Part II. Supply and Use tables 1 November 2006 BALANCING Dirk van den Bergen Statistics Netherlands: National accounts in Practice

Dataflow Source statistics Adjustments to NA requirements Input Output Division Balancing of the supply and use tables National Accounts

Part II. Supply and Use tables 1 November 2006 Basic identities Supply table Production Import Producers Goods and services  Supply of producers  total supply of goods and services Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Basic identities Production Import Producers Goods and services  Supply of producers  total supply of goods and services Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Basic identities Production Import Producers Goods and services  Supply of producers  total supply of goods and services Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Basic identities Supply = Demand Row totals are equal for each commodity group Statistics Netherlands: National accounts in Practice

Balancing: Current and constant prices Simultaneously balancing of cup and cop Indices: Price index (Paasche) Volume index (Laspeyres) Value index Levels: Current price Constant price T-1 data

Balancing: Current and constant prices Six Pack CUP Price index 75 1.03 COP volume index 73 1.04 T-1 value index 70 1.07

Part II. Supply and Use tables 1 November 2006 Balancing Cause of inconsistencies in data at the unit level: insufficient coordination - Differences in units Multinational enterprises mistakes - Wrong period in survey data - Using wrong definitions - Inconsistent data incomplete data - No data on change in stocks - Hidden economy Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Causes of inconsistencies at the statistical office: source statistics - Incorrect product allocation - Incorrect grossing up of sample In the National accounts department No estimate of hidden transactions No / incorrect correction for production abroad - Mistakes in the break down of unspecified items Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Simultaneous balancing Fulfil basic identities in current and constant prices - supply = use - output = input - value change = volume change * price change Plausible (volume)ratio’s - production and intermediate consumption - production and value added Plausible changes in labour productivity Plausible price changes per commodity Statistics Netherlands: National accounts in Practice

EXERCISE

Part II. Supply and Use tables 1 November 2006 Exercise on balancing Simultaneous balancing: an example All exports of goods are produced by industry A Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Objectivity is hard to obtain Theory: identify causes of inconsistencies Practice: cause often not found (completely) Remainder “solved” by specialist Each with own preferences and prejudices Result: imperfect national accounts Not reproducible Dependent on specialist Solution: more automated balancing Of probleem kan niet worden opgelost: belastingen Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Balancing process Partly manual, partly automated (“balancing machine”) Advantages automation More efficient Reproducible Disadvantages automation Uses no outside information Sometimes too simplistic Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Balancing process Manual: large inconsistencies Extra research required Outside information is used Automated: other Small inconsistencies Inconsistencies with known cause Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 Balancing Process still not completely objective Subjectivity remains in Determining quality of data sources Non-statistical error is often larger than statistical error Determining which inconsistencies are “large” Balancing of large inconsistencies error may be found, but size of error remains unknown “Plausible” solution may be best there is Statistics Netherlands: National accounts in Practice

Part II. Supply and Use tables 1 November 2006 BALANCING Statistics Netherlands: National accounts in Practice