National Accounts

12 Key excerpts on "National Accounts"

• 

  eBook - ePub

  National Environmental Accounting

  Bridging the Gap between Ecology and Economy

  • Joy Hecht, Joy E Hecht(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  CHAPTER

  2

  Concepts of Conventional National Income Accounting

  E nvironmental accounts are based on the national income accounts. It is, therefore, useful to begin with a basic overview of the System of National Accounts (SNA) and a more in-depth description of key issues within the SNA that are particularly relevant to environmental accounts. This chapter provides a basic introduction to concepts of the national income accounts. The next chapter goes into more detail about their structure, highlighting elements that will be important for the development of environmental accounts.

  The Economy and the Accounts

  The National Accounts track the goods produced and sold and the incomes earned within an economy each year. To make this concept easier to understand, this section first looks at the components of a very simple economy and then adds various levels of complexity.

  A Very Simple Economy

  Imagine a very simple country with a few firms manufacturing all the goods people need and a group of people who work for those firms, receive salaries, and buy the goods the firms produce. For the moment, assume they spend everything they earn in the same year, have no government, and do not buy anything from other countries.

  There will be only a few simple exchanges of goods and money in this economy, as shown in Figure 2-1 . The firms, shown on the right side of the figure, produce goods, or output. To do so, they must purchase labor from households, shown on the left side of the figure, and materials from other firms. Then they sell their goods, either to other firms or to households. Goods purchased by other firms as input into their production are termed intermediate consumption . Goods purchased by households are termed final consumption

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  System of National Accounts, 1993

  • International Monetary Fund(Author)
  • 1993(Publication Date)
  • INTERNATIONAL MONETARY FUND

    (Publisher)

  1.31. The main objective of the SNA is to provide a comprehensive conceptual and accounting framework which can be used to create a macroeconomic database suitable for analysing and evaluating the performance of an economy. The existence of such a database is a prerequisite for informed, rational policy-making and decision-taking. Some of the more specific uses of the SNA are described in the following sections.

  Monitoring the behaviour of the economy

  • 1.32. National Accounts data provide information covering both different types of economic activities and the different sectors of the economy. It is possible to monitor the movements of major economic flows such as production, household consumption, government consumption, capital formation, exports, imports, wages, profits, taxes, lending, borrowing, etc., the flows of goods and services being recorded at both current and constant prices. Moreover, information is provided about certain key balancing items and ratios which can only be defined and measured within an accounting framework—for example, the budget surplus or deficit, the share of income which is saved, or invested, by individual sectors of the economy or the economy as a whole, the trade balance, etc. National Accounts also provide the background against which movements of short-term indicators, such as monthly indices of industrial production or of consumer or producer prices, can be interpreted and evaluated. The monitoring of the behaviour of the economy may be significantly improved if at least some of the main aggregates of the System are compiled quarterly as well as annually, although many of the accounts, tables or balance sheets of the System are not usually compiled more frequently than once a year.

  Macroeconomic analysis

  • 1.33. National Accounts are also used to investigate the causal mechanisms at work within an economy. Such analysis usually takes the form of the estimation of the parameters of functional relationships between different economic variables by applying econometric methods to time series of data at both current and constant prices compiled within a national accounting framework. The types of macroeconomic models used for such investigations may vary according to the school of economic thought of the investigator as well as the objectives of the analysis, but the System is sufficiently flexible to accommodate the requirements of different economic theories or models, provided only that they accept the basic concepts of production, consumption, income, etc. on which the System is based.

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  Macroeconomics

  A Contemporary Introduction

  • William A. McEachern(Author)
  • 2016(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  The national income accounts have limitations, but they offer a reasonably accurate picture of the economy at a point in time as well as year-to-year movements in the economy. Subsequent chapters will refer to the distinction between real and nominal values. The national income accounts are published in much greater detail than this chapter indicates. The appendix provides some flavor of the additional detail available. Summary 1. Gross domestic product, or GDP, measures the market value of all final goods and services produced during the year by re- sources located in the United States, regardless of who owns those resources. 2. The expenditure approach to GDP adds up the market value of all final goods and services produced in the economy during the year. The income approach to GDP adds up all the income generated as a result of that production. 3. Consumption’s share of GDP increased from an average of 62 percent during the 1960s to 68 percent during the most recent de- cade. Government purchases fell from 22 percent to 20 percent. Investment bounced around but averaged 15 percent of GDP during the 1960s and 16 percent during the most recent decade. Net exports averaged a surplus of 1 percent of GDP during the 1960s, but turned negative after that, meaning that imports exceeded exports, with an average deficit of 4 percent of GDP during the most recent decade. Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 132 Part 2 Fundamentals of Macroeconomics 4. The circular-flow model summarizes the flow of income and spending through the economy.

