balance sheets data according to national accounts present and future availability use and abuse n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Peter van de Ven Head of National Accounts , OECD PowerPoint Presentation
Download Presentation
Peter van de Ven Head of National Accounts , OECD

Loading in 2 Seconds...

play fullscreen
1 / 26

Peter van de Ven Head of National Accounts , OECD - PowerPoint PPT Presentation


  • 123 Views
  • Uploaded on

Balance sheets data according to national accounts: present and future availability, use and abuse. Peter van de Ven Head of National Accounts , OECD. Strategic Forum Rome, September 22 – 23, 2014. On Statistics ….

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

PowerPoint Slideshow about 'Peter van de Ven Head of National Accounts , OECD' - marlie


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
balance sheets data according to national accounts present and future availability use and abuse

Balance sheets data according to national accounts: present and future availability, use and abuse

Peter van de Ven

Head of National Accounts, OECD

Strategic Forum

Rome, September 22 – 23, 2014

on statistics
On Statistics …
  • “There are three kinds of lies: lies, damned lies, and statistics” (Benjamin Disraeli)
on statistics1
On Statistics …
  • “There are three kinds of lies: lies, damned lies, and statistics” (Benjamin Disraeli)
  • “An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination” (Andrew Lang)
introduction
Introduction
  • General overview of availability of balance sheets data
  • G20 Data Gaps Initiative
  • Implementation issues
  • Indicators: use and abuse
  • Accounting for vulnerabilities and economic sustainability
  • Going forward: what more do we need?

Plea for implementing system of agreed balance sheets, and making full and “appropriate” use of the data

present availability
Present availability
  • International standards for national accounts (SNA 2008 and ESA 2010) lay out a full and consistent framework for balance sheets, including transactions
  • Lot of information is actually already available, first and foremost in relation to quarterly and annual information on financial transactions and positions
  • Especially in EU, quite some progress has been made in developing quarterly data (nowadays available 90 – 120 days after the end of the quarter)
  • Also in other OECD-countries
g20 data gaps initiative
G20 Data Gaps Initiative
  • Economic and financial crisis showed some gaps in the compilation and publication of statistical data, especially in relation to risks and vulnerabilities
  • In 2009, a set of recommendations has been put forward to address the main data gaps, the so-called G20 Data Gaps Initiative (DGI):
    • Better capture the build-up of risk in the financial sector
    • Improve data on international financial network connections
    • Monitor the vulnerability of domestic economies to shocks
    • Improve the communication of official statistics 
g20 data gaps initiative1
G20 Data Gaps Initiative
  • Core recommendation from macro-economic perspective: recommendation 15 on institutional sector accounts:“…to develop a strategy to promote the compilation and dissemination of the balance-sheet approach (BSA), flow-of-funds, and sectoral data more generally, starting with the G-20 economies. Data on nonbank financial institutions should be a particular priority. The experience of the ECB and Eurostat within Europe and the OECD should be drawn upon”
  • Templates for collection of balance sheet data, driven by the example of EU and other OECD-countries, also part of SDDS Plus requirements of IMF
implementation issues
Implementation issues
  • Measurement of non-financial assets, especially non-produced, non-financial assets (land, natural resources, etc.)
  • Not all types of risks and vulnerabilities can be captured with agreed templates, e.g. interconnectedness => “from-whom-to-whom” tables or “flow of funds”
  • Only available in developed countries, not always on a quarterly basis
  • However, economic and financial crisis has created a momentum for further development
  • Other (conceptual) issues => later
indicators use and abuse
Indicators: use and abuse
  • From the framework, various indicators can be derived:
    • Debt to income ratios
    • Debt to assets ratios
    • Etc.
  • Which indicators are the most appropriate?
  • Example: General Government Gross Debt
a simple comparison
A Simple Comparison

A reasonably sophisticated user has taken a look at various sources:

  • Eurostat, Tables on Government Finance
  • IMF, Government Finance Statistics (market value and face value)
  • IMF, World Economic Outlook
  • OECD, National Accounts at a Glance
  • OECD, Economic Outlook
slide15

