NATIONAL ACCOUNTING AS A PLANNING TOOL IN LESS DEVELOPED COUNTRIES: LESSONS OF EXPERIENCE

This paper is directed at the following question: How far is the national accounting system as developed in the industrially advanced countries and recommended by the United Nations applicable and useful to countries at an early stage of development? In order to examine the suitability of this tool, the nature of economic policy decisions and their dependence on macro-statistical constructs are analysed, the emphasis being on planning as actually undertaken in the field or going to be undertaken in the near future and not on planning activities as possibly ought to be attempted. The conclusion reached, based upon personal experience in Africa, the Caribbean area, Brazil and Venezuela, both as “producer” and “user” of data, is that planning is mainly limited to the public sector. Comprehensive plans, prepared with the assistance of foreign consultants, were generally forgotten soon after publication, the driving force behind those plans being external pressure by bilateral donors and international agencies and propaganda-prestige motives. Real over-all economic management or consistent medium term planning of the whole economy never appeared to be an important factor in the decision-making process, possibly because those concepts are far too abstract and do not have short-term impact. The role of national accounting should therefore be limited to the provision of a general framework and factual support for public sector planning activities. In practice the United Nations system has been found far too complicated and ambitious, not sufficiently development planning oriented, and not suitable to the limited statistical resources available in the developing countries. The paper recommends the publication of several detailed “case studies” in national accounting, hoping that those studies might help to identify types of accounting systems appropriate to different existing constellations. In the meantime a drastic scaling down of the United Nations system should be undertaken; we should try to equate demand and supply of relevant information. In the final part, the paper considers planning requirements (timetable and flexibility, information required for a general assessment of the economy, crucial role of the publicsector, relative precision), statistical requirements (resources, data available, priorities, international reporting) and decision-makers’requirements (compactness, simplicity, background information, wishes of external aid donors) and recommends, as an interim measure, a simplified system of national accounts consisting of eight main tables.     

The macroeconomics of unbalanced growth and the expanding public sector: Some simple tests of a model of government growth

A now classic model of public sector growth is Baumol's (1967) ‘Macroeconomics of Unbalanced Growth’. That model implies that one cause of public sector expenditure growth is a low or zero rate of productivity growth in the public sector relative to the private sector. Previous studies have tested, and partially confirmed, the Baumol hypothesis by computing productivity indices for various public sector activities. In this paper I attempt to test that model in a more direct manner. The unbalanced growth model is used to predict growth rates of per capita government expenditures, government's share of GNP and the pattern of government expenditure growth. These predictions are compared with observed growth rates of aggregate government expenditures. The model predicts the growth rate aggregate government expenditures, the growth rate of government's share of GNP, and the pattern of government expenditure growth reasonably well, and the data tend to support the Baumol model.     

PUBLIC SECTOR STATISTICS FOR THE UNITED KINGDOM

This paper describes the composition of the public sector in the United Kingdom and traces the development and contribution to the economy of the three main sub-sectors-central government, local government and public corporations—over the past thirty years. Relevant data for output, employment, fixed capital formation and national wealth set the public sector into perspective with the economy as a whole and illustrate how its share of human and other resources has changed over the years. While all four measures show the public sector share of the total to have been around 30 percent in 1980, historically the changes have moved very differently. The slow, but fairly steady, increase in the share of employment and output contrasts with very marked changes in the other two measures. Although public sector fixed investment nearly doubled in real terms between 1950 and 1980 its share of total investment declined from 48 to 31 percent, a much smaller share being taken by dwellings, electricity supply and the railways. In terms of the share of national wealth the public sector moved from a state of indebtedness to the rest of the economy in the fifties and sixties to a position of holding nearly one third of the value of tangible and financial assets in the late seventies. A small part of the paper considers the international dimension, but because few other countries use the concept of a public sector, this section examines only the relationship between total tax revenue and GDP in a number of countries and employment in general government. The problems of determining the boundary of the public and private sectors occurs most frequently at the interface between public corporations and private enterprises; the rules for deciding classification are set out in so far as they can be specified. The last sections of the paper put the statistics into their policy context and consider the value of public sector aggregates. The conclusion is that a general case cannot be made to justify assembling public sector aggregates for all countries; the need will be determined by the economic policies being pursued in a particular country. Although the United Kingdom gives considerable prominence to a public sector financial aggregate, the Public Sector Borrowing Requirement, the functions of the public corporations and the rest of the public sector are so disparate that consolidated accounts for the public sector are no longer prepared.     

