trade data as input to u s gdp calculations l.
Skip this Video
Loading SlideShow in 5 Seconds..
Trade Data as Input to U.S. GDP Calculations PowerPoint Presentation
Download Presentation
Trade Data as Input to U.S. GDP Calculations

Loading in 2 Seconds...

play fullscreen
1 / 24

Trade Data as Input to U.S. GDP Calculations - PowerPoint PPT Presentation

  • Uploaded on

Trade Data as Input to U.S. GDP Calculations . Dave Wasshausen Economist, National Income and Wealth Division, BEA. ITDU International Trade Data Conference May 4, 2004, Washington D.C. What are the NIPA’s?.

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Trade Data as Input to U.S. GDP Calculations' - KeelyKia

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
trade data as input to u s gdp calculations

Trade Data as Input to U.S. GDP Calculations

Dave Wasshausen

Economist, National Income and Wealth Division, BEA

ITDU International Trade Data Conference

May 4, 2004, Washington D.C.

what are the nipa s
What are the NIPA’s?
  • The National Income and Product Accounts (NIPAs) are a set of economic accounts that track economic flows within the U.S. economy. The key NIPA measures are:
    • Gross domestic product (GDP): Measures the total value of goods and services produced within the U.S.
    • Gross domestic income (GDI): Measures the incomes earned and costs incurred in that production

nipa seven account summary
NIPA seven-account summary
  • Domestic Income and Product Account
  • Private Enterprise Income Account
  • Personal Income and Outlay Account
  • Government Receipts and Expenditures Account
  • Foreign Transactions Current Account
  • Domestic Capital Account
  • Foreign Transactions Capital Account

foreign transactions in nipas
Foreign Transactions in NIPAs
  • Foreign transactions is the fifth account in a seven account system of integrated accounts (i.e. NIPAs) that provides a comprehensive measure of the nation’s economic activity
  • Account records transactions of foreign residents with U.S. residents and is essentially a condensed version of BEA’s International Transactions Accounts (ITAs)

foreign transactions in nipas cont
Foreign Transactions in NIPAs -- Cont.
  • Includes transactions for the following:
    • Goods
    • Services
    • Income on assets
    • Wages
    • Transfers

foreign transactions in nipas cont6
Foreign Transactions in NIPAs -- Cont.
  • ITAs provide the basis for NIPA foreign transactions
  • Conceptual and statistical differences exist and are reconciled in NIPA table 4.3B

foreign trade in gdp flow of estimates
Foreign Trade in GDP: Flow of Estimates
  • Goods exports/imports processed by Census’ Foreign Trade Division (FTD)
  • Services exports/imports processed by BEA’s Balance of Payments Division (ITAs)
  • BEA’s BPD adjusts Census’ goods estimates to conform to ITA conventions
  • BEA's National Income and Wealth Division (NIWD) adjusts ITA estimates to conform to NIPA basis
  • NIWD develops estimates of real exports and real imports by adjusting for price change

notable reconciliation items
Notable Reconciliation Items
  • Territorial adjustment: ITAs include U.S. territories, Puerto Rico, and the Northern Mariana Islands as part of the U.S. The NIPAs define these as part of the rest of the world
  • Services furnished without payment by financial intermediaries except life insurance carriers included in NIPAs
    • Borrower services
    • Depositor services

foreign trade in gdp
Foreign Trade in GDP
  • Traditional expenditure (or product-side) approach identity for measuring gross domestic product (GDP):

GDP = C + I + G + X - M


C = Personal consumption expenditures

I = Gross private domestic investment

G = Government consumption expenditures and gross investment

X = Exports

M = Imports

expenditure components of gdp 2003
Expenditure components of GDP (2003)

[Billions of dollars]


