National Accounting Aggregates Research Articles

Âges et générations : une introduction générale

This issue of the journal brings together five contributions devoted to comparing standards of living depending on age and generation : methodological contributions relating to equivalence scales and to the econometrics of pseudopanels ; the initial results for France of National Transfer Accounts (NTA) that break down National Accounts aggregates on the basis of age ; and comparisons of pension entitlements between public and private sector employees. We return to four of the questions they raise. The first is the issue of separating age, period, and cohort effects : how it is conducted should depend on the question asked. We then advocate a plural approach to intergenerational inequalities, consisting in looking at them from several complementary angles : for example, by referring not only to monetary income, but also to health, and access to education and employment, or housing. We continue by examining the concept of “ lifecycle deficit”, which is calculated by the NTA, and is the gap between what a generation consumes and what it produces through its labour throughout its existence. We discuss how it ties in with the broader issue of sustainability, which is the prospective part of the issue of intergenerational fairness. A minimalistic criterion of intergenerational fairness could be that each generation should be watchful to ensure that the next ones enjoy living conditions at least as good as it did. Finally, we comment on the various possible avenues for comparing pension entitlements in the public and private sectors : the difficulty of measuring contribution effort is an argument in favour of an overall approach combining direct salary and all of the pension entitlements.

Obituary: David Charles Lynn Wroe

David Wroe was born on February 20th, 1942, and died on February 2nd, 2014, after a 16-month battle against pancreatic cancer. Professionally, he will best be remembered as a world expert on economic statistics, and particularly for his work on national accounts while Deputy Director of the Central Statistical Office (CSO). David was educated at Reigate Grammar school. He was awarded a Master of Arts degree in mathematics at Trinity College, Cambridge, a Certificate in Statistics at Trinity College, Oxford, and a Master of Science degree in computer science at Birkbeck College, London. In 1965, he began his long and successful career spanning 31 years in the Government Statistical Service, by joining the Ministry of Social Security. He transferred to the CSO in 1968 where, apart from 2 years in Zambia, and 2 years with the Royal Commission on Distribution of Income and Wealth, he remained until 1982. Initially, he worked in social statistics. In 1976, on promotion to Chief Statistician, he was posted to head the Balance of Payments branch and, 4 years later, to head the National Accounts branch. This period of David's career determined where he was to make his greatest contribution to government statistics—the UK's national accounts. Before making his real mark in this area, he was promoted again and transferred to the Department of the Environment as Director of Statistics, where he had a wide portfolio covering housing, land use, new towns, local government and environmental issues. In 1991, shortly after the publication of the Pickford report on the quality of the UK's economic statistics, David returned to the CSO as Deputy Director. As the single ‘national accounts director’ recommended by Pickford, he drove through and managed probably the most significant changes in the UK's national accounts systems ever undertaken, anticipating many of the changes that were later required by European Union legislation. In particular, he transformed the UK's national accounting system from one based on income and expenditure to one centred on output, supply–use and input–output methodology. Major improvements in the quality of gross domestic product and other national accounting aggregates soon followed and were widely welcomed by users. As Deputy Director, he also had responsibilities that were wider than national accounts. He worked closely with Bill McLennan, CSO Director from 1992 to 1995, in bringing about fundamental improvements in the management of both the Government Statistical Service and the CSO. After retirement in 1996, David was in demand as a consultant, advising governments on statistical matters, often at the highest levels. His clients included the European Union Commission, UK, Hungary, Croatia, Nigeria, Pakistan and Barbados. Most of these projects were in economic statistics, but he also provided advice on social statistics, such as population censuses. David was an active Fellow of the Royal Statistical Society. He was a member of Council from 1993 to 1998, as Vice-President from 1995 to 1998. He served on the Social Statistics, Finance and Professional Affairs committees and on the Charter Working Party. He was awarded the Companion of the Bath in 1997. Beyond work, David had a passion for sailing and often invited Government Statistical Service colleagues for a day sailing on the Medway. He shared this interest with his wife, Susan, as well as a love of cross-country skiing, rambling and visiting their house in France. Those who did not know him well sometimes saw him as reserved. His close friends found him approachable, understanding and generous, with a dry wit that brought a sparkle to conversations with him. He had a sharp intellect, a clear vision and exceptional determination, all of which were essential to the success of his career. Most importantly, he was a ‘family’ man. A happy marriage of nearly 50 years was blessed with three daughters, all born during their stay in Zambia, and with six grandchildren.

