A SIMPLIFIED INTEGRATED FORM OF SNA AND MPS*

At present two systems of measurement of national product are in practice, one as defined in the UN System of National Accounts (SNA) and the other termed the Material Product System (MPS) or National Balances for the Economy. In the present paper, an expanded system of accounts integrating the national balances within the framework of a simplified SNA has been suggested. The accounts suggested are mainly the two sets of (i) Supply, Disposition and Domestic Production of goods and services and Consumption Expenditure of Budget and Mixed Organisations and the Population, and (ii) Income and Outlay and Capital Formation Accounts. The system is convenient not only for arriving at estimates by either of the two approaches, but is readily manageable. This set of accounts can, without any effort, be put in the form of a matrix leading to its ultimate integration with either the UN System of National Accounts or a modified system of national balances. The system gives not only the integrated system of SNA and national balances, but also a coded list of transactors and transactions within the economy. This coded list can be used as the first set of information for the creation of the economic data bank for the Integrated Statistical Information System.     

DEVELOPMENT OF THE NATIONAL ACCOUNTING SYSTEM IN HUNGARY

This paper presents the characteristics of the National Accounting System of Hungary and outlines its development in the last decades and the insufficiencies still existing. Hungary has joined with great interest in the work performed within the frame of the United Nations Statistical Commission concerning the development of the Systems of National Accounts, being interested in applying—as far as possible—the results of the revision of the SNA and MPS in its national practice. The paper first presents a conceptual matrix containing all the major items in the MPS system in order to explain the contents of the items and the interdependencies among them. In this connection a brief account is given of the major differences between the SNA and MPS. The following part of the paper presents the National Accounting System introduced in Hungary in 1968. It is put also within the framework of a matrix, which supplies the items of both the SNA and MPS by means of simple aggregation as well as satisfying the national requirements, so that it is possible to compare the structure and development of the Hungarian economy with those of any other countries. The major differences between the Hungarian system and the current MPS and the revised SNA are then presented.     

SUR LA STRUCTURE GENERALE DU SCN A PARTIR DE L'EXPERIENCE DU SYSTEME ELARGI DE COMPTABILITE NATIONALE FRANCAIS

This paper describes the French enlarged system of national accounts, and discusses its relevance for the revision of the UN System of National Accounts. Part I develops the concept of a "Central System" of national accounts, and sets out its minimum requirements and the margins within which adjustments or variants would be acceptable. This part concludes that the Central System is the basic system of macro-economics, and must meet the needs of macro-economists both as to content and coherence. Part II discusses the issue of the complexity of SNA. It proposes the introduction of a "tableau economique d'ensemble" (TEE) to provide an overview of the Central System, and shows how certain complementary approaches dealing with population, employment, input-output, financial operations, and more detailed presentations of wealth accounts and institutional sector accounts can be related to the TEE. The third part discusses the possibilities of deriving directly the accounts of the Central System from microdata for individual units, concluding that although this may be possible in limited special cases such as central government, it is generally impractical. For certain sectors- especially non-financial corporate and quasi-corporate enterprises-a system of intermediate accounts is proposed, which would reflect the data that can be collected from these units without adjustments and/or corrections needed for the national accounts. For other sectors, notably households, only global treatment seems feasible. Part IV introduces the concept of satellite accounts as a means of extending the coverage of the data system without overburdening the Central System. Annexes illustrate the tableau economique d'ensemble, the intermediate accounts, satellite accounts, and accounts relating to such extensions as natural resources and the ecosystem.     

ON THE TREATMENT OF TAXES AND GOVERNMENT IN THE NATIONAL ACCOUNTS

Framed in the context of the ongoing revision of the 1993 System of National Accounts (SNA), this note proposes a new presentation of the National Accounts. While it does not require new information, nor difficult calculations, it is suggested to be conceptually clearer and practically simpler. The changes concern the treatment of taxes and government in the national accounts which imply that: (i) GDP, measured at basic price, is now exactly the sum of all value added, which is split in the compensation of employees and an enlarged operating surplus; (ii) the two functions of government are clearly distinguished in a modified sequence of accounts, that is, as producing non-market services up to the allocation of primary income account, and then as redistributing the national income; and (iii) with a conventional allocation of government services and GDP broken down between market GDP and non-market GDP, households remain the only final consumer and the so called question of consumption subsidies is resolved.     

