National Income Accounts Research Articles

The Transport Bias in Comparisons of National Income

It is generally recognized that the usual method of comparing national income-conversion by the foreign exchange rate into U.S. dollars (or other common currency) per capita-exaggerates differences in living standards between rich and poor countries. This recognition has led many authors to make comparisons of national income at a uniform set of prices. The major landmarks are the work of Colin Clark,2 Kuznets,3 and Gilbert and Kravis.4 The results of different systems of international comparison may vary so materially as to swamp differences merely due to deficiencies in the basic statistical data. For example, the conventional comparison shows that the per capita national income of the United Kingdom is about fourteen times that of Thailand. Recomputations made by the author to allow for various biases in the comparison suggest that the effective ratio of living standards is about three to one.5 Even if the recomputed ratio is doubled, the change in order of magnitude is large enough to affect our way of thinking about the underdeveloped countries. It is less well known why this exaggeration of income differentials takes place. Income is quantity multiplied by price; fundamentally there can only be two sorts of reasons, those associated with the quantities of goods compared and those associated with the operation of the price mechanism. The theory of the comparison of quantities has been examined exhaustively by Kuznets. Most of the difficulties boil down to the decisions as to what constitutes income, and as to the distinction between cost of production and income. The rule in ordinary national income accounting is that all expenditures by final consumers together with govemment expenditures and investment are income, and that all other expenditures are costs of production. Some rule like this is

THE USE OF NATIONAL INCOME ACCOUNTS IN PLANNING IN PAKISTAN

Review of Income and WealthVolume 1963, Issue 1 p. 318-327 THE USE OF NATIONAL INCOME ACCOUNTS IN PLANNING IN PAKISTAN Dr. Moin Uddin Baqai, Dr. Moin Uddin Baqai State Bank of Pakistan, Karachi. In writing this paper the author received considerable help from Dr. Mahbudul Haq, Chief, Monetary and Fiscal Section, Planning Commission, who provided him with a good deal of material in addition to discussing the problem with him.Search for more papers by this author Dr. Moin Uddin Baqai, Dr. Moin Uddin Baqai State Bank of Pakistan, Karachi. In writing this paper the author received considerable help from Dr. Mahbudul Haq, Chief, Monetary and Fiscal Section, Planning Commission, who provided him with a good deal of material in addition to discussing the problem with him.Search for more papers by this author First published: March 1963 https://doi.org/10.1111/j.1475-4991.1965.tb01033.x AboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume1963, Issue1March 1963Pages 318-327 RelatedInformation

Soviet National Income Accounts for 1955

PpT HIS paper presents in very concise form the principal results of a detailed estimate of the national income and product of the Soviet Union in I955, together with a brief discussion of the problems involved in the construction of such accounts.' Although at least two other estimates of Soviet national income accounts for I955 by the Economic Commission for Europe (ECE) 2 and by Hoeffding and Nimitz3 are available, the study on which this paper is based differs from them in several respects.4 The ECE study, which follows the United Nations system of national accounts,5 presents basic sector accounts but does not contain enduse or origin breakdowns or an adjustment of established prices for indirect taxes and subsidies. The Hoeffding-Nimitz study, which uses the format devised by Professor Bergson following that of the United States Department of Commerce,6 does include an end-use breakdown in established prices, but it lacks a similar one in adjusted prices and also lacks an origin breakdown. In contrast, the study summarized in this paper contains both end-use and origin breakdowns at both established and adjusted prices.7 In addition, the results are presented in a form intended to facilitate comparisons (i) of the purchasing power of the ruble and foreign currencies in regard to national product (and its major components) and (2) of the relative size of Soviet national product (and its major components) and that of another country in a common currency for example, with United States national product through the use of appropriate ruble-dollar or dollar-ruble ratios.8 In the limited space available, this paper presents the basic accounts constructed in the underlying study, the resulting end-use and origin breakdowns at established and adjusted prices, and some observations on the problems and limitations involved in the construction of Western-style national accounts for Soviettype economies.

