Use basic prices as the starting point for the
redefined and streamlined sequence of accounts
• Show the derivation of market price aggregates
from components of this sequence
• Provide a convenient presentation of the
national accounts aggregates ”that users want”