POSSIBILITIES AND PROBLEMS OF RECONCILIATION OF THE SNA AND THE MPS

This paper reviews the underlying concepts and definitions of SNA and MPS in order to identify those areas where the differences in the content or classifications of the corresponding aggregates of these systems of national accounting can be eliminated or reduced in the course of the present or the future work on the revision of both SNA and MPS. This will bring the systems nearer to each other and improve international comparability of national income data. In cases where such a reconciliation is not feasible, the introduction of certain modifications or clarifications in the selected sections of SNA and/or MPS will be a useful step.
Pursuing this objective, the paper introduces the following classification of the intersystem differences:
—differences in the fundamental concepts and definitions;
—differences caused by the peculiarities in the
—institutional set up;
—so called "incidental" differences.
On examining the above classification the paper comes to the conclusion that each group requires its own approach. The second conclusion is that possibilities for reducing intersystem differences are more promising in the case of the third group.
The paper uses the simplified MPS matrix in order to demonstrate the usefulness of certain modifications in the MPS classifications. These modifications do not imply any deviations from the fundamental concepts and yet they could facilitate international comparability.
The paper also discusses certain modifications (or clarifications) concerning some aggregates which could be useful in the context of international comparisons.     

SOCIAL ACCOUNTS AND THE DISTRIBUTION OF INCOME: THE MALAYSIAN ECONOMY IN 1970

Although the functional and institutional distributions of income are integrally connected to individual living standards and other development policy objectives, these dimensions are rarely given prominence or even accommodated within standard national accounting frameworks. This paper summarizes research on the estimation of a social accounting matrix (SAM) for Malaysia for 1970 in which the distribution of income between different factors and socio-economic groups is identified. It is the latest of a series of case studies involving some of the authors and is, perhaps, the most detailed of its kind. The study departs from the United Nations SNA guidelines at various points. The SNA basically proposes a commodity balance approach to national income accounting. In giving equal emphasis to income/outlay accounts as to the production accounts, the present study has brought together data from two major primary sources: a household expenditure survey and a production survey. Their combination poses several problems which are discussed in the paper. It leads to an integrated picture, in matrix form, of the interrelationships between income distribution and production structure in the Malaysian economy. Both the factor and household accounts in our SAM are disaggregated according to race and the geographic distinction between Peninsular and East Malaysia, with an urban/rural split within Peninsula Malaysia. The Peninsula labor force is further disaggregated by education level, while its households are then subdivided according to the employment status of main income earners. Arguments for and against these choices are presented. Some other aspects of the study can be noted. First, the distinction drawn between East and Peninsular Malaysia is desirable not only because of the inherent interest of the regions but also because of large differences in data availability and hence in estimation methods. Secondly, to complete our SAM it was necessary to estimate inter-household transfers, being the institutional analogue of inter-industry commodity flow. And finally an attempt has been made to impute the labor component of unincorporated business income. These, then, are the major problems which had to be overcome in our attempt to quantify the generation, distribution, and redistribution of income within Malaysia in a SAM framework.     

THE ESTABLISHMENT, REFORM, AND DEVELOPMENT OF CHINA'S SYSTEM OF NATIONAL ACCOUNTS

This paper provides a systematic and comprehensive account of the establishment, reform, and development of China's System of National Accounts, focusing on important changes in concepts and methods in national accounting during China's transition from the Soviet-type Material Product System to the United Nations System of National Accounts, as well as existing problems and challenges that must be faced in the further development of the system.     

NATIONAL ACCOUNTS IN TRANSITION COUNTRIES: BALANCING THE BIASES?

In the past several years, efforts have been made to introduce the 1993 System of National Accounts (1993) SNA ) in most of the formerly centrally planned economies. In doing so, a number of problems have emerged, some of which are particular to the situation of these countries. Some of these problems will probably cause overestimates of national accounts variables, others will cause underestimates, and it would be purely coincidental if these effects cancel out. This paper discusses the most disconcerting issues in this situation, and possible solutions.     

