1. Output Intermediate consumption and Value added (production method)
Part II. Supply and Use tables
31 October 2006
Output Intermediate consumption and Value added (production method)
Piet Verbiest
Intro zelf
Doel en opbouw van deze module
Mededelingen over de rest van de cursus
Vragen en opmerkingen tijdens de les
AGT van 1993 op P-serie niveau uitreiken
Statistics Netherlands: National accounts in Practice

2. BASIC TERMINOLOGY

3. EXERCISE

4. Part II. Supply and Use tables
31 October 2006
PRODUCTION
An ACTIVITY carried out under the control and responsibility of an institutional unit that uses INPUTS of labour, capital, and goods and services to produce OUTPUTS of goods and services
Note: a purely natural process is not production; nor are windfall profits/losses; almost every other (economic) activity is!
Statistics Netherlands: National accounts in Practice

5. Part II. Supply and Use tables
31 October 2006
PRODUCTION
Included in SNA production are:
fraud, underreporting
illegal production
goods produced by households for their own consumption
goods and services supplied free to employees [income in kind]
Statistics Netherlands: National accounts in Practice

6. Part II. Supply and Use tables
31 October 2006
PRODUCTION
Excluded from SNA production are:
All household activities that produce domestic or personal services for OWN final consumption within the same household, EXCEPT paid domestic staff and services of owner-occupied dwellings
Examples:
caring for children, the sick or elderly
preparation of meals
washing, cleaning
small repairs
etc.
Statistics Netherlands: National accounts in Practice

7. Part II. Supply and Use tables
31 October 2006
PRODUCTION
Why exclude certain household activities?
self-contained, limited influence on the rest of the economy
vast majority is not produced for the market > difficult to estimate values
difficult to interpret:
received and imputed income are not really comparable
it would eliminate the concept of unemployment
Statistics Netherlands: National accounts in Practice

8. Part II. Supply and Use tables
31 October 2006
PRODUCTION
Market output
Non-market output
Statistics Netherlands: National accounts in Practice

9. Part II. Supply and Use tables
31 October 2006
PRODUCTION
MARKET OUTPUT:
The total value of
goods and services sold at economically significant prices;
goods and services bartered;
goods and services used for payments in kind;
goods and services supplied by one establishment to another within the same enterprise;
changes in inventories of finished goods and work-in-progress intended for one of the above uses
Statistics Netherlands: National accounts in Practice

10. Part II. Supply and Use tables
31 October 2006
PRODUCTION
NON-MARKET OUTPUT :
goods and services produced for own final consumption or gross fixed capital formation;
goods and services supplied free, or at economically insignificant prices, to other institutional units;
goods and services supplied by one non market establishment to another;
changes in inventories of finished goods and work-in-progress intended for one of the above uses
Statistics Netherlands: National accounts in Practice

11. Part II. Supply and Use tables
31 October 2006
NON-MARKET PRODUCERS
Examples: government production, health services, cleansing services
no value of output in market prices
value of output is defined as sum of total costs (incl. consumption of fixed capital)
-> net operating surplus is zero
Statistics Netherlands: National accounts in Practice

12. Part II. Supply and Use tables
31 October 2006
NON-MARKET PRODUCERS
Example
Costs of:
Energy
Renting
Office needs
Staff
Consumption of fixed capital
Output
Statistics Netherlands: National accounts in Practice

13. EXERCISE

14. PRODUCTION: Special Items

15. PRODUCTION VALUE OF TRADE
Part II. Supply and Use tables
31 October 2006
PRODUCTION VALUE OF TRADE
Production value = trade margin
+ sales of goods purchased for resale
- purchases of goods for resale
+ change in inventories of goods for resale including normal losses due to:
wastage
theft
= trade margin
Statistics Netherlands: National accounts in Practice

16. VALUATION OF INVENTORIES
Part II. Supply and Use tables
31 October 2006
VALUATION OF INVENTORIES
SNA recommends Perpetual Inventory Method (PIM) for valuation of inventories
Basic principles:
additions to inventories are valued at prices of the moment of production or purchase
withdrawals from inventories are valued at prices that would have been paid at the moment of withdrawal
Statistics Netherlands: National accounts in Practice

17. EXERCISE

18. Intermediate Consumption

19. INTERMEDIATE CONSUMPTION
Goods and services consumed as inputs by a
process of production
Points of attention:
* delineation with fixed assets
- small tools
- intangible assets
- military weapons
- software

20. INTERMEDIATE CONSUMPTION
Goods and services consumed as inputs by a
process of production
Points of attention:
* delineation with value added
- wages in kind
- reimbursements
- FISIM

21. Part II. Supply and Use tables
31 October 2006
INTERNAL DELIVERIES
Internal deliveries within a kind- of-activity unit are not recorded
Exceptions:
adding to stocks/work in progress
production for own final use
Statistics Netherlands: National accounts in Practice

22. Value added (Components of value added: income method)
Part II. Supply and Use tables
31 October 2006
Value added (Components of value added: income method)
In the S+U table rows
Statistics Netherlands: National accounts in Practice

23. Part II. Supply and Use tables
31 October 2006
GENERATION OF INCOME ACCOUNT
USES
RESOURCES
Compensation of employees -
Value added
Taxes on production minus
subsidies on production
Consumption of fixed capital
BI= net operating surplus or
mixed income
TOTAL
Statistics Netherlands: National accounts in Practice

24. Output Intermediate consumption and Value added
Part II. Supply and Use tables
31 October 2006
Output Intermediate consumption and Value added
Statistics Netherlands: National accounts in Practice