Are the theoretical foundations of the 2008 SNA still relevant today ?

1. Are the theoretical foundations of the 2008 SNA still relevant today ? - Setting the future direction of the National Accounts - Building on the theoretical foundation of the 2008 SNA Discussant: Wolfgang Strohm, Director of N.A.-Department, DESTATIS, Germany

2. Topic of presentation: • The SNA: some outstanding issues • by Peter Hill • Three broad issues • The scope of the SNA and its accounting structure • Different demands on the accounts for short and long term analysis • The need to reconstruct the production account (capital services)

3. 1. The scope of the SNA and its accounting structure • The author proposes a different set and sequence of accounts and a different accounting structure. • Proposal: „The accounts should be presented in such a way that the financial implications of the real economic activities in which economic units engage can be understood by users.“

4. 2. Different demands on the accounts for short and long term analysis • The existing SNA is meant to be a multi-purpose system designed to meet a variety of analytic and policy needs. • Proposal: Split the System into two different systems of account • one geared primarily to short term analysis • the other one geared to long term analysis

5. 3. The need to reconstruct the production account (interest and capital services) • „The main question adressed here is the appropiate way in which to record the value of the services contributed by fixed assets to production.“ • Proposal: „The relevant interest to be charged in the production account should be the total interest payable on the current value of the fixed assets whether this consists of the actual interest or interest foregone.“

6. Three measure sticks • Concepts should make sense, be logical and coherent • Concepts must be feasable to implement • Results must be understandable

7. Principles for a revision of the System of National Accounts • Methodological changes should only be introduced if they can be measured in a satisfying way and if they are not obtained solely by modelling (i.e. estimations as few as possible and no valuation according to unknown future flows). An increasing part of estimations and assumptions would diminish international comparability of NA figures.

8. In case of doubt transactions should be restricted to observable market transactions (i.e. non-market transactions and imputations only in few special cases and as much as possible not beyond the status quo). • Problems of deflation (measuring constant price figures) should be solvable for all items introduced by the revision (i.e. no loss of quality compared with the status quo). • Problems for the quarterly accounts as well as for the regionalisation of NA should be solvable satisfactorily (i.e. availability of statistical data).

9. In case of doubt the methodology should be in accordance with business accounting. • Methodological changes should be accepted by important users of NA not only in international organisations but also in the countries (i.e. questionnaires should be sent to the users before final decisions are made).

10. Changes in methodology should be useful from a practical or political point of view. Pure theoretical and formal arguments should be no reason for changing the SNA. • Difficult and problematic items of the revision should first be tested within satellite accounts and not be immediately introduced to the core system of National Accounts.