Modeling the Economic Surplus in a SAM Framework

Introduction The concept of an economic surplus is something that Marxian and Sraffian economics share in common. Both theories recognize the existence of a surplus that is produced and subsequently utilized for various purposes, but each defines this surplus in very different ways. The surplus of Sraffian theory is the net product of the economy as defined in conventional national accounts. The surplus in Marxian theory is defined through its class theory. From the Marxist perspective the surplus created in production provides the resources that support the array of nonproduction activities associated with capitalist enterprises as well as many activities and individuals that might otherwise seem quite distant from these enterprises. Shareholders of a corporation, for example, receive an income derived from the surplus created in production, but this is simply one of many potential uses. Identifying the connection between the surplus created in production and the subsequent recipients is the task of Marxian class theory. Class theory provides a means to understand how the surplus created in production circulates and thus plays a role in the reproduction of the economic system itself. This emphasis on a complex class structure that is part of the fabric of the economy is what distinguishes Marxian class theory from the Sraffian one, and it is also what distinguishes their two different theories of surplus. These two theories of surplus are different, but they are not inherently incomparable with one another. This paper focuses on defining the Marxian surplus as it is produced and circulates in the economy as a whole. It will also be shown how this differs from the conventional net product, and thus the Sraffian surplus. The primary technique for doing this is a social accounting matrix (SAM). The SAM makes it possible to first define the conventional national accounting aggregates and then systematically derive the Marxian aggregates through a class analysis of these conventional accounts. A SAM is simply a way of organizing the transactions in an economy into a set of accounting aggregates, and it has the advantage of connecting these aggregates together in a way that maintains mutual consistency among them. It can be cast at any level of detail, from highly disaggregated to complete aggregation, according to the task for which it is intended. This flexibility is especially useful for deriving the Marxian income and product aggregates from the conventional ones because neither complete aggregation nor fine-grained disaggregation are necessary or useful in this process. The derivation of the Marxian accounting aggregates presented here draws from two very different literatures. The first is Resnick and Wolff's theory of class and their Marxian analysis of the capitalist enterprise (1987). Their work provides a sophisticated microeconomic analysis of the flows of value within an enterprise, and a basic understanding of the flow of value between enterprises. They do some rudimentary national accounting (1987: 180-183), but focus primarily on the microeconomics of the production, appropriation, and distribution of surplus. The second important influence on this work is the literature on Marxian interpretations of conventional national accounts and, in particular, the work of Shaikh and Tonak (1994). Some readers may find the juxtaposition of Resnick and Wolffs work with Shaikh and Tonak's curious. But despite important differences on many points, with regard to many of the basic issues involved in this paper they have much in common. This paper contains two primary sections. The next section presents a very simple SAM and uses it to show how it defines the conventional national accounting aggregates. The following section then systematically derives the Marxian aggregates from the conventional ones and analyzes some of the important similarities and differences. The final section summarizes the basic findings of the paper. …

OFFICIAL REVISIONS TO SOUTH AFRICAN NATIONAL ACCOUNTS DATA: MAGNITUDES AND IMPLICATIONS

AbstractThis paper investigates the bias and dispersion in official revisions of eight national accounting growth rates. The growth in GDP, consumption expenditure and personal disposable income by households has been subject to significant upward revisions and bias, especially after 1994. No significant bias was found in the revisions to the other national accounting aggregates. The official revisions are subject to a high degree of dispersion. Based on the 1984‐2003 period, there is a 30 per cent probability that the “final” growth rate in GDE deviates by more than 5 percentage points from the first release growth rate. For most magnitudes, other than exports and imports, the dispersion in South Africa's official revisions is similar to that of a sample of OECD countries. Using two examples, it is shown that the vintage of the data has a profound impact on the magnitude and significance of regression results based on such data.

