Transcript Slides - World KLEMS

KLEMS and the NIPAs
J. Steven Landefeld, Director
World KLEMS Conference
Harvard University
August 20th, 2010
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Integration: the foundation for KLEMS
work
▪ Provide a complete set of accounts for the
total economy and various sectors
▪ Ensure consistency in macroeconomic
data used in the accounts
▪ Integrated statistics allow users to focus
on analysis rather than making
adjustments to the data
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Importance of consistent data by Industry
Differences in Growth Rates of Real Value Added, 2007
[Percent]
30
25
20
15
10
5
0
Motor Vehicles
Computers
Published
Manufacturing
Durable Goods
Simulated
NOTE: Measures of value added were allowed to increase (decrease) by the difference in wage data between BLS
and the Census Bureau.
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Importance of consistent data on Income
Percent Change of Profit Measures
60%
40%
Y/Y Percent Change
20%
0%
-20%
-40%
-60%
-80%
1999
2000
2001
2002
S&P Operating Earnings
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QFR Profits (Mining,MFG,Trade)
2003
2004
2005
2006
2007
SOI (Total Receipts less Total Deductions)
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Integrated and Expanded Accounts
▪ Integrated accounts would include:
 More complete reconciliation and balancing
of the components of the U.S. accounts
produced jointly by BEA, BLS, and the FRB
 Common concepts
 Business sector, non-farm business, etc.
 Common methods
 Seasonal adjustment, extrapolation and interpolation
 Common source data
 Accuracy and consistency vs. historical practice
 Common, and or, reconciled business registers
and classifications
 Expanded data sharing authority
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Integrated and Expanded Accounts
▪ Integrated accounts would include:
 A complete production account, based on:
 Integration of NIPA’s and MFP accounts, with real and
nominal values
 Addition of estimates of capital services for government
and nonprofits.
 Longer-term: development of output based measures of
government and non-profit product.
 A complete integration of real and financial
accounts, based on:
 Integration of BEA’s NIPA, Wealth, Balance of Payments,
Industry, and Regional data with the Fed’s Flow of Funds
and Balance Sheet Estimates
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Integrated and Expanded Accounts
▪ Integrated accounts would include:
 R&D, Natural Resources, and
Human Capital
 Energy-Environment
 Health Care, Household Production,
and
 Pensions
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Current work & future plans on integration
efforts
▪ Existing Integration Work:
 Better integration of BEA Industry and GDP
Accounts; quarterly GDP by industry
 Quarterly Final Expenditures, Income, and
Production-based estimates
 FRB-BEA Annual and Quarterly Estimates:
 http://www.bea.gov/national/nipaweb/Ni_FedBeaSna
 BLS-BEA Annual GDP-MFP Estimates:
 http://www.bea.gov/national/integrated_prod.htm
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Integrated Production Account
▪ GDP for government and nonprofits is now
measured as compensation plus depreciation
(capital consumption allowances)
▪ More complete measure of the cost or value of
capital services would be rental value:
 Rental Value = rNS + Dep – Expected Capital Gain
or Loss
 Picking an appropriate rate of return is difficult
(private business sector IRR used below)
 SNA recommended supplemental item
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Integrated Production Account
▪ Other adjustments, including
 Private sector labor and capital inputs,
 Government labor inputs (adjusted for labor
composition)
▪ Such an integrated system would enable users
to identify the sources of changes in
productivity and cross-walk them to GDP and
its components:
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Product
Industry
Type of income/value-added
Gross Output
Final sales
Intermediate products
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International Integration:
▪ Closing the gap on international
inconsistencies:
 FISIM treatment
 Valuations in factor, basic, producer prices used in
value added
 Measuring depreciation
 Business accounting standards (IFRS vs. GAAP for
R&D)
 Seasonal adjustment practices
 Software: accounting & prices
 Common business registers
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Variation in software prices
Investm ent in softw are. Price indices in recent years. 1995=100
SWE
140
GRC
130
FIN
120
SPA
110
ITA
100
90
NDL*
80
FRA
70
USA *
60
CAN *
50
DEN
1992
1993
1994
1995
1996
1997
1998
1999
2000
AUS
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Variation in capitalized services
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Benefits of International Integration:
▪ Value of consistent macro estimates for
coordinated fiscal, monetary, trade,
regulatory and tax policies:
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EU KLEMS:
SNA 2008
IMF Balance of Payments Manual
EU Price Manual
UN Guidelines on Integrated Economic
Statistics
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