A REVIEW OF SELECTED ASPECTS OF THE UNITED NATIONS SYSTEM OF NATIONAL ACCOUNTS IN THE LIGHT OF COUNTRIES’ EXPERIENCES*

A review of the United Nations System of National Accounts and its implementation by countries is presently being conducted at the United Nations Statistical Office. This article presents a personal and selective account by the author of the results of that review and its consequences for the present structure of the SNA. Information is included on the level of response by countries for the tables of the SNA national accounts questionnaire. It shows that this response is at present sparce, except for the tables on GDP by end use, cost structure and kind of economic activity. On the more detailed level the feasibility of introducing integrated sector accounts into the system has been examined and different approaches compared. Country practices suggest that one way of facilitating the introduction of such accounts would be to eliminate one essential feature of the dual classification of the SNA, i.e., the distinction between quasi-corporate and other unincorporated enterprises. Other modifications of the SNA structure implied below are the introduction on a limited scale of articulation of transactions, the inclusion of additional aggregate income and balancing items, a reallocation of data between the main accounts and the supporting tables, and a better integration of the SNA matrix with the accounts and tables of the system. A reduction of the present number of independent classifications in the SNA is suggested, based on links between categories of different classifications that are assumed in country responses to the questionnaire. A suggestion is made for a uniform valuation of goods and services and income flows, to replace the present complex valuation guidelines on approximate basic and factor values and producers’ prices.     

CONCEPTUAL INCONGRUITY IN THE NATIONAL ACCOUNTS

This paper is presented as a general contribution to discussions underway with respect to the revision of the SNA. The author argues that underlying premises in the current (1968) version of the SNA tend to favour quantitative aspects of production and that the treatment of certain financial items such as interest and valuation of inventory change have been compromised in regard to their effects on production.
The need for alternative approaches to these components in the subaccounts of the SNA is emphasized, the rationale involved is explained and modifications to some of the subaccounts are proposed. The alternative approaches affect the boundaries of production and it is argued that the new boundaries would provide a more realistic representation of current values of gross domestic product. It is also noted that the modified production accounts are more compatible with the balance sheet subaccounts.
The author shows that production subaccounts on input-output and productivity are based on the need for quantitative measures in analysing growth in the volume of goods and services produced and of productivity to determine efficiency of factor utilization. It is argued that the existing conceptual structure of these two subaccounts meet these needs and should be retained in their present form.     

The relationship between government accounts and national accounts, with special reference to the netherlands

National accounts are a macro-economic accounting system that is compiled on the basis of a globally harmonized accounting standard, that is SNA93/ESA95. To a large extent, the SNA93/ESA95 accounting principles are also suitable for government (micro-)accounting purposes, if only because the accounts drawn up according to this standard are comparable across (types of) units and over time. That facilitates performance monitoring and benchmarking. In addition, the ESA95 guidelines and procedures deal with innovative transactions and accounting, which increases the credibility of the accounts. Finally, accounts for government units are then directly comparable with the macroeconomic accounts, which facilitates the link between forecasts for the national economy and drawing up government budgets. This paper also describes the present conversion of government accounts to national accounts for the government sector in the Netherlands and the plans of the Dutch government to change from a cash-based to an accrual government accounting system.     

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.     

COMMODITY BALANCES AND NATIONAL ACCOUNTS: A SAM PERSPECTIVE

This paper is concerned with the treatment of commodity and activity balances in a national accounts context. It makes use of a general method for reducing the size of a social accounting matrix (SAM) by apportioning the elements of one or more accounts to the rest. The national accounts are looked at in terms of their usefulness for policy analysis, not least analysis of the impact of price changes. The SNA convention of separately distinguishing activities and commodities is endorsed. However, in contrast to the SNA, it is argued that for analytic purposes commodity transactions should be recorded at market prices, with a separate account for each of the markets for a given commodity in which a distinct price prevails. The SNA SAM is shown to be a reduced form of the SAM resulting from this recommended treatment of commodity transactions, while a further round of reductions (apportionments) yields SAMs which are familiar from input-output analysis, in which activities and commodities are not separately distinguished. It is argued that no special effort would be required to produce SAMs in which commodity balances are recorded at market prices as recommended here (the necessary data are also required to produce the conventional SNA tableaux), and that all reduced form versions of such SAMs, including the SNA, are inferior as a basis for the analysis of price effects on the structure of production.     