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  Economics

  A Contemporary Introduction

  • William A. McEachern(Author)
  • 2016(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  The national income accounts have limitations, but they offer a reasonably accurate picture of the economy at a point in time as well as year-to-year movements in the economy. Subsequent chapters will refer to the distinction between real and nominal values. The national income accounts are published in much greater detail than this chapter indicates. The appendix provides some flavor of the additional detail available. Summary 1. Gross domestic product, or GDP, measures the market value of all final goods and services produced during the year by re- sources located in the United States, regardless of who owns those resources. 2. The expenditure approach to GDP adds up the market value of all final goods and services produced in the economy during the year. The income approach to GDP adds up all the income generated as a result of that production. 3. Consumption’s share of GDP increased from an average of 62 percent during the 1960s to 68 percent during the most recent de- cade. Government purchases fell from 22 percent to 20 percent. Investment bounced around but averaged 15 percent of GDP during the 1960s and 16 percent during the most recent decade. Net exports averaged a surplus of 1 percent of GDP during the 1960s, but turned negative after that, meaning that imports exceeded exports, with an average deficit of 4 percent of GDP during the most recent decade. Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 464 Part 6 Fundamentals of Macroeconomics 4. The circular-flow model summarizes the flow of income and spending through the economy.

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  Economics and the Real World

  • Andrew M. Kamarck(Author)
  • 2016(Publication Date)
  • University of Pennsylvania Press Anniversary Collection

    (Publisher)

  And, remember, these sectors have been a growing proportion of the total GNP in all industrialized countries. In addition, we have mentioned several sets of activities that are mostly or wholly outside the National Accounts all together and yet are significant in the national economy. Less developed countries In addition to the problems of measurement and definition of the National Accounts that apply to all countries, conventional National Accounts can capture only very roughly the economies of the less developed countries : (1) the accounts are monistic, that is, they consider the whole nation to be sufficiently homogeneous to be treated as a single unit — this assumption is untrue in dualistic economies or economies with important enclave sectors; (2) the ac-counts are designed for countries that are economically indepen-dent, and the accounts of companies under foreign control are not separately presented; (3) expenditure on durable capital goods is considered as 'investment' whether on machinery or 'white elephant' prestige projects, whereas expenditures that may result in the future flow of output, such as on education or nutrition of children, is 'consumption'; (4) non-marketed production is treated cursorily, and own production of villages (e.g. religious, military, and medical services provided on the basis of customary obligation or barter) is completely neglected; (5) it is assumed that reliable statistics do in fact exist on economic activities. This assumption is especially doubtful in the cases of trade, services and traditional self-production. For example, estimates of food output are often derived from some old and unreliable census; output per head is assumed to remain constant with increases in rural population; output prices are assumed to move in line with urban market prices; and very crude assumptions are made about input prices and quantities (Seers, 1976, p. 198). There are similar problems

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  Measuring Economic Growth and Productivity

  Foundations, KLEMS Production Models, and Extensions

  • Barbara Fraumeni, Barbara M. Fraumeni(Authors)
  • 2019(Publication Date)
  • Academic Press

    (Publisher)

  Mankiw (2016) is particularly good in presenting the underlying theory and model and then presenting empirical evidence regarding key hypotheses. These basic models are normally presented within the National Accounts System and the identities and components in the accounts are used to explain:

  1. • Equilibrium in production and distribution in the short and long run. The equilibrium is shown to be based on firm and household micro-theory and macro-theory and implemented using the National Income and Product Accounts structure and data
  2. • The role of interest rates, prices, and exchange rates in equilibrating markets
  3. • The trade-off between inflation and unemployment
  4. • The accounting identity in an open economy that shows that the difference between aggregate demand and aggregate supply (and saving and investment) is equal to the trade deficit (e.g., the “twin deficits”)
  5. • Net National Product (GDP less depreciation, or the capital used up in production which must be replaced) as a measure of sustainable output for the nation.
  6. • The impacts of fiscal and monetary policy including the Keynesian multiplier
  7. • Understanding individual and aggregate consumer behavior
  8. • The determinants of investment by type of investments (equipment, structures, inventories, and intangible assets)
  9. • Changes over time and across business cycles in the distribution across the components of production, income, and expenditures
  10. • The impact of government deficits in the short and long run
  11. • Growth accounting and the determinants of growth over time and across countries
  12. • Inflation and output and the importance of index number theory in aggregation

  2.4. Joint evolution of theory, research, and National Accounts

  Although today's National Accounts seemed to be well-integrated with theory and well-designed to answer economic policy and other questions, their evolution has been a long process.