The Federal Budget on National Income and Product Account

The Federal Budget on National Income and Product Account

The Economic Development of China: Studies Reviewed in Tranquillity

NY account of the economy of mainland China gives rise to certain basic questions in the mind of the reader. He wants to know what things are being j done and why, and how they are being done and where. He wants to know previous conditions and present needs. And he wants some guide to the prospects the future, both China and the rest of the world as it touches or is touched by China. Such expectations are a large order. Facts are hard to obtain in a country where statisticll work is rudimentary and new products are appearing, where accurate reporting is often a novelty, where the concept of national income accounting and total economic planning is less than ten years old, where political and social pressures often lead to onesided reporting and underevaluation of difficulties, and, finally, where some information simply is not divulged. However, at least three important conclusions do emerge from the accounts of economic development now going on. First, there is impressive growth in all directions. Second, except using the large population as a reservoir of labor capital construction, there seems to be no long-range policy with respect to population planning. Third, there is a large measure of trial and error in the methods of achieving general goals. That this last demands drastic changes millions of people, both leaders and led, is part of the price of applying social theory on a large scale. The works reviewed here were published from late 1957 into early 1960. Six present observations by non-Chinese who visited China in that period; two are by mature Chinese economists living outside China; and the rest are by non-Chinese, two of whom lived in China before 1949 and worked with materials bearing on the economy. Since any expression about the People's Republic of China is controversial, these published works might easily be divided into proand anti-Peking. However, such a division would not help us much, especially when we are not sufficiently sure of the facts to be for or against. Instead, it is more useful to group the materials into three categories: (1) those which are mainly descriptive; (2) those which are descriptive but are heavily laced with interpretations according to the author's bias; and (3) those which in addition present analyses of the Chinese materials and methods of computation. Although the last category may seem closest to the truth, I am not satisfied that it necessarily is, I agree completely with one Chinese economist who writes:'

The Integration of Sector Finance and National Income Accounts

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-

REVIEWS

Essays In the Theory of Economic Growth. By E. D. Domar. Commonwealth Perspectives. By Nicholas Manserghet al. Publication No. 8, Duke University Commonwealth Center. The Commonwealth Today. By E. H. Brookes. The Cabinet in the Commonwealth. By H. V. Wiseman. Economic Arithmetic. By R. Marris. Business Budgets and Accounts. By H. C. Edey. National Income Accounts and Income Analysis. By Richard and Nancy Ruggles. 2nd Edition. The State and the Industrial Revolution in Prussia 1740–1870. By W. O. Henderson. Free Elections. By W. J. M. Mackenzie. Ethiopia Today. By Ernest W. Luther. The Background to Current Affairs. By D. W. Crowley. Mars' Law of Insolvency in South Africa. Filth edition. By H. E. Hockly.

National Income Accounts and Income Analysis

National Income Accounts and Income Analysis

DEPRECIATION and STOCK APPRECIATION ADJUSTMENTS IN THE NATIONAL INCOME ACCOUNTS*

DEPRECIATION and STOCK APPRECIATION ADJUSTMENTS IN THE NATIONAL INCOME ACCOUNTS*

Human Time Allocation: A Basis for Social Accounts

Abstract It is possible to develop indices of the richness of life in urban communities. A parallel technique to national income accounting can be used for analyzing the social choices made within a population. It is based upon the ways people spend their time. Improvements in income and social development are accompanied by increases in the amount of time spent in public activity. They are reflected also in an increase in the variety of life. Thus, the cumulative data on time allocations can be used to indicate whether the life of various sections of the population is getting richer, and the effectiveness of programs directed to modifying the social and physical environment can be tested.

