Abstract
This paper examines the appropriate treatment of international transfers in the national accounts. It argues that the appropriate treatment differs, depending upon the use to be made of the accounts. The treatment recommended in the SNA is appropriate for expenditure behavior analysis, with its emphasis on total disposable income on the one hand, and its allocation between consumption and saving on the other. For economic performance analysis, however, the primary focus of interest is the excess, if any, of aggregate resource use over the GNP, i.e., the extent to which the combined level of consumption and investment is sustained out of own production or is dependent on unrequited capital inflow. It is essential for this purpose that the measure of capital inflow include all international transfers regardless of their economic destination.
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