  2

  Political economy and National Accounts have always been concerned with political and economic policy using economic theory and data to understand key issues ranging from the gains from free trade to the sources of economic growth. However, the process has been discontinuous with theory, research, and measurement advancing at different rates, but all interacting to improve both economic theory and the accuracy and relevance of the National Accounts. For example, looking at today's textbook presentation, the accounts look like they were designed based on Keynesian models, but while Keynes played a key role as a “theoretician, compiler, supporter and user” of the evolving accounts, the basic structure of the accounts was established in the early 1900s or earlier, well before Keynes' contributions.

  3

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  Ecological Economics

  An Introduction

  • Michael Common, Sigrid Stagl(Authors)
  • 2005(Publication Date)
  • Cambridge University Press

    (Publisher)

  With foreign trade, keeping track of the relationship between saving and invest-ment gets complicated because it is necessary to distinguish between investment in the domestic economy and investment overseas, and between investment in the domestic economy by residents and by foreigners, for example. We will not go into these complexities here. 5.2.6 National income accounting in practice Table 5.9 uses data taken from the annual national income accounting publica-tion from the United Kingdom government that came out in 2002, where the most recent data refers to 2001. This publication contains an enormous amount of infor-mation --over 300 pages of data tables. The governments of most industrial nations, and some developing nations, produce similar volumes, following internationally agreed conventions. 144 ECONOMIC ACTIVITY In published national income accounts the main focus is on GDP, which is of interest as a measure of the overall level of activity in the domestic economy. This is important information for the management of the economy so as to avoid reces-sion or inflation, and to promote economic growth. The table from which the data in Table 5.9 here are taken --Table 1.2 in the ‘Blue Book’, as it is often referred to --reports three numbers for GDP: one derived from production data; one from expenditure data; and one from data on the incomes of factors of production. As explained above, given the conventions followed, each of these approaches should produce the same number. In practice, they do not. As the source for Table 5.9 puts it: The resulting estimates however, like all statistical estimates, contain errors and omissions; we obtain the best estimate of GDP (i.e. the published figure) by reconciling the estimates obtained from all three approaches. (Office of National Statistics, 2002: p. 31) In other words, the different approaches actually give different answers.

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  National Income and Social Accounting

  • Ronald Cooper, Profesor Harold C Edey, Harold C. Edey, Professor Sir Alan T Peacock, Alan T. Peacock(Authors)
  • 2013(Publication Date)
  • Routledge

    (Publisher)

  1 showing how the conceptual basis of our earlier chapters is related to the form of presentation of the official accounts. This analysis will give some idea of the relative magnitudes of the various figures in a modern industrial economy. Secondly, we shall consider very briefly the development of the United Kingdom national income over a period of years in order to illustrate some of the more important dynamic elements in national income accounting.

  The system of accounting used in the official statistics is necessarily more elaborate both in arrangement and content than the one we have adopted. Even so, the structure of the official accounts is closely related to the accounts we have set out in Chapter 3 (section 3): firms, households, government, rest of world, and capital. The firms account however is divided in the official statistics into a production account and an appropriation account in the way described in Chapter 4 (section 2). There is the following correspondence between the terms we have used and the title of the corresponding Blue Book accounts:

  Firms’ production account	Gross national product
  Appropriation account	Corporate income appropriation account
  Households	Personal income and expenditure
  Government	Combined public authorities
  Rest of world	International transactions
  Capital	Combined capital account

  2. The National Income Account of the United Kingdom 1965

  These are given in the tables on the following pages, first in double-entry and then in matrix form. So far as possible, we have used the terminology of the Blue Book in order that the reader may better follow his way through the official statistics. But we have used the same item numbers as in the system of accounts set out in Chapters 3 and 4

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  Principles of Economics in a Nutshell

  • Lorenzo Garbo, Dorene Isenberg, Nicholas Reksten(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  size of the economy, and such measure is provided by two fundamental concepts of national income accounting you have probably already heard of a million times:

  Gross Domestic Product (GDP)

  : market value of all the final goods/services produced in a given period of time (usually the calendar year) within national borders.

  Gross National Product (GNP)

  : market value of all the final goods/services produced in a given period of time (usually the calendar year) by domestically owned factors of production.

  Note : domestic (the “D” in GD P) is linked to the concept of borders , and thus includes production by domestic and foreign firms within the borders of the country; and national (the “N” in GN P) is linked to the concept of nationality of factors of production, and thus includes production performed only by domestic firms, independently of whether such production occurs within or outside national borders.

