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Central Statistics Office. Institutional Sector Accounts Non-Financial Mary Brew Integration Division National Accounts UCC 16 th March 2011. Recap. Session 1 – Key Social Indicators Session 2 – Key Business Indicators Session 3 – Balance of Payments – Ireland’s globalised economy

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central statistics office
Central Statistics Office

Institutional Sector Accounts Non-Financial

Mary Brew

Integration Division

National Accounts UCC 16th March 2011

recap
Recap
  • Session 1 – Key Social Indicators
  • Session 2 – Key Business Indicators
  • Session 3 –

Balance of Payments – Ireland’s globalised economy

Quarterly National Accounts – Headline indicators of total economic activity

  • Session 4 – Measures other than GDP
the stiglitz sen fitoussi commission report 2009
The Stiglitz, Sen, Fitoussi Commission Report (2009)
  • The report was written by economists and social scientists
  • To Political Leaders, Policy Makers, The Academic Community, Statisticians and Civil Society Organisations
  • To identify the limits of GDP as an indicator of economic performance & social progress
  • To recognise other relevant measures e.g. household income, consumption and wealth
european sector accounts
European Sector Accounts
  • Outcome of collaboration between Eurostat, the European Central Bank, National Statistical Institutes and National Central Banks
  • Output for Euro Area – 16 countries and European Union – 27 countries
  • Detailed economic development by institutional sector at current prices
  • Key ratios – e.g. household saving rate
institutional sector accounts
Institutional Sector Accounts

3 approaches to measuring National Income

  • Output – Value added by each producer

Σ output - Σ intermediate consumption + net product taxes

  • Income – All income generated

Σ COE + GOS/GMI + net taxes

  • Expenditure – All spending on final demand

C + I + G + X - M

institutional sector accounts1
Institutional Sector Accounts
  • Vertical analysis

Provides by institutional sector a

systematic description of the different

stages of the economic process

  • Horizontal analysis

Institutional sectors are distinguished in

terms of their principal economic

behaviour

institutional sectors horizontal analysis
Institutional Sectors (Horizontal Analysis)
  • Mutually exclusive institutional sectors that make up the total economy
    • Non-financial corporations
    • Financial corporations
    • General Government
    • Households
    • Non-profit institutions serving households
  • Rest of World
sequence of accounts vertical analysis
Sequence of Accounts(Vertical Analysis)
  • Institutional Sector Accounts are built around a sequence of inter-connected accounts
    • current accounts
      • Production, generation, allocation, distribution and use of income
    • accumulation accounts
      • Financial and non-financial accumulation
    • balance sheets
  • Linked sequentially
    • Balancing item from one account provides the starting point for the next account
sector accounts
Sector Accounts

Financial

Balance sheet

Production - GDP

Financial Accounts

Generation of Income - GOS

Capital Accounts – Net Lending/Borrowing

Allocation of Primary Income - GNI

Secondary Distribution of Income - GDI

Use of Disposable Income - Saving

non financial accounts
Non-Financial Accounts
  • Current accounts distinguish between:

resources – transactions that add to the amount of economic value of a sector

uses – transactions that reduce the amount of economic value of a sector

social contributions d 61
Social Contributions D 61

Household Sector

€-15,797,

current accounts
Current Accounts
  • Production account measures the output of goods and services and the value of goods and services used in making them

Output – intermediate consumption = GVA

GVA + (taxes – subsidies on products)=GDP

GDP – consumption of fixed capital = NDP

Balancing item = Net domestic product

current accounts1
Current Accounts
  • Distribution and use of income accounts
    • Generation of income account – How is net domestic product distributed to the factors of production:

Compensation of employees (labour)

Taxes less subsidies on production (government)

Balancing item: net operating surplus/mixed income

current accounts2
Current Accounts
  • Allocation of primary income account – primary income is received from direct participation in the production process and from ownership of an asset put at the disposal of another

Balancing item – net national income ( the balance of primary income)

Memorandum – entrepreneurial income account – Financial and non-financial corporations – balancing item corresponds to the concept of current profit as used for business accounting.

current accounts3
Current Accounts
  • Secondary distribution of income account – shows how the balance of primary income is redistributed through:
    • Current taxes
    • Social contributions and benefits and
    • Other current transfers

Balancing item – net disposable income

  • Use of disposable income account – how disposable income is divided between final consumption expenditure and saving

Balancing item - saving

accumulation accounts
Accumulation Accounts
  • Accumulation accounts record the changes in the assets and liabilities of sectors and the change in their net worth
  • Capital account
    • Change in net worth due to saving and capital transfers account

Balancing item – changes in net worth due to saving and capital transfers

    • Acquisitions of non-financial assets account

Balancing item – net lending or borrowing

  • Financial account
rest of world
Rest of World
  • External account of goods and services

balancing item – external balance of goods and services (imports – exports)

  • External account of primary incomes and current transfers

balancing item – current external balance (corresponds to saving by the institutional sectors)

  • Capital account

balancing item – net lending or borrowing (equal, but with the opposite sign, to net lending or borrowing of the resident institutional sectors)

analytical potential of sector accounts
Analytical Potential of Sector Accounts

The Economy

  • Gross Value Added
  • Net Lending/Borrowing

Households

  • Household Net Disposable Income and Final Consumption
  • Household Saving Rate - Calculated in % as: gross saving / gross disposable income (D8* is included)
analytical potential of sector accounts1
Analytical Potential of Sector Accounts
  • Investment Rate of Households - Calculated in % as: gross fixed capital formation / gross disposable income (D8* is included
  • Household Net Lending/Borrowing

Non-Financial Corporations

  • Profit Share of Non-Financial Corporations - Calculated in % as: gross operating surplus / gross value added of non-financial corporations
  • Investment Rate of Non-Financial Corporations - Calculated in % as: gross fixed capital formation / gross value added of non-financial corporations
analytical potential of sector accounts2
Analytical Potential of Sector Accounts

Government

  • Government Income
  • Government Expenditure
  • Government Savings and Net Lending/Borrowing
institutional sector accounts2
Institutional Sector Accounts

Financial

Balance sheet

Production - GDP

Financial Accounts

Generation of Income - GOS

Capital Accounts – Net Lending/Borrowing

Allocation of Primary Income - GNI

Secondary Distribution of Income - GDI

Use of Disposable Income - Saving