GDP = C + I + G + X - M





foreign trade in gdp cont
Foreign Trade in GDP--Cont.
  • GDP measures the market value of the goods and services produced by labor and property located in the U.S.
  • C, I, and G reflect purchases of goods and services regardless of where they are produced
  • Subtracting imports (M) is necessary to reduce total expenditures (C, I, G, and X) to domestic output

foreign trade in gdp cont12
Foreign Trade in GDP--Cont.
  • Consider the following examples that illustrate how imports are reflected in expenditure categories:
    • Retail sales, which are the basis for personal consumption expenditures (C) for goods, include goods that are produced outside the U.S.
    • Estimates for private fixed investment (I) in equipment and software are prepared using the commodity-flow technique, whereby we explicitly add imports to domestic shipments

foreign trade in gdp cont13
Foreign Trade in GDP--Cont.
  • A special adjustment is made in PCE for “net foreign travel.” For example, a European visiting the U.S. purchases jewelry. The transaction is recorded in three places:
    • Exports of travel increases
    • PCE net foreign travel decreases
    • PCE jewelry sales increases
  • GDP increases by the value of the jewelry and PCE is unaffected

foreign trade in gdp cont14
Foreign Trade in GDP--Cont.
  • Similarly, a U.S. resident visiting Europe purchases jewelry:
    • Imports increases
    • PCE net foreign travel increases
  • GDP is unchanged

  • Assume the trade deficit widens. What does that mean for GDP?
  • Exports are unchanged and imports of software
      • Private fixed investment in software
      • Imports (which are a subtraction)
      • GDP is unaffected!

gdp vs gnp
  • Gross national product (GNP) is the market value of goods and services produced by labor and property supplied by U.S. residents

= GDP + Income Receipts - Income Payments

  • The difference between gross domestic product and gross national product is net receipts of income from the rest of the world

real foreign trade in gdp
Real Foreign Trade in GDP
  • Real (adjusted for price change) exports and imports (Q) primarily reflect nominal estimates (E) that have been deflated with a price index (P):

Q = E ÷ P

  • Price indexes used to deflate trade in goods are primarily derived from Bureau of Labor Statistic (BLS) export/import price indexes

real foreign trade in gdp cont
Real Foreign Trade in GDP--Cont.
  • Price indexes used to deflate trade in services are derived from a variety sources, including:
    • BLS export/import price indexes
    • BLS producer price indexes
    • BLS consumer price indexes
    • Foreign country consumer price indexes
    • NIPA (aggregate) implicit price deflators
    • BEA defense price indexes

real foreign trade in gdp cont19
Real Foreign Trade in GDP--Cont.
  • Some import price indexes are explicitly adjusted for exchange rates, including travel and direct defense expenditures

importance of foreign trade in gdp
Importance of Foreign Trade in GDP
  • Estimates are large and growing!
  • In 2003:
    • NIPA current-dollar exports grew 4.2% to over $1 trillion (real exports grew 2.0%)
    • NIPA current-dollar imports grew 7.7% to over $1.5 trillion dollars (real imports grew 4.0%)

gdp and outsourcing
GDP and Outsourcing
  • Import component most relevant to outsourcing is the business, professional, and technical services category, which rose 16 percent (current-dollars) in 2003
  • No evidence of a systematic bias in the estimates of net exports in GDP.

comparing bea s estimates to other estimates
Comparing BEA’s Estimates to Other Estimates
  • Use caution when comparing BEA estimates to data produced by trade associations or by foreign governments:
    • May not be consistent with international statistical standards
    • Concept of “resident” may differ

imports of services additional perspectives
Imports of Services: Additional Perspectives
  • Real imports of services have been rather flat since 2000, which largely reflects declines in travel and passenger fares
  • The NIPA price index for imports of services increased 7.4 percent in 2003 reflecting increases in the price indexes for travel (11.6%), other transportation (12.9%) and direct defense expenditures (17.9%)

for more information
For More Information
  • Prepared a set of Q & A’s that was posted on the BEA website
  • Additional related information can be found in “A Note on Patterns of Production and Employment by U.S. Multinational Companies,” published in the March Survey of Current Business