  Two key parts of these definitions require careful examination:

  1. Final Goods and Services
  2. Market Value

  a. Final goods and services: the concept of

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  UFS BUSINESS SCHOOL EDITION ECONOMIC INDICATORS

  • P Mohr, D Yu, S Adendorff(Authors)
  • 2020(Publication Date)
  • Van Schaik Publishers

    (Publisher)

  The SARB publishes a set of six production, distribution and accumulation accounts for South Africa. They are for:

  • Financial corporations
  • Nonfinancial corporations
  • General government
  • Households and nonprofit organisations serving households
  • The total domestic economy
  • The rest of the world

  These accounts contain a wealth of information and form the basis of the system of National Accounts. Although some of the details of the accounts differ (because of the different nature of the various sectors), the following outline of the account for the total domestic economy provides a good indication of the type of information they contain.

  Production, distribution and accumulation accounts: total domestic economy

  Output at basic prices Less: Intermediate consumption Gross value added at basic prices Plus: Taxes on products Less: Subsidies on products Gross domestic product at market prices Less: Compensation of employees Less: Taxes on production and imports Plus: Subsidies Gross operating surplus Plus: Compensation of employees Plus: Taxes on production and imports Less: Subsidies Plus: Property income received (interest, dividends, rent)

  Less: Property income paid (interest, dividends, rent)41

  Gross national income Plus: Other current transfers received Less: Other current transfers paid Gross disposable income Less: Final consumption expenditure (individual and collective) Less: Residual Gross saving Less: Consumption of fixed capital Net saving

  Apart from the information in this consolidated outline, the accounts provide useful data for the component sectors, for example, the taxes on income and wealth paid by the financial corporations, nonfinancial corporations and households (and received by government).

  Source: SARB Quarterly Bulletin.

  Saving by households (sometimes called personal saving) is equal to the difference between the disposable income of households and the final consumption expenditure by households. The household (or personal) saving rate is obtained by expressing saving by households as a ratio or percentage of the disposable income of households.

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  The U.S. National Income and Product Accounts

  Selected Topics

  • Murray F. Foss(Author)
  • 2007(Publication Date)
  • University of Chicago Press

    (Publisher)

  Although more than 30 years have passed since the U.S. national income accounting system was estabhshed, its basic structure has re-mained essentially unchanged. What has occurred instead is a continual improvement in the quantity and quality of the information provided. By and large, most users of the national income accounts are well satisfied with what the present system offers, and there are few who would wish to see radical changes made. This does not mean, however, that there is no room for further development in the U.S. national income accounts. Rather, it suggests that desired changes can probably be accommodated within the existing framework. In the review of the discussions of conceptual issues over the past 30 years, four general topics stand out as areas where further work is called for. These are (1) the sectoring, subsectoring, and the structure of the accounts; (2) the treatment of nonmarket activities and imputations; (3) the basic accounting principles underlying the recording of transactions in the accounts; and (4) the integration of financial transactions and balance sheets with the national income accounts. Each of these topics will be examined briefly in the following sections of this paper. 1.3.1 Sectoring and the Structure of the Accounts Although this topic is central to national income accounting and has important impHcations for its future development, it has not engendered very much explicit discussion. The original 1947 six-account system rec-ognized business, government, households, and the rest of the world as the four primary sectors. In 1958 the system was reduced to five accounts, the business sector being consolidated with the national income and product account and not shown explicitly as a separate sector. This was done to reduce the number of minor and inconsequential flows in the accounts and to display the major flows in the economy more promi-nently and simply.

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  Applied Intermediate Macroeconomics

  • Kevin D. Hoover(Author)
  • 2011(Publication Date)
  • Cambridge University Press

    (Publisher)

  The important point is that, once data have been seasonally adjusted, then month-to-month or quarter-to-quarter changes can be interpreted as economically significant. A forecaster may legitimately declare that good times are upon us when seasonally adjusted GDP rises, and the policymaker may wish to stimulate the economy when seasonally adjusted GDP falls. Many economic time series are published in both seasonally adjusted and nonseasonally adjusted versions, but only sea-sonally adjusted NIPA data are routinely published in the United States. 3.7 Putting It All Together: Reading the NIPAs In the last section we examined some of main issues involved in com-piling the national-income-and-product accounts. In the final section, we shall look at the accounts themselves and show how to relate them to the four national-income-accounting identities of Chapter 2. The official U.S. national-income-and-product accounts are presented in 148 separate tables. They are summarized in five interrelated tables, which can be regarded as more complicated versions of the national-accounting identities (2.1–2.3). 100 Understanding Gross Domestic Product 3.7.1 The National-Income-and-Product Account The first account ( Table 3.7 ) corresponds to the production-expenditure identity: Y ≡ C + I + G + ( EX − IM ) . (2.1) The right-hand side of the table is nearly identical to the right-hand side of the identity, except for some added detail. Most of the terms are familiar. Recall from Chapter 2 that inventories include stocks of unused raw materi-als, work in progress, and stocks of unsold finished goods (e.g., the food on the grocery shelf). Inventories are a form of capital, and a positive change in private inventories is a form of investment.

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