The Integration of Sector Finance and National Income Accounts

Abstract

M ANY OF THE DIFFICULTIES encountered in integrating statistics of changes in the financial assets and liabilities of the sectors of an economy (hereinafter called financing statistics) with traditional national income statistics may be clarified by the application of balance of payments methodology.1 Thus, the flow-of-funds accounts, which have been developed in the United States to combine both types of statistics, have been described as a set of interlocking balance of payments statements.2 Traditional national income accounts cover transactions in goods and services and transfers within and between certain functionally defined sectors of an economy (mainly households, enterprises, and government) and between the economy as a whole and the rest of the world, presented in a form that yields aggregates for production, income, consumption, and real capital formation for the economy as a whole. Financing statistics cover economic transactions that represent changes in financial assets and liabilities of the sectors of an economy, and these changes are equivalent, mutatis mutandis, to capital transactions as recorded in the balance of payments. Traditional national income and financing statistics combined thus cover essentially the same types of transaction (goods and serv-