TREATMENT OF SUBSIDIES IN NATIONAL ACCOUNTS*

This document contains a critical analysis of some aspects of the treatment of subsidies in the present system of national accounts (United Nations SNA and the ESA, i.e. the European System of Integrated Economic Accounts) as background to the current discussion of their revision. One of the conventions used is that subsidies are recorded as a resource in the accounts of the market producer units which actually receive them. Should this rule of the receiver be applied in every case? The paper suggests that it would be preferable to attribute subsidies to the beneficiary in those cases where a subsidy received by one unit is the counterpart of a reduction in price which he grants to another unit which buys something from him (and which is the real beneficiary), so long as the discount is only granted to specific categories of purchasers. Recording in the accounts of the beneficiary results in a better distribution in the branch accounts and moreover greater stability of the national accounts in the face of minor institutional changes. The problem of allocation arises also for transfers designed to cover social risks or needs (illness, invalidism, old age, maternity). For this category of “social” goods and services for which general government wholly or partially assumes the costs to households, the transfer is treated either as a subsidy to collective consumption or a social benefit. The institutional arrangements, which vary from country to country, product to product and over time, give rise to profoundly different recording in the accounts. In order to restrict these differences, improve comparability between countries, permit analysis of trends over time, make the accounts less sensitive to different institutional arrangements and obtain a figure for household consumption which does not depend on the particular way in which the costs of such consumption is borne, the present document suggests that consumption subsidies should be treated as individual consumption expenditure of general government.     

REGIONAL ECONOMIC ACCOUNTING IN THE U.S. OFFICE OF BUSINESS ECONOMICS–AN APPRAISAL*

This paper discusses the conceptual framework in which regional economic accounts in the United States are viewed and the functions which those accounts serve. It points out that the major differences between regional and national accounts relate to factor returns to capital. First, returns to capital are extremely difficult, if not impossible, to measure meaningfully on a geographic basis. Secondly, because the capital market in the United States is a reasonably perfect one geographically, the return to capital that originates in a given region has little significance as either a stimulant or a constraint to production in that region. In terms of the functions of regional accounts, the point is made that whereas national economic accounts can aid economic decision-making in three general areas of policyallocation, distribution and stabilization—with perhaps greatest emphasis now placed on the last of these, regional accounts are most useful in matters relating to allocation and distribution. Information needed for the use of regional accounts in decision-making with regard to allocation and distribution problems is examined. Against these needs are placed an inventory of regional accounts which are available in the Regional Economics Division, Office of Business Economics. The available accounts are found to fall considerably short of those needed for allocation decisions. In contrast, regional accounts as presently constituted have much to offer as tools for analyzing the problems of regional economic distribution, although here too, much additional information is needed.     

THE ROLE OF NATIONAL ACCOUNTS IN CONJUNCTURAL RESEARCH—THE CASE OF CZECHOSLOVAKIA

This article discusses the revival of interest in research on cyclical behavior in the socialist countries, and the resulting shifting requirements placed upon the national income accounts. The first section discusses the economic experience and the institutional factors leading to this shift in emphasis. The second section deals with the use of national accounts in cyclical analysis, with particular reference to the Czechoslovak experience. The third section extends the discussion to the use of national accounts data for economic forecasting. The final section discusses the theory of economic fluctuations under socialism, and compares it with cyclical behavior in capitalist economies.     

THE INTEGRATION OF MACRO AND MICRO DATA FOR THE HOUSEHOLD SECTOR1

National accounts in their present form do not serve very well as a framework for microdata, largely because of differing concepts and coverage in the macro and micro data. This article identifies the differences in sectoring and the handling of imputations and attributions between macro and micro data, and then proposes a form of presentation of the macro accounts that will facilitate their integration. Data for the United States in 1980 are used as an illustrative example. The final section explores the consequences of the proposed alterations in the macro accounts for the analysis of saving and investment and the accumulation and distribution of wealth, using U.S. data for the period since 1947. The article concludes that the proposed alterations do lead to new analytical insights, and further, that in their present form the national accounts are both misleading and inadequate.     

