FISIM in the EU Brian Newson Eurostat

History SNA93 offers option: allocate or not. ESA95 compulsory, required no allocation, but Task force began immediately to define methods.

Methods tested 1. interest receivable on loans between OMI + OFI stocks of loans between OMI + OFI 2. Method 1 plus interest on securities 3. Short-term as 1 and long-term published rates 4a. Average lending and borrowing rates FI versus other sectors 4b. Average 1 and 4a 4c. Average 2 and 4a

Results of test period FISIM can be reasonably allocated Beyond a certain point sophistication of methods not worthwhile. average increase of GDP 1,3 % negative FISIM ? occasionally (“sticky” rates) structurally (cross-subsidisation)

Method adopted (1) Reference rates derived from data interest receivable on loans between OMI + OFI stocks of loans between OMI + OFI allocate on loans and deposits of FI because the FI only control those. Requires data to separate: households final/intermediate consumption, transactions non-residents (X,M)

Method adopted (2) Central Bank output Industry breakdown sum of costs, because normal method enormous Industry breakdown allocation based on stocks of loans + deposits for each industry, otherwise output. Constant prices base year margin x (stocks loans + deposits)/Ip

Implementation In 2005 all 25 EU Member States must supply NA with FISIM allocated back data to 1995.