Government Debt 2010 Differences between highest and lowest result, in %-points of GDP

coverage of instruments
Coverage of instruments
  • General definition of gross debt: a specific subset of liabilities … that require payment or payments of interest or principal by the debtor to the creditor at a date or dates in the future (22.104).
  • All liabilities except shares, equity and financial derivatives
    • Monetary gold and SDRs
    • Currency and deposits
    • Debt securities
    • Loans
    • Insurance, pension and standardized guarantee schemes
    • Other accounts payable
coverage of instruments1
Coverage of instruments
  • However, several other definitions are being used
  • Maastricht debt:
    • Currency and deposits
    • Debt securities
    • Loans
  • Sometimes only loans and debt securities are covered
  • Most substantial impact: pension liabilities
valuation and consolidation
Valuation and consolidation
  • Different valuation concepts:
    • Market prices (according to SNA)
    • Nominal value (e.g. Maastricht definition)
    • Face value
  • Consolidated versus non-consolidated data
  • Other differences: differences in sources, lack of alignment to international standards, sometimes even differences due to reporting agency
impact of excessive deficit procedure
Impact of Excessive Deficit Procedure
  • Improvement of data according to agreed definition
  • Inclination to prefer being “exactly wrong” instead of “approximately right”
  • Focus on single indicators drives poor policy:
    • Gross Debt and Investments
    • Pension reforms
    • Creative accounting: impact on numbers more important than economic rationale (PPPs, sale and lease back constructions, taking over pension liabilities of public corporations)
  • Single indicators are, almost by definition, a simplification of economic reality
going beyond
Going beyond
  • Need to account for pension liabilities and contingent liabilities
  • Need for additional indicators on Net Government Debt => various definitions proposed:
    • Including liquid assets only
    • Including similar instruments as the ones on the liabilities side
    • Including all financial assets (including shares and other equity)
    • Including financial assets as well as non-financial assets => net worth => also raises the question of which expenditures to be considered as investments
  • Finally, need for more “story-telling” on the interpretation of government debt data (e.g. the impact of differences in pension arrangements across countries)
accounting for vulnerabilities and economic sustainability
Accounting for vulnerabilities and economic sustainability
  • Various forms of vulnerabilities or risks:
    • Liquidity risk: gross debt to income (after adjusting for liquid assets)
    • Solvency risk: gross debt to assets
    • Risk exposures to certain sectors/countries: need for “from-whom-to-whom” tables
    • Maturity risk, currency risk, etc.: need for more detailed breakdowns
  • Generally, quite detailed data needed, and some risks may be covered (or actually hidden)
    • In addition, macro-data may hide risks for certain groups
  • Question: where to go?
accounting for vulnerabilities and economic sustainability1
Accounting for vulnerabilities and economic sustainability

The importance of looking at wealth distribution

  • Analysing wealth distribution is essential for analysis of vulnerabilities in the household sector

Debt to income ratio of indebted households

Sources: EFF 2002 (Spain), SCF 2001 (US), SHIW 2002 (Italy), BHPS 2000 (UK)

accounting for vulnerabilities and economic sustainability2
Accounting for vulnerabilities and economic sustainability
  • Balance sheets are a snapshot of the wealth at a certain moment in time
  • As such, they may not reflect economic sustainability to the full extent:
    • Weak versus strong sustainability
    • Does not say anything about future income generating potential (e.g. debate on ageing society and pension liabilities)
  • On the other hand, changes in balance sheet positions do provide a sense of sustainability or direction where things are going
going forward what more do we need
Going forward: what more do we need?
  • Better accounting for non-financial assets
    • Eurostat/OECD Task Force on Measuring Other Non-financial Assets => Guidance on Land
    • Natural resources (subsoil assets)
    • Residential and commercial property price indices
    • Implementation!
  • Knowledge capital?
    • Already included: (i) mineral exploration; (ii) software and databases; (iii) entertainment, literary and artistic originals; and (iv) R&D
    • Human capital?
going forward what more do we need1
Going forward: what more do we need?
  • Full accounting for pension entitlements
    • Supplementary table (2017 in EU)
  • Accounting for contingent liabilities
  • Need for much more distributional information
  • Can we capture risks and vulnerabilities to the full extent?
  • More generally: which data needs are most prominent?