FINANCIAL INTERMEDIATION SERVICES INDIRECTLY MEASURED: ESTIMATES FOR FRANCE AND THE U.K. BASED ON THE APPROACH ADOPTED IN THE 1993 SNA

The 1993 SNA proposes a revised treatment of the output of financial intermediaries which treats intermediation services in part as a component of final demand, so that GDP is higher than the 1968 SNA suggests. In this paper we present the results of attempts to estimate FISIM (Financial Intermediation Services Indirectly Measured) for France and the U.K. The French study uses a reference rate calculated to ensure that no imputation is made with respect to own funds, while the U.K. study relies on a market interest rate. Both studies present an allocation of intermediation services by industry as well as by category of demand. The adjustments to GDP are of similar magnitudes in both countries.     

ENVIRONMENTAL ISSUES AND THE SNA

The concept of environmental accounting is developing as the system of national accounts (SNA) is being revised. A basic difference at present is that environmentalists regard natural resources as assets analogous to man-made capital, whereas they are treated as free gifts of nature in the national accounts. In this paper the author examines the consequences for the SNA of adopting the environmentalists approach to capital.     

THE PRESENT STATE OF NATIONAL ACCOUNTS IN LATIN AMERICA

This document attempts to give an overall review of the present situation of national accounts in Latin America, and deals essentially with the statistical basis and procedures used in their preparation. The purpose of these comments is to place the main problems common to all countries in order of priority and, in view of the need to advance and in the face of the task of establishing the present SNA, to discuss briefly the main lines which future work might follow. The stage of development so far reached by national accounts in Latin America is unsatisfactory if compared with the former system recommended by the United Nations two decades ago, and their recent evolution indicates that the rate of progress has fallen behind the advances made in the theoretical field in this connexion, and in relation to the increasing requirements of macroeconomic information for economic planning and policy. This whole picture becomes more meaningful if the objectives, structure and content of the present SNA, that has already been in force for five years, are compared with the present state of national accounts estimates in the region, which reveals the long road that lies ahead and the magnitude of the effort required if the present situation is to show a change for the better. Clearly, little progress can be made unless the basic statistics are expanded in scope and improved. This is the crux of the problem, towards which the greatest efforts and resources should primarily be channeled. It is necessary to adopt a critical approach and concerted action with respect to four aspects which characterize the national statistical systems in Latin America:

• (a) organizational problems and the shortage of human and financial resources;
• (b) the lack of co-ordinated programmes of basic statistics;
• (c) the limited use of efficient methods of collecting data; and
• (d) the insufficient recourse to administrative records.

     

FINANCIAL ACCOUNTS AND BALANCE SHEETS: ISSUES FOR THE REVISION OF SNA

This paper is an abridged version of a report with the same title originally written for the United Nations Statistical Office, as a part of the ongoing review of the System of National Accounts. Its purpose is to identify the issues in the financial statistics area that need to be considered in the course of the review. Particular attention is paid to problems of harmonization of SNA with related standards of the International Monetary Fund. The 1968 SNA provided a place in the framework for financial accounts and balance sheets, but did not develop them in any detail. In the 19 years since the revised SNA was published, policy and analytic interest in financial questions has greatly increased, and much work has been done on conceptual development and statistical compilation of financial statistics, both within and outside of the SNA framework. It is now apparent that some of the early decisions taken when financial considerations were not the focus of attention need reconsideration, some of the makeshift solutions that have grown up over time are no longer adequate, and some issues that have not been dealt with at all need to be addressed. This paper is not intended to propose solutions, but rather to reflect questions that have been raised, and to present alternatives that have been proposed.     

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.     

