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Central Statistics Office
Institutional Sector Accounts Non-Financial
Mary Brew
Integration Division
National Accounts UCC 16th March 2011
Recap
Session 1 – Key Social Indicators Session 2 – Key Business Indicators Session 3 –
Balance of Payments – Ireland’s globalised economy
Quarterly National Accounts – Headline indicators of total economic activity
Session 4 – Measures other than GDP
The Stiglitz, Sen, Fitoussi Commission Report (2009)
The report was written by economists and social scientists
To Political Leaders, Policy Makers, The Academic Community, Statisticians and Civil Society Organisations
To identify the limits of GDP as an indicator of economic performance & social progress
To recognise other relevant measures e.g. household income, consumption and wealth
European Sector Accounts
Outcome of collaboration between Eurostat, the European Central Bank, National Statistical Institutes and National Central Banks
Output for Euro Area – 16 countries and European Union – 27 countries
Detailed economic development by institutional sector at current prices
Key ratios – e.g. household saving rate
Institutional Sector Accounts
3 approaches to measuring National Income Output – Value added by each producer
Σ output - Σ intermediate consumption + net product taxes
Income – All income generated Σ COE + GOS/GMI + net taxes Expenditure – All spending on final demand
C + I + G + X - M
Three Measures of GDP
Three measures of GDP 2009 (€m)
Value Added Income Expenditure
Output 348,545COE 73,224Consumption (including G) 112,049
+ Taxes on products 16,234GOS/GMI 70,620Investment 23,195- Subsidies on products 808+ Taxes 18,372+ Exports 144,782 - Intermediate Consumption 204,325- Subs 2,571- Imports 120,380
GDP 159,646 159,646 159,646
Institutional Sector Accounts Vertical analysis
Provides by institutional sector a systematic description of the different stages of the economic process
Horizontal analysis
Institutional sectors are distinguished in terms of their principal economic behaviour
Generation of Income Account
Resources S.1 S.11 S.12 S.13 S.14/S.15 S.1N S.2
B.1g Gross domestic product 159,646 75,098 14,063 21,956 33,850 14,678
D.3 Subsidies, received 2,571 166 0 0 1597 808
D.31 - Subs on products 808 808
D.39 - Other subs on production 1,763 166 0 0 1597
R211 Total resources 162,216 75,265 14,063 21,956 35,446 15,486
Uses
D.1 COE 73,224 35,012 6,007 19,817 12,387 405
D.2 Taxes paid 18,372 1563 97 0 478 16,234
D.21 - Taxes on products 16,234 16,234
D.29- Other taxes on production
2,138 1563 97 0 478
B.2g GOS 58,377 38,689 7,959 2,139 10,338 -748
B.3g Mixed income 12,243 12,243
U211 Total uses 162,216 75,265 14,063 21,956 35,446 15,486
Institutional Sectors (Horizontal Analysis)
Mutually exclusive institutional sectors that make up the total economy
» Non-financial corporations
» Financial corporations
» General Government
» Households
» Non-profit institutions serving households
Rest of World
Sequence of Accounts(Vertical Analysis)
Institutional Sector Accounts are built around a sequence of inter-connected accounts» current accounts
– Production, generation, allocation, distribution and use of income
» accumulation accounts– Financial and non-financial accumulation
» balance sheets Linked sequentially
» Balancing item from one account provides the starting point for the next account
Production - GDP
Generation of Income - GOS
Allocation of Primary Income
- GNI
Secondary Distribution of Income - GDI
Use of Disposable Income - Saving
FinancialBalance sheet
Sector Accounts
Capital Accounts – Net Lending/Borrowing
Financial Accounts
Non-Financial Accounts
Current accounts distinguish between:
resources – transactions that add to the amount of economic value of a sector
uses – transactions that reduce the amount of economic value of a sector
Household Sector€-15,797,
Social Contributions D 61
Current Accounts
Production account measures the output of goods and services and the value of goods and services used in making them
Output – intermediate consumption = GVA
GVA + (taxes – subsidies on products)=GDP
GDP – consumption of fixed capital = NDP
Balancing item = Net domestic product
GVA: Output – Intermediate Consumption
Current Accounts
Distribution and use of income accounts» Generation of income account – How is net
domestic product distributed to the factors of production:
Compensation of employees (labour)
Taxes less subsidies on production (government)
Balancing item: net operating surplus/mixed income
Profit Share of Non-Financial Corporations
Current Accounts
» Allocation of primary income account – primary income is received from direct participation in the production process and from ownership of an asset put at the disposal of another
Balancing item – net national income ( the balance of primary income)
Memorandum – entrepreneurial income account – Financial and non-financial corporations – balancing item corresponds to the concept of current profit as used for business accounting.
Current Accounts Secondary distribution of income account –
shows how the balance of primary income is redistributed through:» Current taxes» Social contributions and benefits and» Other current transfersBalancing item – net disposable income
Use of disposable income account – how disposable income is divided between final consumption expenditure and savingBalancing item - saving
Annual change in Household Net Disposable income and Household Final
Consumption
Household Saving Ratio
Accumulation Accounts Accumulation accounts record the changes in the
assets and liabilities of sectors and the change in their net worth
Capital account
» Change in net worth due to saving and capital transfers account
Balancing item – changes in net worth due to saving and capital transfers
» Acquisitions of non-financial assets account
Balancing item – net lending or borrowing Financial account
Investment Rate of Non-Financial Corporations
Investment Rate of Households
Net Lending/Borrowing
Household Net Lending/Borrowing
Rest of World
External account of goods and servicesbalancing item – external balance of goods and services (imports – exports)
External account of primary incomes and current transfersbalancing item – current external balance (corresponds to saving by the institutional sectors)
Capital accountbalancing item – net lending or borrowing (equal, but with the opposite sign, to net lending or borrowing of the resident institutional sectors)
Analytical Potential of Sector Accounts
The Economy Gross Value Added Net Lending/Borrowing
Households Household Net Disposable Income and Final
Consumption Household Saving Rate - Calculated in % as: gross
saving / gross disposable income (D8* is included)
Analytical Potential of Sector Accounts
Investment Rate of Households - Calculated in % as: gross fixed capital formation / gross disposable income (D8* is included
Household Net Lending/Borrowing
Non-Financial Corporations Profit Share of Non-Financial Corporations -
Calculated in % as: gross operating surplus / gross value added of non-financial corporations
Investment Rate of Non-Financial Corporations - Calculated in % as: gross fixed capital formation / gross value added of non-financial corporations
Analytical Potential of Sector Accounts
Government Government Income Government Expenditure Government Savings and Net
Lending/Borrowing
Government Income
Government Expenditure
Government Saving and Net Lending/Borrowing
Production - GDP
Generation of Income - GOS
Allocation of Primary Income
- GNI
Secondary Distribution of Income - GDI
Use of Disposable Income - Saving
FinancialBalance sheet
Institutional Sector Accounts
Capital Accounts – Net Lending/Borrowing
Financial Accounts
Central Statistics Office
Thank You