PROBLEMS OF DETERMINING AND MEASURING THE RELIABILITY OF NATIONAL ACCOUNTS IN DEVELOPING COUNTRIES

Most developing countries have compiled national accounts on a regular basis only for the last few years. It has not yet been possible for them to collect many of the statistics necessary to obtain good coverage of their economic activities by methods which would generally be accepted as reliable. Consequently the checks on reliability imposed by the framework of the national accounts are often absent, and the accounts prepared contain many estimates of doubtful quality. These doubts can usually only be removed as statistics collected by better methods become available. This is proving to be a slow process, partly because of the shortage of trained statistical staff and the competing demands of social and demographic statistics and partly because of the inherent difficulties in collecting good statistics from small businesses and traditional households. The need to define traditional households as producers as well as consumers leads to our demanding extra information from this difficult sector. In addition it is often difficult for the national accounts statistician, and even more so for the user, to find out in the time available exactly how some of the statistics with which he is presented were obtained. When this cannot be done it is impossible to assess their reliability. Thus assessing the overall reliability of national accounts in developing countries for even a limited range of uses is at present largely a matter of personal judgment. The information necessary to make more objective assessments rarely exists and hence the problems which developed countries face in using such information are not yet within the experience of most developing countries.     

PROVISION OF SERVICES IN POLAND: A THEORETICAL AND STATISTICAL STUDY

Problems raised in the article relate to the treatment of services in a planned economy. While the theoretical discussion argues for change in the conceptual framework for qualifying and measuring the output of the service sector, the practice of statistical reporting is still based on the classical concept of the material product system (MPS) of national accounts. The first part of the article gives an outline of the MPS background and presents major theoretical and practical dilemmas of measurement of services in the non-material sphere of production. The second part is an empirical investigation of interrelatedness between production in the material sphere and services created in the non-material sphere in Poland during the period 1970–81. Correlation and elasticity of growth analysis as well as structural forecasting methods were used in order to demonstrate the strong relation between the development of the material and non-material spheres of production, and the favorable position of services in terms of factor productivities with their low potential for dynamic structural changes in the future. For the purpose of empirical analysis, the service sector output was estimated by using an extended version of MPS. There are two major conclusions to be drawn from the analysis. The first is that the classical concept of MPS not only inadequately copes with changes resulting from economic reforms in Poland but produces more and more dilemmas and practical problems. The second conclusion calls for a more active approach to services in development programming and planning.     

PROBLEMS OF DETERMINING AND MEASURING THE RELIABILITY OF THE NATIONAL ACCOUNTS: HUNGARY'S EXPERIENCES

Economic realities can be described in national accounting only by certain approximative means and presumptions; therefore they cannot be measured with absolute accuracy. However, because of their great importance these investigations must fulfil as far as possible the reliability required for the economic control and planning of the national economy, in accordance with predetermined concepts and methods. The reliability of national accounting is favourable in Hungary, as they are based mostly (92 percent) on the bookkeeping data of enterprises, cooperatives and institutions. The bookkeeping system is uniform in all economic organizations, in conformity with central regulations, and it takes into account the demand of computations for national accounting. Despite these favourable conditions lesser or greater contradictions can be found in the national accounts every year. The absolute measure of the differences is not significant; however, if compared to the annual increase it results in uncertainty of 15 percent. The uncertainty is reduced by the fact that the sign of differences is the same every year. The author classifies the causes of uncertainty in national accounts into four groups: 1. problems of the time shift of the connected economic processes and of their accounting; 2. effect of the enterprise interests; 3. inadequacy of methodological regulation; 4. inaccuracy of data surveys and processing. The study deals with the special factors of inaccuracy occurring in constant price accounting. Inaccuracy of the most important aggregates, for instance that of the volume index of the national income, comes to 0.5-0.7 percent which results, in the case of a yearly 5 percent “real” increase in the index, in reliability limits of 10 to 15 percent. In the concluding part of the study the author points out that in Hungary the unexplored contradictions are not shown as “statistical discrepancy” but they are included in the various aggregates on the basis of considerations discussed in the study.     