Quantity and Price Indexes in National Accounts

This concise Report is intended to be a sequel to Professor Stone's Standardised System of National Accounts, also published by O.E.E.C., several years ago. While there are a number of connecting links between the two studies, the emphasis and manner of exposition are notably different. Professor Stone's aim here is to expound the application of Laspeyres' and Paasche's index-numbers over the framework of aggregated commodity transactions— a task that he accomplishes with polished restraint and imaginative dexterity. Chapters I and II are mainly concerned to clear away possible misunderstandings as to what can and cannot be brought within the measuring rod he is wielding, given the present state of empirical knowledge. Chapter III develops the price/quantity dichotomy in various social accounting settings, and Chapter IV treads cautiously among the hazards of “ measuring “ or “ indicating “ quantitatively certain kinds of quality changes. Chapters V and VI deal respectively with problems of routing commodity flows and with the interesting difficulties connected with seasonal variation. The final chapters demonstrate the arbitrary nature of attempting to reduce an accounting system to a balance in constant prices, discuss the more general problems of choosing indicators, weights and a base-year, and list briefly the main types of index-number in use. There is a helpful Summary and some excellent advice on how to economise scarce statistical resources. While the Report is for the most part written in a clear literary style, the level of exposition varies a great deal. Passages in which any student familiar with the elements of index-number and national income accounting should feel completely at home alternate in several sections of Chapters II—VI with highly technical excursions into matrix algebra and demand theory.

The National Income and Product Accounts of the U.S. in the Netherlands Arrangement

The National Income and Product Accounts of the U.S. in the Netherlands Arrangement

Communist China's National Product in 1952

NATIONAL income accounting provides a broad avenue for systematically surveying the state of a country's statistical development, for identifying the most serious statistical gaps, and for appraising the reliability of the data. This function may be particularly important in areas where statistics are not regularly published, but are presented in scattered and unsystematic fashion. While this statistical mobilization and survey function is methodologically quite important from the standpoint of further studies of China's mainland economy, it is a subsidiary rather than a primary purpose of this study. Thus, the major focus is upon an analysis of the structure and flows in the economy, upon composition rather than just size of national product. Our work on the Chinese Communist economy, its performance, its capacity for growth, the relative importance of different sectors, the rate of saving and investment, the sources of saving, etc., has been greatly handicapped by the absence of national income estimates for some recent period. All of the previous estimates are for the I93I to I936 period.' Owing to the profound structural and institutional changes in the Chinese mainland economy, these would be inapplicable to the I950's even if they were methodologically and statistically unassailable. For recent years, the Chinese Communists have published some highly aggregated estimates.2 However, it is difficult to work with these, since they are not buttressed by a detailed exposition of sources and methods used. The national income concept used in this context is apparently the same as in the Soviet Union, that is, it excludes passenger transport, government, and many other types of services. In recent years, particularly since I955, we have begun to obtain much more information on various aspects of the Chinese economy, e.g., agricultural and industrial production, government budget, agricultural taxation and marketing, profits of state enterprises, levels of investment expenditure, etc. However, it has been very difficult to interpret and appraise these data since they could not be fitted into a broader framework and could not be assessed against the background of performance and intersectoral flows in the economy as a whole. In effect, -all of our investigations have suffered from the lack of an analytically meaningful yardstick. It is my hope that this study, confined to an analysis of national income accounts in one year, will at least go part of the way toward filling this gap. It should be viewed as an attempt to explore a new field of inquiry rather than to furnish definitive estimates. One of the purposes here is to apply the national accounting framework to an underdeveloped sovietized economy and to work out a method of approach to the available data which can then also be used for future estimates. There is no doubt that as the work on Chinese national income proceeds, these methods will be improved and new information will become available so that our present estimates will need to be revised. Space forbids a detailed exposition of methods and sources. Neither is it possible to discuss at length the pricing and valuation problem. These tasks will necessarily be left to a forthcoming monograph on national income and product in Communist China. Therefore, the primary purpose of this paper is to summarize the findings, to give some general indications of the methods of estimation pursued, and to bring out some of the analytical implications.