PRICES AND PRICE ANALYSIS IN THE FRAMEWORK OF THE NATIONAL ACCOUNTS

The paper discusses the role of prices in the framework of the new System of National Accounts (SNA) in terms of three major uses: (1) deflation, (2) price indicators, and (3) price analysis. Following a brief review of the price and quantity measures required by the new SNA with its emphasis on deflation of commodity flows and input-output accounts, in addition to the more conventional deflation of final demand categories, the paper discusses some of the conceptual, methodological and data problems involved in implementing the various uses of prices in the new SNA. Implementing the use of prices as deflators depends, in part, on the concept of output selected (national versus domestic; gross versus net), and which of six concepts of valuation, ranging from purchasers'value to true factor cost, is used. Some of the difficulties in deflating nonmarket flows (e.g., interplant transfers) and industry value added, based on the double deflation method, are discussed. In concept price deflators, which have shifting weights, cannot be used as price indicators, which should have fixed weights. In practice, this is often disregarded and the deflators are used as price indicators. The paper support the SNA recommendation for the development of price indexes with fixed weights to be used as price indicators, in addition to the implicit price deflators. Research in the United States indicates that differences in weights can result in different price measures for various subperiods, components of demand and sector output. Periodic revisions in weights to provide more current fixed weights for price and quantity indexes in each subperiod may minimize the problem but it introduces a new problem—lack of comparability with the constant price tables in the SNA which have fixed weights for the entire period. The new SNA provides a comprehensive and integrated framework for price analysis including the analysis of the structure of aggregate price changes, the industrial origin of final demand prices, and the impact of price change in one sector of the economy on the rest of the economy. Some major gaps which need to be overcome in order to implement the use of the new SNA for price analysis include the development of industry capital stock estimates, separate estimates of proprietors’income, reconciliation of value added and distribution share estimates, and the development of a wide variety of information to supplement the conventional input-output tables in the SNA. Implementing the various objectives of price measures within the framework of the accounts will require a number of improvements in existing price measures and expanding the scope of coverage. “List” prices should be superseded by “transactions” prices and better techniques and data need to be developed to provide for quality adjustment of prices. Coverage will need to be expanded to include services, freight rates, trade margins, government expenditures, and also fill in gaps for many manufactured products. Finally, where possible, use of unit values as price indexes or deflators, e.g., imports and exports, should be replaced by direct price measures.     

SOCIAL MATRICES AND INDICATORS IN THE TRADITIONAL AFRICAN ECONOMY

This paper discusses the relevance of the conventional national accounts systems to the traditional African economy and concludes that they contribute little because they omit certain economic activities and fail to recognise the reciprocity between social and economic activities. Social accounting is thus more relevant. Lack of statistical data may make it necessary to conduct special surveys and in some cases a tribe or village or economic region may be a more useful accounting unit than a nation. A modified system of accounts is suggested, based on the frame work of the four consolidated accounts of the SNA. It provides linkages to many more nonmonetised activities. Other linkages would be provided through supporting tables emphasising social activities and transfers. A system of transactor accounts in matrix form is also suggested. In the case of communities smaller than the nation several external transactor sectors could be included. It is recognised that the problem of evaluation of social activities and a number of economic activities remains to be solved and it is concluded that "time spent" may be the only common unit or value to equate such activities.
The final section deals with investment in human resources and proposes a balance sheet approach to indicative planning. This exercise would be related to demographic projections in several variants. Other factors to be analysed dynamically would be education and health status, public finance and, ultimately, distribution of income and wealth since it is noted that the process of monetisation is having an impact which may have important welfare implications.     

THE TREATMENT OF INTEREST AND FINANCIAL INTERMEDIARIES IN THE NATIONAL ACCOUNTS OF AUSTRALIA

This paper is divided into two main sections. The first part summarises briefly the main points which have arisen in the lengthy debate over the treatment of banking intermediaries in the national accounts. The discussion emphasises the method adopted in the early Australian accounts when banks were treated in the same way as the general government. It is argued that this method is simpler and provides a more realistic account of the functions of banks than the current SNA proposal.
The second part of the paper examines the functions of banks in Australia. It uses data of interest and administration cost for separate banking institutions to examine the incidence of bank costs. It is concluded that the costs do not fall on borrowers or lenders but are a charge in providing a communal service in the establishment and maintenance of the financial system.     

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.     

THE TREATMENT OF PENSIONS AND INSURANCE IN NATIONAL ACCOUNTS*

In the course of the nearly two decades since the revised SNA was developed, the role of pensions and insurance in the developed western economies has been significantly altered. The United Nations System of National Accounts (SNA) is not fully consistent in its treatment of pension and insurance transactions. This paper examines whether, in view of the changed institutional context, a modification of the SNA treatment of this complex of flows would be desirable. It investigates the impact on household income and saving of adopting a somewhat more consistent transactor/transaction approach for all pension and insurance transactions. Four main topics are covered: (1) social security, (2) private pensions, (3) life insurance, and (4) casualty insurance. Each is considered in terms of the treatment of contributions, the treatment of benefits, and the handling of reserves and the income generated by them. The same sorts of problem arise in all four cases.     

AN ECONOMIC CORE SYSTEM AND THE SOCIO-ECONOMIC ACCOUNTS MODULE FOR THE NETHERLANDS

In this article the authors discuss some elements of the structure of an overall integrating system of economy-related statistics. First of all attention is paid to the core of such a system. Next, the various types of modules which could supplement this core are described. Modules with a social connotation are discussed with the help of the Socio-economic Accounts which have been developed recently in the Netherlands. Finally, the link between the Socio-economic Accounts and the National Accounts Core System is addressed and numerically illustrated.