Suggestions for an NTA Satellite, an SNA Point of View

By Dr. Jan W. van Tongeren ,

International Consultant on SNA and Macro Accounting for Policy Analysis,

Delft, Netherlands, email: jwvtongeren@gmail.com

1

Suggestions for an NTA Satellite, an SNA Point of View

Themes dealt with

2

I. Concepts of SNA analysis

II. Concepts of NTA analysis

III. Review of NTA concepts

IV. NTA compilation

I. SNA analysis

3

2010 Netherlands SNA Data

4

Policy analyses supported by SNA accounts and concepts, SUT

5

Production Account

Value added -production approach:

:

Generation of Income Account

Value added -income approach:

Product accounts

Supply Use balances

GDP/Value added expenditure approach

Policy analyses supported by SNA accounts and concepts, IEA

6

Primary distribution of income account

= same identity holds for & Prop

Secondary distribution of income account

= +

=

Use of income account

Capital account

While SNA is a double bookkeeping system, please note that not all items (receipts and expenditures) are used to define major SNA concepts. Only receipts and expenditures of Ce, Prop, Trcur, and Trcap are needed to define ; &

II. NTA analysis

7

Analysis supported by NTA Accounts and Concepts

8

SNA Saving

Operating surplus & Mixed Income

NTA Life cycle deficit

NTA Satellite with 2010 Netherlands data

9

Selection SNA Variables (received and paid) for Use in NTA, NTA balances, general principles

10

NTA Life cycle deficit

National saving () using selected items of Prop & Trcur will only remain the same if following condition holds:

= 0

This conditional identity could be implemented by identifying for each expenditure a supporting revenue and vice versa for each receipt the expenditure for which it is used

By selecting all SNA Prop and Trcur variables, same age profiles of counterpart variables may neutralize impact on age profile of saving

Age profile

Age profile

Age profile

etc. etc.

By selecting a limited nr. of Prop and Trcur variables, under identity conditions as formulated, the number of artificially imputed age profiles may be considerably reduced

(Tentative) Selection SNA Variables for Use in NTA, practical implementation with 2010 Netherlands data

11

Included: All items in HH sector

Included: All items of GOV and NPI sector (related to financing GOV and NPI consumption)

However, Excluded: All counterpart of items in HH, NPI and GOV sector

Excluded: All items of NFC and FC sectors that have counterparts in NFC and FC sectors

In the selection a decision needs to be taken whether revenue or expenditure items should be selected

III. Review of NTA concepts

12

Social Transfers in kind should not be included in NTA

13

Mixed income should be imputed for HH durables, no capital component of mixed income of non-market output (?)

14

Production taxes and subsidies may not be deducted from HH final consumption

15

A distinction should be made between pension premiums and benefits of funded and unfunded schemes

16

A distinction should be made between labour income and remittances to/from abroad

17

Current transfers versus Capital transfers, criteria

18

Capital transfers only occur if an ASSET is transferred

Concept of asset may be changed between SNA and satellite accounts (e.g. HH durables, human capital and expenditures on education and health, R&D)

Capital transfers may be in CASH and IN-KIND

Capital transfers IN-KIND may concern TANGIBLE, INTANGIBLE AND FINANCIAL assets

Capital transfers if one of the parties considers the transfer as a capital transfer (e.gh. Development aid based on current GOV budget)

For total economy K=Snal + Srow; for sectors K=S + TrCap + Lfin

Current transfers versus Capital transfers, examples

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Transfer of house between parents and children (in-kind)

Transfer of funds between parents and children under condition that they purchase a house (cash)

Reimbursement by insurance companies for damage to buildings, equipment, infrastructure, caused by fire and adverse weather conditions (cash)

Transfer of defense and other equipment between GOVs (in-kind)

Funds provided by GOVs to GOVs for building roads and other infrastructure (cash)

Transfers between parents and children for purposes of education provided human capital is recognized as asset in satellite accounts

Cancellation of debt between GOVs and between parents and children

Large donations by individuals and enterprises to NPIs (universities, research centers, etc.), presumably for purposes of investment

Bequests to children at death of parent (not explicitly mentioned in SNA)

IV. NTA compilation

20

NTA Compilation, NTA Manual

21

Adjust micro data by age groups based on HH related surveys to Macro (SNA) Totals

NTA Compilation, Conventional SNA compilation

22

Available data are incomplete; in annual compilation basic data cover approximately 50% of SNA variables

SNA structures of benchmark compilation (e.g. i-o coefficients) are used to complete needed information to estimate variables for which no basic data are available

SNA identities (e.g. supply-use identities, IEA distribution of receipts and expenditures) are used to arrive at consistent estimates

Including new micro HH data by ages implies that SNA compilation would need to be revised; estimates of Macro Totals would be changed if this information had been available at the time of the SNA compilation

NTA Compilation, Bayesian Compilation in SNA and Satellite Frameworks

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Formalization of Bayesian estimation approach manually used in conventional national accounts compilation

Bayesian estimation approach uses four inputs:

Basic data of selected variables: age structure micro data, SNA macro estimates

Ratios: age structure composition of micro HH data, SNA coefficients: i-o coefficients, tax ratios, structure of composition of HH disposable income

SNA identities, identities between Macro-totals and sum of micro HH data

Prior reliabilities (standard deviations) of basic data on variables and ratios

Results of Bayesian estimation:

Posterior (adjusted) Bayesian estimates of all variables and ratios that are consistent,

Posterior standard deviations of all variables and ratios

Final consumption expenditure

167,065262,6555,155434,875

Labour income

201,69517,36059,207328,99652,4632,599328,996333,3245,4271,099

Net social contributions

5,23548,26087,225439139,96955141,214139,9692841,529

Social benefits other than social transfers in kind

5,23533,19468,798105,66543955105,665107,7212,304248

Taxes less subsidies

10,1813,264132,295-21257,62822132,295133,4471,995843

Net non-life insurance premiums

2,56513,9561,45430811,4653613,95615,8282,040168

Non-life insurance claims

2,5651,45413,95630811,4653615,82813,9561682,040

Miscellaneous current transfers

816103,229111,11311,13914,0536,4383,038120,806129,02012,7614,547

Operating surplus, net

82,57620,155102,731102,731

Property income

49,18870,891200,586210,70216,49111,79139,62416,68840814306,297310,086195,151191,362

Saving, net (SNA)

49,7077,003-19,52710,691-1,36146,513-29,866

NPISH'sTotal economy

Rest of the

world

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

ReceiptsReceipts

Disburse-

ments

Receipts

Disburse-

ments

Table 2f Example of ideal data conditions: SNA

variables selected for incorporation in NTA,

excl. counterpart variables

(actual figures)

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Non-financial

corporations

Financial

corporations

General

government

Households

Requires more detail to

identify counterpart

items

Requires more detail to

identify counterpart

items

General

government

HouseholdsNPISH's

Disposable income, net

147,538258,1263,794

Final consumption expenditure

167,065262,6555,155

Individual consumption expenditure

100,392262,6555,155

Collective consumption expenditure

66,673

Saving, net, NTA

-19,527-4,529-1,361

Social transfers in kind

-100,392105,547-5,155

Adjusted disposable income, net

47,146363,673-1,361

Actual final consumption

66,673368,202

Actual individual consumption

368,202

Actual collective consumption

66,673

Saving, net, NTA

-19,527-4,529-1,361

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Table 2a HH final Consumption and Social

Transfers in kind

Before

"Adjustment for

the change in

pension

entitlements"

Households

Disposable income, net, SNA

258,126

Disposable income, net, NTA

260,126

Mixed income of owner-occupied dwelling services

5,000

Mixed income of services of HH durables

2,000

Mixed income of other non-market products

10,000

Mixed income for market output

17,890

Other disposable income

225,236

Final consumption expenditure, SNA

262,655

Final consumption expenditure, NTA

260,655

Consumption of owner-occupied dwelling services

5,000

Consumption of services of HH durables

2,000

Minus: consumption of HH durables

-4,000

Consumption of other non-market products

22,684

Consumption of market products

234,971

Saving, net, SNA

-4,529

Saving, net, NTA

-529

Receipts

Disburse-

ments

Table 2b HH durables and mixed income

General

government

HouseholdsNPISH's

Final consumption expenditure (in market prices)

167,065262,6555,155

Taxes less subsidies

Taxes on production and imports

71,363

Taxes on products

64,303

Other taxes on production

7,060

Subsidies

-9196

Subsidies on products

-3549

Other subsidies on production

-5647

Table 2c Product taxes and subsidies

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Non-financial

corporations

Financial

corporations

General

government

HouseholdsNPISH'sTotal economy

Rest of the

world

Social contributions and benefits in cash

Net social contributions

5,23548,26087,225439139,96955141,214139,9692841,529

Actual social contributions, pensions

47,94247,26447,94247,264678

Actual social contributions, non-pensions

83,10982,54283,10982,542284851

Imputed social contributions

5,2353184,11643910,1635510,16310,163

Social benefits other than social transfers in kind

5,23533,19468,798105,66543955105,665107,7212,304248

Social benefits, pensions

32,87632,04432,04432,876832

Social benefits, non-pensions

5,23531868,79873,6214395573,62174,8451,472248

49,70722,069-19,527-4,529-1,36146,359-29,712

Adjustment for the change in pension entitlements

-15,06615,220154-154

49,7077,003-19,52710,691-1,36146,513-29,866

Saving, net, before "Adjustment for the change in

pension entitlements"

Saving, net, after "Adjustment for the change in

pension entitlements"

Receipts

Disburse-

ments

Table 2d Pension premiums and claims

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Receipts

Disburse-

ments

Non-financial

corporations

Households

Rest of the

world

Labour abour income

5,4271,0995,4271,099

Current transfers

Remittances, to/from ROW

4551,2761,276455

Disburse-

ments

Receipts

Compensation of employees, to/from ROW

Table 2e Labour income and remittances

Receipts

Disburse-

ments

Receipts

Disburse-

ments