The State Budget Compilation Process in Russia: Institutional Framework and Practice

This article clarifies the institutional framework and practice of the state budget compilation process in Russia, taking the 2001 federal budget as an example. The budget was the first one compiled under the new national financial system, including the Budget Code of the Russian Federation, which came into force in January 2000. The Budget Code is greatly superior to the preceding one, in the socialist era, which regulated Russia's financial activities during the initial phase of the transition period. Under the new legal system the 2001 budget was drafted by the Ministry of Finance, approved by the government, submitted to the Federal Assembly, discussed at the State Duma and finally approved by the Federation Council. A detailed analysis of this process shows that a certain order is emerging in the budget compilation process due to the comparatively amicable relationship between the government and the Federal Assembly and because of the establishment of the new legal system, including the Budget Code. The new financial system, however, has many problems, indicating that Russia will not be able to accomplish institutional changes in this field all at once.     

LINKAGES BETWEEN MACRO AND MICRO BUSINESS ACCOUNTS: IMPLICATIONS FOR ECONOMIC MEASUREMENT

The paper shows the relationship between microbusiness accounting based on double-entry bookkeeping and macroeconomic accounting based on quadruple-entry bookkeeping. In order for microaccounts to successfully aggregate into macroaccounts (i.e. preserve macro/micro linkages), quadruple-entry bookkeeping requires that the traditional double entries, recorded by transacting microbusiness units, be "consistent" with each other. In fact national economic accounting implicitly assumes that such consistency is maintained when national "aggregates" are uniquely extracted from national accounts and when national "identities" are claimed to hold true.
The main purpose of the paper is to show important examples where quadruple-entry consistency is not satisfied. These examples typically involve "complex" economic transactions between business units in which the legal form of the transactions do not necessarily represent their economic substance. When this occurs, different business units have genuinely divergent conceptions and perceptions with respect to their mutual economic transactions. Therefore, microbusiness accounts cannot be successfully aggregated into macroeconomic accounts without violating the integrity of microdecision making records.
The conclusion of the paper introduces a new theory called Perpetual Imbalanced Accounting. The theory shows that inconsistent (or imbalanced) economic accounting does tend to become consistent (or balanced) over sufficiently long time periods. Therefore, we must adopt a more dynamic view of national accounting if we desire to preserve successful macro/micro linkages. However, the problems of imbalanced macroaccounting and its statistical consequences cannot be entirely avoided no matter how long the accounting time period is taken. All of the above have important implications for the revision of the United Nations System of National Accounts.     

SOME CONCEPTUAL DILEMMAS IN THE USE OF PRESENT NATIONAL ACCOUNTS

The following note is a very concise summary of a paper² that was presented at the 17th General Conference of the International Association for Research in Income and Wealth at Montvillargenne, August, 1981. As such it may be considered a new paper, although it contains practically all the conceptual issues of the original paper. As in the original paper its intention is only to place these issues before a wider audience, while specific solutions will have to wait for a more detailed treatment. All issues concern certain conceptual dilemmas, arising in particular in the use of national accounts when available concepts do not coincide with those for which data are sought. A decision to change the existing basic concepts would however require not only the support of the scholars in this field but also the co-operation of the users of national accounts. Due to extreme summarizing, certain statements are now fairly compact—compared with the original paper. It is nevertheless hoped that the basic problems still shine through. The following note gives instances in which the traditional national accounts, as established according to existing rules and statistics, may not suffice for actual data requirements, yielding differences in growth rates of several percentage points.     

TAKING THE ENVIRONMENT INTO ACCOUNT: THE NAMEA APPROACH

The National Accounting Matrix including Environmental Accounts (NAMEA) shows environmental burdens that are consistent with the economic figures in the national accounts. In the NAMEA, the existing national accounts matrix has been extended with accounts in physical units. On the basis of the expected contribution of each polluting substance to a particular environmental problem, emissions are converted to theme equivalents. This results in six summary environmental indicators that are directly comparable to the conventional economic aggregates. In addition, this meso-level information system can be used as the core data framework for integrated analyses and forecasts of economic and environmental changes.