Price and volume measures for government output Overview of EU legal requirements 26-27 May 2005

General background Harmonisation of GDP growth figures became a priority in 1997 -> intensive work program ESA95 rules considered not to be sufficient to ensure comparable figures Commission Decision 98/715 defined various important issues such as chaining Research program was set up involving all Member States Non-market services crucial element in view of importance for GDP 26-27 May 2005

Work on non-market output Four Task Forces between 1998 and 2000 (2 on health, 1 on education and 1 on public administration) Many discussions in NAWG leading up to Price&Volume Handbook, published in December 2001 After publication of Handbook, many countries received Eurostat grants for its implementation, in particular on non-market 26-27 May 2005

A, B and C methods A methods: ideal B methods: acceptable alternatives C methods: unacceptable 26-27 May 2005

Available methods for measuring the volume of non-market output Input methods Deflation with input price indices Extrapolation with input volume indices Productivity adjustments Volume indicators Activity Output Outcome 26-27 May 2005

Input, activity, output and outcome Inputs: what is used to produce outputs; eg number of doctors and nurses Activity: what is done with the inputs; eg number of operations in hospitals Outputs: what is produced with the inputs and consumed by users; eg number of treatments Outcome: effect of the output; eg change in life expectancy 26-27 May 2005

Criteria for appropriate use of output indicators Full coverage of services provided to external users Cost-weighted Defined as detailed as possible Quality adjusted 26-27 May 2005

Quality changes Three approaches: Direct measurement of quality Measuring the quality of inputs Using outcomes 26-27 May 2005

A, B and C methods for individual services: A methods: output indicators satisfying all four criteria B methods: output indicators not satisfying all four criteria C methods: input methods volume indicators relating to inputs, activities or outcome (unless outcome = quality-adjusted output) non-representative output indicators 26-27 May 2005

A, B and C methods for collective services Basically the same as for individual services, with two exceptions (because of difficulties in defining output): Input methods are B, provided: Each input separately deflated Inputs quality adjusted NO productivity adjustments Activity indicators are B 26-27 May 2005

Commission Decision 2002/990 For individual non-market services: input methods are banned from 2006 For collective non-market services: input methods need to be improved to comply with the above criteria Eurostat is now checking the “Price and Volume Inventories” of Member States to assess compliance 26-27 May 2005