Canadian Business Cycles since 1919: A Progress Report

Since the appearance of annual estimates of gross national expenditure and its components, their use has dominated the analysis of Canadian business fluctuations. They provide the most comprehensive picture of the value and volume of those goods and services, currently produced and consumed, which have passed through the market place. The national accounts have been adapted to analyses of the relationship between the Canadian economy and the economies of the United Kingdom and the United States, particularly of the latter. Interest in these relationships existed for many years before national income accounting became available, but its development certainly gave the problem new focus.The use of national accounts for cyclical analysis has given rise to two problems. The first is that attention in Canada has focused on the period since 1926. There has been great emphasis accordingly on the Great Depression, its transmission to and impact on the economy. This cyclical experience has dominated the recent thinking of Canadian economists quite apart from the crises and misery which it brought. After all it is the one cyclical movement which stands out clearly in the national accounts. Furthermore, the experience of 1929-32 presented an unusual combination of circumstances. Nothing like it in duration or extent had occurred since the 1870’s. To base much of the analysis of Canadian business cycles on this one downturn, however major it might have been, and to draw implications for policy therefrom, could easily put public and private decision-making on an inadequate and misleading foundation.

National Income Accounts and Income Analysis.

National Income Accounts and Income Analysis.

National Income Accounts and Income Analysis

National Income Accounts and Income Analysis

A Moneyflows Approach to Consumer Behavior

Up to the present time the social accounting framework for the analysis of consumer behavior would seem to have been provided by national income accounting. The variables of consumption and savings are defined on the basis of their meaning in national income accounting. These variables are then related to other national income concepts such as national income, disposable personal income. Variables outside the social accounting framework of national income accounting may then be introduced. In recent years a new social accounting framework has made its appearance based on moneyflows or flow of funds. The two major studies to date are the Federal Reserve's Flow of Funds in the United States, 1939-1953 (Washington, D. C.: Board of Governors of the Federal Reserve System, 1955) and Morris A. Copeland's Moneyflows in the United States (New York: National Bureau of Economic Research, 1952). The latter is the pioneering study and in addition to developing the accounting framework goes on to some interesting theoretical interpretations. The former is a fuller statistical study which takes careful pains to avoid subjective interpretations. The virtues of flow of funds analysis stem from the greater amount of information that it provides us. Most importantly, the financial transaction is given the same prominence as the nonfinancial transaction. The sources and uses of funds statement for the consumer sector shows financial sources (net increase in liabilities) of consumer credit, mortgages, etc. and financial uses (net increase in financial assets) of currency and deposits, federal obligations, etc. as well as nonfinancial sources (e.g., payroll, interest, dividends, etc.) and nonfinancial uses (durable goods purchases, taxes, etc.).1 It is to the nonfinancial transaction that national income accounting pays its exclusive attention. The personal savings category of the household account in national income accounting is a residual category and packs in highly significant nonfinancial transactions as well as the net difference between the various financial uses and financial sources of funds. Some information is lost in the flow of funds formulation of the consumer

Export Duties and the National Income Accounts

Export Duties and the National Income Accounts

Field Work in Sample Surveys of Household Income and Expenditure

The last few years in this country have seen a considerable increase in the use of sample surveys for the collection of data on personal incomes, saving, and expenditure. There have recently been three major inquiries: the Ministry of Labour household budget inquiry; the Oxford Institute of Statistics Savings Surveys; and the project of the Department of Applied Economics, Cambridge, the Social Accounts of Cambridgeshire. (For a general description of the methods and objects of these three inquiries see references. 1,2) But while there has been considerable discussion about the design for such surveys, relatively little has been said about two other important aspects of the direct collection of income and expenditure information, namely the reliability of the material collected and the cost of collection. The existence of non-sampling error, while recognised, has not received very much attention, probably because of the difficulty of measuring it. In the course of the Cambridgeshire survey, however, it has been possible to form some views about the ways in which certain kinds of non-sampling error could be reduced, as well as to build up some data on costs. I shall be concerned with three questions. Firstly, what can be done to increase response in surveys of human populations (particularly financial surveys), since incomplete response may always be a source of error. Secondly, what can be done to reduce recording errors arising from the mistakes of both the interviewer and the respondent. Thirdly, what, if any, will be the effect of the suggested steps upon the cost of field work for such financial surveys. The material drawn upon is, in the main, that obtained in a large-scale budget inquiry conducted by the Department of Applied Economics, Cambridge, as part of a research project, the Social Accounts of Cambridgeshire, designed to develop methods for the direct collection of national income and social accounting information. The field work was carried out during the period April 1953 to March 1954.

National Income and Social Accounting.

National Income and Social Accounting.