Accounting for India's forest wealth

In this paper, we account for forest wealth in India. Changes in the timber and carbon wealth embodied in these forests are related to important green national accounting aggregates such as genuine saving and the change in wealth per capita. Important accounting issues include the timing of carbon releases that occur when forests are disturbed, as well as the valuation of these releases. Our empirical findings suggest that while India's forest wealth is substantial, net changes in this wealth are arguably not so large at least in relation to GNP. However, when viewed in the context of the wealth-diluting effects of population growth this implies a far larger additional savings effort is required to cover the (net) loss in forest values than otherwise appears to be the case. Finally, we examine ways in which the accounting approach that we adopt can be reconciled with approaches which stress conserving forest wealth.

National account measures and sustainability objectives: present approaches and future prospects

AbstractA dominant objective within the public policies of all SE Asian countries has been the achievement of economic growth. The issue of sustainability has serious implications for this policy objective. Pursuit of economic growth is concerned solely with the present, whilst sustainability is concerned with ensuring the current generation meets its present needs without threatening future generations' ability to do likewise. National accounts, such as gross domestic product, can measure healthy economies, but they can not measure sustainability. This paper, however, sets out a conceptual approach that describes the misalignment of national accounting measures with sustainability objectives and provides empirical evidence of how this misalignment can be partially overcome. An empirical approach is developed whereby certain adjustments to national accounts, based on normative social choice theory, are introduced to indicate how a partial measure of sustainability can be determined using national accounting aggregates as a base. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

An operative framework for total hicksian income measurement: application to a multiple-use forest.

A methodology for estimating total hicksian income in multiple-use forests is presented. The approach consistently incorporates commercial as well as non-commercial economic values and enables the measurement of national accounting aggregates taking into account variation in man-made and natural capital. Innovative solutions are developed (i) for the estimation of non-market values, such as recreation, where an attempt to determine exchange values has been made simulating markets, (ii) for timber, where standing timber valuation methods have been extended to cover uneven stands, and (iii) for carbon fixation valuation, where only permanently fixed carbon after 1990 has been taken into account. The methodology is applied to a multiple-use pinewood in the Guadarrama mountains, near Madrid (Spain). Timber, cattle grazing, hunting, recreation, carbon fixation and conservation values are measured and integrated in the accounting system, using primary microeconomic data from the case study. Results indicate the importance of non-commercial income, which accounts for 51% of the total income, and the social relevance of the analysed forest, implying that only 31% of the total income generated is appropriated by the forest owner.

The sustainability gap: a practical indicator of sustainability in the framework of the national accounts

The concept of sustainable development needs to be based on a clear definition of sustainability and how it is to be measured. This paper defines environmental sustainability as the maintenance of important environmental functions, and identifies seven sustainability principles that relate this requirement to current environmental issues. From these principles, the paper derives physical indicators of sustainability, organised according to the framework of the national accounts, which enables a "sustainability gap" to be estimated, comprising the difference between the current level and the environmentally sustainable level of the indicator in question. This physical "sustainability gap" can be given a monetary value according to the expenditure that would be necessary on abatement or restoration technologies to close the gap. Although the monetary "sustainability gap" cannot appropriately be used to adjust the national accounting aggregates, its value, and its ratio to GNP, provide useful information both to decision-makers and to the general public about the economic effort that would be required to achieve an environmentally sustainable economy.