Can government's choice of a high inflation policy be rational?

Out of the two inflation tax equilibria—i.e., the two inflation rates which bring the same revenue to the government—the higher one is not infrequently chosen. It is shown that such a choice may not be irrational for a government whose policy includes a financial repression and exchange rate controls and which is trying to maximize public sector expenditures. However, such policy is not sustainable in the long run, whatever its short-term advantages may be. Hence, policy makers should always weight advantages of higher public sector expenditures today against hardships of inevitable stabilization programs in the future.     

ON THE EFFECTS OF DIFFERENT PATTERNS OF PUBLIC CONSUMPTION EXPENDITURES

The multiplier effects resulting from an isolated increase in the level of public consumption within different public branches are investigated and the policy implications are discussed. The article begins with a theorethical analysis which shows why and in which ways these multipliers can be expected to differ between public branches. Thereafter, an empirical investigation is given, based on simulations with an econometric model of the Swedish economy. In this model the public activities are divided into 13 different public branches. The effects of an increase in public consumption on employment, imports and private consumption are found to differ considerably depending on which branch of the public sector is expanded. Some implications for short run stabilization policy are discussed. The article ends with a special analysis of the implications for a medium term planning problem: the trade off between private and public consumption growth. This analysis throws new light on the old topic "private or public consumption". In an economy with highly differentiated production in the public sector the trade-off is shown not to be unique. The sacrifice of private consumption growth corresponding to a given growth of public consumption expenditures will vary considerably according to the distribution of the public consumption growth within the different branches of the public sector.     

Tax and spend or spend and tax? An empirical investigation for Austria

The aim of this contribution is to discriminate between the rivallingspend and tax andtax and spend hypotheses in order to check empirically the relationship between government spending and taxation decisions in Austria. For that purpose, the authors estimate a tri-variate structural VAR Model of Austria's public sector that, besides expenditures and revenues, includes aggregate income as an additional variable. They implement impulse-response functions and frequency domain techniques in order to identify the causal relation between government outlays and receipts. The budget making process is interpreted as an error correction model which allows to estimate to what extent revenues and expenditures are adjusted whenever the government sees its long run budget constraint violate. The empirical findings strongly support the spend and tax view that budget decision-making is significantly dominated by the expenditure side in Austria.We are gratefully indebted to Peter Weiss and three anonymous referees for many valuable comments and suggestion.     

SIZE OF THE PUBLIC SECTOR,ECONOMIC GROWTH AND THE INFORMAL ECONOMY: DEVELOPMENT TRENDS IN THE FEDERAL REPUBLIC OF GERMANY*

The growth of the public sector in the post-war period and the consequences of this development for economic growth is a strongly disputed subject of economic theory and policy. In this paper the development trends of state activities in the case of the Federal Republic of Germany are presented. The structure of public expenditures as well as the tax structure are taken into consideration and possible impacts on real economic growth are analysed. The negative correlations between some kinds of public expenditures (or taxes) and the growth rate of real GNP should not be taken in proof of the growth-retarding effects which might ensue from increasing state activities. It seems to be more likely that state activities have induced shifts of resources from the formal into the informal economy. Politicians should be aware that some measures of economic policy conventionally proposed will strengthen the movement into the informal economy, thus intensifying the current problems within the public budgets as well as in the social security system.     

Should governments stop subsidies to private goods? Evidence from rural Latin America

This paper empirically documents the effects of subsidizing private goods to the detriment of the government's supply of public goods. We use a new data set from the rural sector in fifteen Latin American countries over the period 1985–2001 collected using a methodology that allows us to separate government subsidies to private goods from expenditures in the provision of public goods. The econometric evidence shows that the government's decision to subsidize either private or public goods has dramatic consequences for economic development. Reducing the share of subsidies to private goods (or, equivalently, increasing the share of public goods) in the government's budget has, ceteris paribus, a large and significant positive impact on rural per capita income, reduces certain undesirable environmental effects associated with output expansion, and contributes to poverty reduction.     

