Transcript The Final Consumption Expenditure of Households in Korea

The Final Consumption Expenditure
of Households in Korea
Sangkyo HAN
National Accounts Coordination Team
Economic Statistics Department
Contents
I.
Introduction
II. GDP by Expenditure Approach
III. Estimation Method of the Final Consumption
Expenditure of Household
IV. Household Income & Expenditure Survey Evaluation
I. Introduction
• Korean System of National Accounts
– Introduction of 1993 SNA in 2004 at the time of the 9th
rebasing from 1995 to 2000
– Additional implementation to 1993 SNA at the time of the
10th rebasing from 2000 to 2005
E.g. introduction of chain-linking method, recognition of
valuables as a separate item of gross capital formation
– 2008 SNA intended to be introduced in 2014 at the time of
the 11th rebasing from 2005 to 2010
I. Introduction
• Three aspects from which Korean National Accounts
statistics are measured
– Production, Expenditure, Distribution
– Broadly known as production approach, expenditure
approach and income approach
• The final GDP aggregates are determined as GDP by
production activities.
I. Introduction
• GDP by production
– Data sources : survey data from the Statistics Korea, the BOK’s self
survey data and administrative data from government agencies such as
the National Tax Services (NTS)
• GDP by expenditure
– Data sources : survey data from the Statistics Korea, corporate financial
statement, administrative data, customs clearance statistics and BOP
statistics, etc
• GDP by income(compiled annually for nominal value)
– Data sources : GDP estimates by production and expenditure, data from
government and social security agencies, administrative data from the
NTS, business analysis data and employment statistics
Flow Chart on the Compilation of National Accounts Statistics
Collection of Source
Data (survey, etc.)
Check on Errors of
Source data
- Output
- Intermediate input
- Value added
Estimation of GDP
By production
Coincidence with annual
Input/output table
- Consumption
- Gross capital formation
- Export/Import
Estimation of GDP
By expenditure
Check on appropriateness
of estimates
Conciliation of GDP
By production and
GDP by expenditure
Press release
Estimation of GDP
by income
II. GDP by Expenditure Approach
• Conventional Estimating Process by Commodity
Flow Method (CFM)
– Calculate domestic gross output in production side
– Derive total final demand by adding imports and deducting
intermediate consumption and exports
– Calculate each expenditure item by multiplying the total
final demand by the weight of each item stemmed from I/O
table in base year
II. GDP by Expenditure Approach
The conventional estimating process by CFM
Final consumption
expenditure
Total supply
(Gross domestic
―
Intermediate
―
=
Exports
output
consumption
Total domestic
demand
Fixed investment
+ Imports)
Inventories
(weight on total domestic demand)
II. GDP by Expenditure Approach
• Problems revealed in CFM approach
– Lack of independence in the estimates for some expenditure
components of GDP
• Introduction of new statistical techniques employing
both the supply-side and the demand-side statistics
– Identifying economic trends more accurately by coping with changing
statistical environments and by incorporating much more statistical data
– Enhancing accuracy, reliability of statistics, and transparency
– Ensuring objectivity of the estimation process recommended by IMF
III. Estimation Method of the Final
Consumption Expenditure of Household
• Calculate base year and annual(final) figures based on
consumer expenditure data
• Calculate annual(preliminary) figures by sum of quarterly
(preliminary) figures
• Calculate quarterly (preliminary) figures by extrapolating
alternative indicators with the year-on-year rates of change
from the same period of the previous year
– Nominal figures by item and the total are estimated; then real figures
are calculated using a deflation method (deflator=mainly CPI)
Major Source Data Related to Household Final
Consumption Expenditure
Organization
Cycle
Date of
release
Statistics
Korea
Every 5
year
Mar of the two years
after reference date
Wholesale and
Retail Survey
〃
Annual
Dec of the following
year
〃
Sales by industry of the wholesale and retail
sectors for non-base year
Service Industry
Survey
〃
〃
〃
〃
Sales of service industry for non-base year
Transport
Survey
〃
〃
Aug of the following
year
〃
Sales of the transportation industry
Title
Census of
Service Industry
Household
Income and
Expenditure
Survey
〃
Monthly
Quarterly
(10th day of the
second following
month)
Retail Sales
Statistics
〃
〃
Monthly
(following
month-end)
Service Industry
Activity Index
〃
〃
〃
Shipment for
domestic market
〃
〃
〃
Survey method
Major information
Face-to-face
Sales by sub-classes, the sales ratio to
interview
consumers, etc. for the service
(investigator's entry) industry(excluding transportation sector)
Housekeeping book Volume, structure and trend of income &
(respondent's entry) expenditure of households
Face-to-face
Trend of retail sales in terms of business type and
interview
group of
(investigator's entry) goods
〃
Value and volume indexes on sales-basis for the
service industry
〃
Producers' sales activities and trend of shipment
of the mining and manufacturing industry by
item.