External Effects of Agricultural Production in Italy and Environmental Accounting

This paper deals with the valuation of some negative external effects arising from agricultural production in Italy. External effects are treated in a transformation function as a ‘bad’ output additional to the normal output of a production activity. In this case we can distinguish a price component or shadow price of the external effect and a quantity component and estimate them separately. In order to calculate the price component of the external effects we first estimate one point on the marginal external costs curve and then try to obtain the whole curve, i.e. external costs associated to different levels of emissions in different years. As to the quantity component, net emissions of Nitrogen, Phosphorus and Potassium have been estimated. The aggregate value of external effects is then calculated for thirty years from 1961 to 1991 and deducted from the value added of the agricultural sector, as a first step towards the correction of national accounting aggregates to take environmental degradation into account.

THE USE OF TENDENCY SURVEYS IN EXTRAPOLATING NATIONAL ACCOUNTS

A well‐known way of using tendency survey data is the construction of Composite Leading Indicators (CLIs). It is rather peculiar that CLIs pretend to predict macroeconomic aggregates, while their construction is not consistent with the way actual macroeconomic statistics are compiled. This paper contains preliminary results of an attempt to integrate tendency survey indicators into the framework of the Dutch Quarterly Accounts. We conclude that tendency survey indicators can contribute to an explanation of trends in “real” economic variables. Many of these indicators lead the Quarterly Accounts indicators. They can, therefore, contribute to a timely estimation of National Accounts aggregates.

PROBLEMS OF RECORDING ENVIRONMENTAL PHENOMENA IN NATIONAL ACCOUNTING AGGREGATES

Is it expedient or possible to modify the content of the national accounting aggregates like GDP so that they reflect also the effect of environmental changes like pollution and noise–this is the question the author tries to answer. He points to some analogies with other national accounting problems, where the basic question is also how far should we go in modifying our measuring scale, the market price, in order to get closer to the measurement of some kind of economic welfare.Reviewing the various possibilities for modifications of the national accounting concepts, the author does not propose any substantial changes. The harm done to the environment as such cannot be measured in monetary terms. The cost of prevention is not a good approximation of the harm done to the environment, since the correlation between these two variables is not strong enough. Nor is the cost of restoration a good measure of the disfunction. Some damages, like noise, lung cancer caused by air pollution, cannot be restored. If–as proposed by some authors–the compensation for the disfunction (e.g. a swimming pool built to compensate for the water pollution) were deducted from GDP, this would not provide a good solution either, since the trouble is the disfunction itself and not the remedying action. (If no swimming pool is built, there is nothing to be deducted?) On the whole, there is no sufficiently sound basis for evaluating the monetary value of environmental damages.The author attaches great importance to getting more information on environmental phenomena. However, he prefers to supplement the national accounting information by a series of physical, chemical, biological, etc., indicators, instead of changing the national accounting concepts themselves.

THE PRELIMINARY AND FINAL FIGURES OF THE DANISH NATIONAL ACCOUNTS

This paper compares preliminary estimates (available about four months after the close of the period to which they refer) with final estimates (available three years after the close of the period) for certain national accounting aggregates and some of their major components. It concludes that preliminary estimates are consistently low for gross domestic product, exports, and public consumption, whereas imports, private consumption, and gross capital formation may be either low or high. The best early estimates, in the sense of closest to the final figures, are those for gross domestic product, imports, and exports.

PROBLEMS OF INTERNATIONAL COMPARISONS OF NATIONAL ACCOUNTING AGGREGATES BETWEEN COUNTRIES WITH DIFFERENT ECONOMIC SYSTEMS

This paper discusses a number of problems arising in comparisons of levels of national accounting aggregates between countries with different economic systems, notably between countries with market economies and countries with centrally planned economies. It considers problems arising from differences in the national accounting concepts used and problems arising from institutional differences, both of which are viewed as relating to the concepts on which the comparison should be based and the adjustment of national data to these concepts. The final section considers index number problems.