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

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

3. 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

4. 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

5. 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

6. 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

7. 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

8. Balancing: Current and constant prices
Six Pack
CUP Price index
COP volume index
T-1 value index

9. 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

10. 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

11. 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

12. EXERCISE

13. 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

14. 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

15. 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

16. 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

17. 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

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