LE SYSTEME ACTUEL DE COMPTABILITE NATIONALE ET LA PLANIFICATION

The present system of national accounting (revised SNA and existing national systems) is a good framework for physical projections of goods and services produced by enterprises. It is less well suited to planning in value terms, because data on income are poor and the system is badly adapted to analysis at the level of decision-making centers of the relationships of production, prices, income, and investment; the picture which it gives of the non-market economy is inadequate; and it yields a static view of successive states of the economy, the last accented by the scarcity of structural information. The usefulness of the accounts for the formation of economic policy varies greatly according to the problems considered. Important for general aspects of economic policy in the relatively short term, they are limited in terms of fine decisions on public intervention in the market economy, and for the relatively detailed study of economic policy in the public sector itself. These shortcomings, although in part remediable, raise questions concerning the scope, object, flexibility, and spacial and temporal coverage of national accounting. Finally, the newly emerging needs of planning, especially those arising from the extension of the dialogue between social groups, the attempts at planning in value terms, and the increasing interest in the non-market economy, suggest a need for some deconsolidation of the system. To answer these demands, a more flexible system is needed. Such a system might comprise two stages. One, a statistical framework and presentation of data, would remain close to business and public accounting. The other, a more abstract and elaborate framework for macro-economic analysis, would correspond in large part to the present system. This system would include, around the central nucleus, a number of satellite accounts, consistent with the nucleus but articulated with it by very flexible and diverse rules. It could be extended to new fields where quantification without valuation is possible.     

Trade and Technology from a Schumpeterian Perspective

This paper attempts to implement empirically a Schumpeterian model of international trade. After briefly discussing the literature on trade and technology, we formulate a model in which ‘real’ factors such as R&D expenditures, investment and wage costs have an impact on bilateral trade flows between advanced economies. We also take into account the effect of exchange rate differences. The model is empirically estimated on sectoral data for nine OECD countries. We find that what determines competitiveness differs by sector. In many sectors, either R&D expenditures or wage costs are important. The results for investment indicate a weaker role. Consistent with the Marshall-Lerner logic, we find that the sign of exchange rate changes varies by sector. We conclude the paper by a discussion of the relevance of the results for ‘technology-based’ theories of international trade.     

EXPLORING POTENTIAL ARMS RACES

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.     

Capital tax competition: bane or boon

This paper reviews potential advantages and disadvantages of capital tax competition. Tax competition may introduce, mitigate, or exacerbate inefficiencies in both the private sector and the public sector. In different models, tax competition may either limit or increase public expenditures and taxes on mobile factors, with differing welfare consequences. We also discuss the implications of tax competition for redistributive policies and for policies dealing with risk, and we identify some of the possible empirical implications of tax competition.     

Information Infrastructure for Healthcare: An Evaluation of a Government-Industry Technology Development Initiative

This paper illustrates a 'bottom-up' model of a civilian technology policy program by recounting the story of the 'genesis' of the Advanced Technology Program (ATP) Information Infrastructure for Healthcare (IIH) focused program beginning with the initial exchange of ideas between members of the private and public sector (industry's submission of 'white papers'; workshops conducted by the ATP; meetings held between individuals from both groups) in which those technologies necessary for the development of a national information infrastructure in healthcare were identified. Included is a discussion of the ATP 'white paper' process in which noted differences existed between what the ATP hoped to gain through this method and how the private sector responded. The ATP review and selection process and the experience of firms, small, medium and large, with ATP projects are also discussed.     

Achieving the Best Fiscal Outcome: What Does the Government Need to Know?

This paper examines the operation of fiscal policy under incomplete information when the central bank sets the stance of monetary policy so as to achieve a zero inflation target. The fiscal authority is assumed to aim to achieve a target level for output and a zero level of public debt. The best fiscal policy setting arises under full information and is one where output attains its full employment level and public debt is driven to zero. Deviations from full information can lead to a considerable divergence from the best fiscal setting involving substantial levels of public sector indebtedness. The results suggest that a government should invest available resources determining what outcomes are achievable and what outcomes are not. Then it should focus all its energies on trying to deliver achievable outcomes. The benefits from such a strategy can be substantial.     

U.S. INCOME, SAVING, AND WEALTH, 1929—1969

The objective of this paper is to present income and expenditure accounts, accumulation accounts, and the asset side of the wealth accounts for the U.S. private national economy in current and constant prices. These accounts are integrated with the production and factor outlay accounts for the U.S. private domestic economy in current and constant prices given in our earlier papers. Taken together, these accounts constitute a complete accounting system in current and constant prices for the private sector of the U.S. economy.
Our complete accounting system incorporates a new concept of the standard of living, defined as the ratio of the quantity index of gross private national expenditures to the quantity index of gross private national consumer receipts. Our concept of the standard of living is similar but not identical to our concept of total factor productivity. Changes in the private standard of living reflect both changes in total factor productivity and changes in the proportion of the total product consumed in the public sector.     

