The Statistics Corner: National Income Accounting Guidelines
Duncan, Joseph W., Business Economics
IN LATE JANUARY an important document for business economists was jointly published by five major international organizations. The publication has a simple title, System of National Accounts -- 1993, but it is expected to have a profound impact on economic statistics in the years ahead.
A JOINT EFFORT
First, it is noteworthy that five diverse and headstrong international organizations were able to agree on definitions, concepts, and standards in the complex field of national income measurement. In the past these organizations:
1. United Nations Statistical Office (UNSTAT)
2. The World Bank
3. International Monetary Fund (IMF)
4. Organization for Economic Cooperation and Development (OECD)
5. The European Economic Union (EUROSTAT)
have tended to set their own statistical standards; now they have taken a major step to strengthen the international comparability of economic statistics. One illustration of the significance of this integration is the agreement that has been reached with the World Bank and IMF to integrate international financial statistics into a common set of accounts with the System of National Accounts.
In the forward to the publication it is noted that "The System is a comprehensive, consistent and flexible set of macroeconomic accounts intended to meet the needs of government and private sector analysts, policy makers and decision takers. It is designed for use in countries with market economies, whatever their stage of economic development, and also in countries in transition to market economies... The SNA is intended for use by both national and international statistical agencies, and countries are advised to start to compile accounts utilizing the revised System as soon as possible."
The revised System has a large number of new characteristics that related to "updating, clarifying and simplifying, and harmonizing" statistical concepts. The report notes that in the twenty-five years since the System of National Accounts was published (1968) a number of structural changes have occurred including greater policy attention to inflation, restructuring of the role of government, and growth in service activities (especially business services, such as communications and computing) and increasing complexity in financial institutions and financial markets.
The System directly deals with each of these changes. For example, it provides a separate account to record the revaluation of assets, a key impact in inflation.
It also separates holding gains into those due to changes in the general level of prices and those due to changes in relative prices. The definitions of final consumption by government is designed to illuminate on a consistent basis the role of governmental activities. The System gives special attention to services and established criteria for the classification of financial instruments and for definition of the financial corporate sector.
KEY ATTRIBUTES OF THE REVISED SYSTEM
On balance the System has the following attributes. It provides a comprehensive view of the economy with attention to the economic behavior of participants, their interrelationships, and the results of their economic impacts. By providing integrated balance sheets, it is possible to obtain a complete picture of resources available to the national economy, and it consolidates concepts such as demographics, price measures, and purchasing power parities that had previously been treated as separate components of official statistics. The System has the objective of providing guidance to developed and developing economies and to centrally planned economies that had previously used a material product system (MPS) as a competing system to the SNA.
The System is a forward looking document with special attention to flexibility, given the widespread variations in analytical needs and data availability. Through the use of satellite accounts, various perspectives on the economic system can be integrated. …