Training Session on National Accounts

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Training Session on National Accounts. ICP Global Office September 2011. Approaches for Splitting GDP Expenditures. ICP requirement: detailed data needed only once every several years

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### Training Session on National Accounts

ICP Global Office

September 2011

ICP requirement:

• detailed data needed
• only once every several years
• Disaggregating GDP into the detailed basic headings is the core part of the national accounts data needed for the ICP
• Countries will experience some difficulties in providing estimates of final expenditure for all the basic headings required
• Participating countries should assign weights to all basic headings

National accounts data for 2011 need to be available by July 2012 (some cases based on preliminary data)

• Many basic heading details might have to be estimated by using data relating to years earlier than 2011 to split the major aggregates for 2011

Five approaches to splitting GDP

Direct estimation

The preferred method, if data sources exist

1

Extrapolation

Update an earlier expenditure breakdown using assumptions on population growth, price changes etc

2

“Borrowing” a per capita quantity or volume

Requires clustering countries for each BH or group of BHs

Multiply the per capita quantity or volume by the population of the “borrowing country” and the price level index between the two countries

3

“Borrowing” a structure

Adjust the “borrowed” structure by a vector of the price level indexes between the two countries

4

Using expert opinion

Consult retailers, manufacturers, marketing experts, chambers of commerce and other sources

5

Direct estimation

• Estimation techniques used in compiling national accounts can assist in obtaining the detailed data required for the ICP:
• commodity-flow method
• supply-use tables (SUTs)

Extrapolation

Common cases

country to regularly compile annual production-based measures of GDP but expenditure-based estimates are available infrequently

2011 level of expenditure GDP can be assumed to be equal to that measured from the production side of the accounts

The Global Office encourages countries to develop improved procedures to allocate expenditures to basic headings: Commodity-flow techniques and supply-use tables

the experience and knowledge of the national accountants, can be invaluable in calculating the detailed splits required for the ICP

Last resort procedure: prorate the level of GDP according to the basic heading distribution from the 2005 ICP, if available

Extrapolation

ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011

statistical surveys

Administrative records (Custom data for Exports and imports of goods,

building approvals for gross fixed capital formation on buildings ,

credit cards for household final consumption expenditure, VAT data )

Othersources of information (publications of regulatory bodies and trade associations)

Extrapolation

ii) Expenditure-based estimates of GDP are available on a regular basis but there is a considerable lag in producing them and they have not yet been updated to 2011

statistical surveys

Administrative records (Custom data for Exports and imports of goods,

building approvals for gross fixed capital formation on buildings ,

credit cards for household final consumption expenditure, VAT data )

Othersources of information (publications of regulatory bodies and trade associations)

A Conditional Step-by-step Process

Yes

Yes

Borrow per capita value

Use Direct Approach

No

No

Is there data for the BH for a previous year?

Is there data for the BH for the year?

Can you obtain data from expert?

Is there country with similar per-capita value?

Yes

1

No

3

Yes

Use Expert Opinion

5

No

Borrow from country with similar structure

Use Extrapolation

2

4

The Model Report on Expenditure Statistics (MORES)

The MORES aims to assist countries to compile

Detailed expenditurevalues for each basic heading of the ICP classification.

Information on the splitting approach

Information on the indicators that were used/or are going to be used to estimate the expenditure values

MORES’s Structure

NA data information for the latest year available

Tabs 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values. It is recommended that the user insert the values at the basic heading levels. All aggregated levels will be calculated automatically.

Tabs 2 and 5 compile, for each basic heading, the detailed information of the splitting approach and for all indicators used to collect data related to National Accounts and reveals the estimated expenditure values for the latest year available or for 2011.

Tabs 3 and 6 summarize the final expenditure values for the latest year available or for 2011 respectively and it will be automactically filled with the discrepancy information of the initial and estimated expenditures values.

NA data information for 2011

Parameters used in previous tabs

Expanded Form 1

GDP Classification

Initial Expenditure Value

Estimated Expenditure Value

Discrepancies

Code

Sheets 1 and 4 include initial expenditure values, estimated expenditure values and the discrepancies between those two values.

4

5

1

2

3

100000

Gross Domestic Product

110000

Individual Consumption Expenditure by Households

110100

Food and non-alcoholic beverages

110110

Food

110111

110111.1

Rice

[...]

[…]

Estimation of BH Expenditures

#

MORES Template

Indicator name

Sour ce name

Year

Value

Unit

Sheets 2 and 5 compile, for each BH, the detailed information of the splitting approach and for all indicators used to collect data related to National Accounts and reveals the estimated expenditure values.

Code

Name

3

4

5

6

7

8

1

2

100000

Rice

Splitting Approach

2

Extrapolation

Code

Estimated Expenditure for

Final Expenditure Values

GDP Classification

Expenditure Value

Code

Sheets 3 and 6 summarize the final expenditure values for the latest year available or for 2011 respectively and it will be automatically filled with the discrepancy information of the initial and estimated expenditures values.

1

2

3

100000

Gross Domestic Product

110000

Individual Consumption Expenditure by Households

110100

Food and non-alcoholic beverages

110110

Food

110111

110111.1

Rice

[...]

[…]

Completing the MORES in 6 Steps

Sheets

1

1

Complete column 3 of sheet 1 with whatever aggregate estimates are available

2

2

Apply 5 approaches

3

From 2 to 1

Column 4 of sheet 1 receives expenditures values from sheet 2

4

1

Discrepancies between columns 3 and 4 appear under column 5

5

1 or 2

6

3

Completing MORES - Example

Step 1

Complete Table1 with whatever aggregate estimates are available.

Completing MORES - Example

Step 2

Complete Table 2 for each basic heading using five splitting approaches.

Completing MORES - Example

Step 3

Table 3 will be automatically filled once discrepancies between aggregate figures and summation of BHs have been resolved.

Fictitious country case statistics

48 indicators were used and five major indicators account for 46% (162 out of 351).

Issues

Lack of sources

• Lack of overall resources, heavy dependence on expert opinions

Iterative process

• Iterative process occurs when borrowing a structure from another country

Distribution of specific BHs