MFA model to assess economic and environmental consequences of food production and consumption

Agri-food sector is a crucially important part of the society, because it is a major factor affecting public health and welfare and it also contributes – directly and indirectly – both to the environment and to the national gross product and employment. Improving sustainability of the agri-food sector implies production of nutritionally better food by using fewer inputs and by reducing environmental burden.In reducing environmental burden, it is essential to restrict the material throughput, to identify the hot spots and direct the measures to them. Improving performance of the food sector requires that the benefits and inputs be quantified in an unambiguous way and that the inputs are estimated for the whole production chain. A comprehensive view of the whole system is necessary.Here, the material flow approach (MFA) has been used to describe the Finnish food flux. The quantitative numerical data have been derived from the farm models' data base, and the data have been adjusted so as to comply with the production and consumption statistics of Finland. Using the compiled data an extended input–output model has been constructed. The model allows for the evaluation of some of the economic and environmental consequences, when the structure of food production and the patterns of food consumption are changed. The consequences can be traced within agriculture, within the food sector as a whole, or at the level of the nation-wide economy. In combination with other information the model, thus, serves as a practical tool for planning.The paper at hand gives an overview of the data base and the basic calculation principles of the model. The usability of the model is demonstrated with results from modelling examples, in which the share of organic production or the share of vegetarian food in the average Finnish diet has been increased. The possibilities and restrictions of the approach as well as some of the needs for further development are discussed.The study is the first step in developing MFA methods to analyse and to monitor the material flows of the Finnish food flux. The results have been used also in compiling the Finnish physical input–output tables. The study, thus, contributes to the overall development of the materials flow accounting.     

提高城市公共品供给效率的研究与探讨

随着时代的进步,城市公共品的供给已经成为衡量一个城市甚至是一个国家文明及进步程度的关键因素.本文首先对城市公共品进行了界定,分析了现有城市公共品的主要供给模式.然后针对当前我国城市公共品供给存在的主要问题:政府和公共部门的过度干预控制,而私人部门或是第三部门在城市公共品的供给过程中参与程度却比较低,整体供给效率不高等,进一步剖析其原因.最后指出为了提高我国城市公共品的供给效率,应继续推进并不断地深化城市公共品的供给市场化改革思路,进行配套地改革,建立起多样化的投融资模式;进一步探求多样化的公共品供给模式,以地方政府和民间资本为城市公共品的有效供给者;建立和规范规制机构,建立健全补偿机制和供给机制;转变政府的职能角色,由“划桨”向“掌舵”进行转变,树立起服务理念;同时还要提高市民享有城市公共品的权利意识.     

FiMod — A DSGE model for fiscal policy simulations

This paper develops a medium-scale dynamic, stochastic, general equilibrium (DSGE) model for fiscal policy simulations. Relative to existing models of this type, our model incorporates two important features. First, we consider a two-country monetary union structure, which makes it well suited to simulate fiscal measures by relatively large countries in a currency area. Second, we provide a notable degree of disaggregation on the government expenditures side, by explicitly distinguishing between (productivity-enhancing) public investment, public purchases and the public sector wage bill. In addition, we consider a labor market characterized by search and matching frictions, which allows to analyze the response of equilibrium unemployment to fiscal measures. In order to illustrate some of its applications, and motivated by recent policy debate in the Euro Area, we calibrate the model to Spain and the rest of the area and simulate a number of fiscal consolidation scenarios. We find that, in terms of output and employment losses, fiscal consolidation is the least damaging when achieved by reducing the public sector wage bill, whereas it is most damaging when carried out by cutting public investment.     

Information Infrastructure for Healthcare: An Evaluation of a Government‐Industry Technology Development Initiative

This paper illustrates a 'bottom-up' model of a civilian technology policy program by recounting the story of the 'genesis' of the Advanced Technology Program (ATP) Information Infrastructure for Healthcare (IIH) focused program beginning with the initial exchange of ideas between members of the private and public sector (industry's submission of 'white papers'; workshops conducted by the ATP; meetings held between individuals from both groups) in which those technologies necessary for the development of a national information infrastructure in healthcare were identified. Included is a discussion of the ATP 'white paper' process in which noted differences existed between what the ATP hoped to gain through this method and how the private sector responded. The ATP review and selection process and the experience of firms, small, medium and large, with ATP projects are also discussed.