III-i. Estimation Method in Reference year
Final consumption expenditure of household
= Total expenditure in domestic market
– Direct purchases in domestic market
by non-resident households
+ Direct purchases abroad by resident households
III-i. Estimation Method in Reference year
• Total expenditure in domestic market
– Total expenditure of goods
• Estimated based on sales by industry using ratios of selling to
household consumers in ‘the Census of Service Industry’
• Disaggregated for expenditures by item using ‘Household
Income & Expenditure Survey’ and other sources
– Total expenditures on services
• Based on ‘the Census of Service Industry’, ‘Household
Income & Expenditure Survey’, and et cetera
III-i. Estimation Method in Reference year
• Direct purchases abroad by residents
/Direct purchases in domestic market by non-residents
– Compiled based on the estimates of the external transaction
account
– Estimate data by reclassifying “Balance of Payments
statistics (e.g. travel services and credit card usage)”
III-ii. Estimation Method in Current year
• Nominal value estimation method in current year
– Principally calculated in the same method as in reference
year
– Estimated on different grounding sources
E.g. ‘Whole and Retail Trade Survey’, ‘The Service Industry Survey’,
‘The Service Industry Activity Index’, et cetera (instead of ‘The
Census of Services Industry’)
III-ii. Estimation Method in Current year
• Real value estimation in current year
– Estimated by dividing nominal value into related deflators
– Nominal value exists under the COICOP classification
system
– Add up nominal and real values by COICOP code to obtain
the final consumption expenditure of households by
purpose and by type
III-ii. Estimation Method in Current year
• Direct Purchases by residents and non-residents
– Compiled based on external transaction account estimates
– Deflators for Direct Purchases Abroad by Residents:
Exchange-rate adjusted consumer price index of major
travel countries
– Deflators for Direct Purchases in Domestic Market by Nonresidents : Domestic consumer price index
V. Household Income & Expenditure Survey
• Differences between National Accounts Statistics and
Household Income & Expenditure Survey :
① Coverage (by subjects or by items)
② Bias due to the limitation of sampling method
③ Classification system
 Limited compatibility between National Account and
Household Income & Expenditure Survey (HIES)
Ⅳ. Household Income & Expenditure Survey
① Coverage by Subjects
• National Accounts : Households + NPISHs
• HIES : Households only!
– In addition, HIES excludes certain households1)
1) Farm and Fishery HHs, Communal HHs and HHs
running restaurant and hotels in their own houses
– The Coverage Ratio is 90.5%
Ⅳ. Household Income & Expenditure Survey
② Bias inherent in Sampling Method (HIES)
• Non-response rate tends to be high in high-income HHS.
– On average, non-response rate was 18.9% in 2008
• Under-reporting could happen, especially in :
– Income : Self-employment income, property income
– Consumption : Sin item (i.e. tobacco, alcoholic beverages)
• Sampling bias has been reported frequently in many
comparative studies carried out in many OECD countries.
Ⅳ. Household Income & Expenditure Survey
③ Different Classification Systems
• Classification Systems are different
– Ex) Withdrawal from income of Quasi-corporations :
Property Income (National Accounts) vs.
Income for Self-Employment (HIES)
Ⅳ. Household Income & Expenditure Survey
 USE of HIES in Compiling GDP statistics
• Total amount of income/expenditure/savings : Pointless
• Absolute value by item level : Limited
• Desirable to use detailed goods/service-level
information(mainly increase rate) of HIES
to estimate National Accounts
Ⅳ. Household Income & Expenditure Survey
 USE of HIES : Income Sector
• HIES mainly as a reference
• Only a few items* are directly applicable
Household Survey
Current transfers between households (in current transfer paid)
↓
National Accounts
Current transfers between households (in other current transfers)
Ⅳ. Household Income & Expenditure Survey
 USE of HIES : Personal Consumption Sector
• HIES is More useful than Income Sector because :
– Many items are comparable in concepts or in classification
system between HIES and Personal Consumption
– Subdivision of HIES items are most detailed
• Use of item-level absolute value (Benchmark year) :
– Private tutoring fee, residence related services, household
services, and etc. (of course, after parameterization)
Ⅳ. Household Income & Expenditure Survey
 USE of HIES : Personal Consumption Sector (cont’d)
• Use of weights information among items :
– ‘clothing and footwear related services’, ‘furniture,
furnishings and household equipment and operation related
services’, and etc.
– First, Estimate total amount based on ‘the Census of Service
Industry’ and apply the HIES weights
• Use of increase rate :
– In most items
– Retail Control Method : determine total amount based on
other statistics such as ‘Whole and Retail Trade Survey’