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Capital Boundaries. CES seminar MEASURING CAPITAL – BEYOND THE TRADITIONAL MEASURES Session II: Capital boundaries in the revision of the System of National Accounts 1993 Walter Radermacher Geneva 12 June 2007. Papers . Capital Measurement in the Netherlands

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Capital boundaries l.jpg

Capital Boundaries

CES seminar

MEASURING CAPITAL – BEYOND THE TRADITIONAL MEASURES

Session II: Capital boundaries in the revision of the System

of National Accounts 1993

Walter Radermacher

Geneva 12 June 2007


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Papers

  • Capital Measurement in the Netherlands

  • M. de Haan, D. van den Bergen and M. van Rooijen-Horsten, CBS-NL

  • The Capital Boundary in the 1993 SNA, Rev. 1 – Challenges for National Statistical Offices

  • P. Sollberger, Ph. Stauffer and R. Meier, SFO-CH

  • Capitalisation of research and development expenditure: points of view and experiences in the European Union

  • G. Gueye and F. Malherbe, Eurostat

  • An Integrated System of Capital Flow and Stock Statistics

  • P. Harper, ABS-AUS



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The dictum:

  • “The only statistics you can trust are those you falsified yourself“

    • Churchill’s authorship has not been proved to this day!

    • A slander campaign in the propaganda war?

    • Possible author:Churchill’s arch-enemyJoseph Goebbels

?


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This is what Winston Churchill really said:

“You must look at the facts because they look at you!”

Speech in the British House of Commons, 7 May 1925


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This is ascribed to Kennedy:

/

Statistics are like a bikini, what they reveal is suggestive, but what they conceal is vital.

  • Aaron Levenstein (1901-1986), economics professor in New York, is the real author


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Goodhart‘s Law

  • Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes (Charles Goodhart)

  • or more generally:

  • When a measure becomes a target, it ceases to be a good measure (Keith Hoskin)


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“Good policy needs good statistics” (Tony Blair)

Theoretical Consistency

Quality of Statistics

Political Relevance

Empirical Measurability


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Capital

Economic Assets

Entities functioning as a store of value

over which ownership rights are enforced by institutional units, individually or collectively, and

from which economic benefits may be derived by their owners by holding them or using them over a period of time

public goods and infrastructure resulting from an accumulation of knowledge


The large hadron collider lhc a particle accelerator at cern near geneva l.jpg
The Large Hadron Collider (LHC) - a particle accelerator at CERN near Geneva

  • Final works in these months to switch on in 2007 – 27 km circumference –not far away from here (literally under our feet)

  • Example for basic research that would be classified as freely available

Source: CERN


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Interaction CERN near Geneva

Water

Knowledge

Skills

Land

Air

Human

being

Nature

Mineral

resources

Biodiversity

Abilities

Creativity

S

A

Y

Land

Capital

Labour


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Land CERN near Geneva

Capital

Labour

Nonfinancial Assets

S

N

A

Nonproduced assets

Produced assets

Tangible

nonproduced assets

Land

Subsoil assets

Intangible

nonproduced assets

Patented entities

Leases

Fixed

assets

Inventories

Valuables

Precious metals

Antiques

93

Tangible fixed assets

Intangible fixed assets

R

E

V

1

Buildings

and

structures

Machinery

and

equipment

Cultivated

assets

Computer

software

Entertainment,

literary or

artistic originals

Mineral

exploration

Research

and

Development


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Human capital CERN near Geneva

Non-scientific innovations

Marketing assets (brands…)

Organisation and management

What is Software?

What is R&D?

Identification problem


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Identification, Valuation, Depreciation: Difficulties CERN near Geneva

  • Identification and Classification of the product

  • Valuation of the gross fixed capital formation (GFCF) of different types of R&D - imputations like capital services of the stock of current knowledge

  • Estimation of mortality tables and expected service lives on an objective basis

  • Availability of long series of GFCF as precondition of the perpetual inventory method

  • Availability of deflators – price indices for never standardised R&D services

  • Valuation of a specific contribution of R&D to production, (based on the accumulation of knowledge)


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Future Work CERN near Geneva

  • Investigate via satellite accounts

  • Bridging R&D statistics to national accounts

  • Imputation of yearly (and quarterly) SNA data without yearly R&D surveys

  • Deflators and long time series

  • Service lives and mortality/retirement function

  •  Satellite accounts should be applied to examine the effects of different solutions of the identification problem (e.g. public goods)


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Measuring wealth and productivity CERN near GenevaThe concept of capital services

An integrated system of capital flow and stock statistics

Accumulation (investment)

Gross stock

Tradit.: Capacity Potential

Retirements

Accumulation (investment)

Accumulation (investment)

+

Return to Capital

S

N

A

Net stock

Wealth

Productive stock

Capital services

Depreciation


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Questions to the authors CERN near Geneva

  • Netherlands:

  • Delineation of knowledge capital creation by R&D and the creation of human capital and other forms of “intangibles” – conceptual level and implementation in practice?

  • Netherlands and Australia:

  • How do you see the interdependence of capital services for non-market producers and the valuation of R&D according to non-market production?

  • Proposal for the further treatment of technical issues – a new forum, new project, new revision or what else?

  • Switzerland:

  • Reliability of the national accounts data including R&D from your first estimates for political purposes?

  • Impact on level and growth rate of GDP?


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Questions to the authors (2) CERN near Geneva

  • Eurostat:

  • Ideas for the work of the Eurostat Task Force on the development of satellite accounts for R&D in the light of the OECD Task Force working in parallel?

  • Is the quality of primary statistics on R&D appropriate? Do national R&D-figures adequately reflect the shift in economy towards globalised ways of production and towards a higher importance of service industries?

  • Australia:

  • To what extent is the concept of capital services necessary for the analysis of productivity? How far does it help to show the productivity effects of “intangibles” better than now?


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Questions for the general discussion CERN near Geneva

  • R&D – difficult to measure in any case

  • Rough estimate or no estimate at all?

  • Very rough estimates may mislead users

    vs.

    Rejection of estimation may damage the macroeconomic quality of the accounts

  • Should national accounts data be based on statistically measurable variables, focused on observable market transactions rather than imputations?

  • Extension of the capital boundary  Switching over to net domestic product for international comparisons?


You have to have facts theories are not good unless you have facts to back them wassilij leontief l.jpg
„You have to have facts. Theories are not good unless you have facts to back them.“ (Wassilij Leontief)

Consistency

Quality of Statistics

Relevance

Measurability

THANK YOU VERY MUCH FOR YOUR ATTENTION !


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