F. Lenglart, J. Magniez, A. Vanoli December 2nd, 2010 Which way forward for national accounts ? An overview

Page 2 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Which way forward for national accounts ? The central framework : what is not changing ? what is changing ? which open issues ? Income distribution and well-being : - breaking down the households account into categories - articulation with social satellite accounts Micro/macro articulation in the enterprises sector National accounts and globalization of production processes Interactions Economy / Nature Implementation: which governance ?

Page 3 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 The central framework(1) No change Reference units grouped into few institutional sectors An accounting framework including current accounts, accumulation accounts and balance sheets specificity: « capital gains » accounts Classifications: transactions, other flows, assets and liabilities Accounting rules Are part of the central framework IOT – including data on production factors volume-price decomposition Estimates are mostly derived from observed data; modelling takes up limited room

Page 4 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 No change - Beyond GDP Net macro aggregates Disposable income and adjusted disposable income The link between flow accounts and balance sheets accounts : the three origins of the changes in net worth Production is still a key concept : the necessary equality between value added and income (at the global level) Possibility to use revaluation accounts to undertake additional analyses The central framework(2)

Page 5 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Innovations et open issues Innovations (SNA08) Welcome ones… Treatment of R&D as fixed asset Evaluation of pension entitlements, whatever the kind of pension scheme considered … and a less happy one Treatment of military equipment as fixed asset Open issues Output measurement for financial activities Improvements in price/volume measurement (GFCF, non market) An economy of products for free The central framework(3)

Page 6 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Why ? HH account : An indispensable account, built up directly at a macro level by way of « mirroring », thanks to the central NA framework… …that says however nothing about the heterogeneity of individual situations Bridging micro and macro approaches, on the basis of HH surveys : knocking down the « dictatorship of average figures », while enhancing their credibility A productive dialogue between specialists in micro social statistics and national accountants, that can trigger quality enhancement of statistics produced on both sides Income distribution and well-being Breaking down the households account by groups (1)

Page 7 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 First results (for France) HH account by category - standard of living, household composition, employment status, age of the head of household - in 2003 : income, final consumption expenditure, actual final consumption Work to undertake Complete the breaking down exercise to capital account, financial accounts and balance sheets (in practice, only the last one seems attainable at medium term for France) Produce an evaluation of HH account by category in evolution Coordinate this type of work at international level (see OECD/Eurostat recent initiatives) Income distribution and well-being Breaking down the households account by groups (2)

Page 8 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 exemple : education Within the scope of NA –Factors of production (nb of teachers, schools) –Volume of service output (nb of students, successful exams) –Taking into account a quality effect (reasoning « every things being equal » for succeeding in an exam) Outside the scope of NA –Well-being derived from the use of education services, which depends upon the volume of services provided but also of other factors (students leasure time, socio-cultural environment…) Social satellite accounts should be designed to present ressources put at disposal by the economy and well-being indicators Income distribution and well-being Link with social satellite accounts

Page 9 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Work to undertake Breaking down the non financial corporations into categories : small/medium/large, public/private, listed/ unlisted on stock markets Possible to compile production and generation of income accounts using existing business statistical sources ; Investigate the feasibility of the compilation of distribution of income account For the purpose of this project, it is necessary to raise the issue of the reference statistical unit : switching from the legal unit to the « real » corporation from an economic point of view, profiling multinational enterprises in « operational divisions » Micro/macro linkage in the enterprises sector

Page 10 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 MNEs development is weakening the estimation quality of national macroeconomic aggregates Large and increasing part of exchanges in goods and services and of distributive transactions between the national economy and the RoW are « intra-OD » Work to undertake Distinguishing within the corporation sector « resident corporations » and « resident subsidiaries of multinational corporations» Compiling a complete account of multinational corporations that are (partially) resident Systematically distinguishing in SUT the transactions on products taking place within a same economic unit National accounts and globalization of production processes(1)

Page 11 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Today: M + P = IC + C + GCF + X Tomorrow : Within economic unitsM + P = IC + C + GCF + X Between economic unitsM + P = IC + C + GCF + X multinational country National accounts and globalization of production processes(2)

Page 12 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Put the emphasis (also) on final demand Estimate physical quantities of pollutants due to final demand products ( carbon footprint for instance) Evaluate ecological hidden costs, in monetary value Increase the value of final demand = costs payed (price) + ecological costs not payed related to damages to environmental assets Interactions Economy / Nature (1)

Page 13 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 An enlarged central framework - 1 Nature Economy planet Interactions Economy / Nature (2)

Page 14 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 An enlarged central framework - 2 Economy central framework Economy enlarged central framework nature Final demandFD+ ecological costs SavingS- ecological costs + capital transfer - capital transfer Balance sheet variation NetValue = S NetValue = - ecological costs Interactions Economy / Nature (3)

Page 15 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Work to undertake Produce « footprint » accounts by type of pollutants on a regular basis How to estimate unpaid ecological costs in monetary value ? Launch pilot operations Interactions Economy / Nature (4)

Page 16 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Large improvements to make on concepts, methods and information to be collected Develop international statistical collaborations (exchanges and co- production of statistical information) and inter-disciplinary collaborations (statistics, economy, engineer sciences, social sciences) A logic of « clusters » : experiment before launching large scale projects under the umbrella of international comparisons. Building up Purchasing Power Parities at a global scale: a governance model to follow ? Implementation: which governance ?

Page 17 F. L., J.M., A.V. OECD WPNA December 2nd, 2010 Thank you for your attention