Expenditure weights

1. Expenditure weights Silke Stapel Head of PPP section Eurostat

2. Overview • ICP 2004 expenditure questionnaire • Handling of the software • Sources for final consumption expenditure by households

3. Main “rule” 1 to be remembered National Accounts is an art, not a science (David Roberts)

4. Main “rule” 2 to be remembered We need a weight for each basic heading.

5. Main rules to be remembered What does this mean? • brave estimates maybe necessary to establish weights for each basic heading • heroic assumptions may have to be made • comparison, comparison, comparison • cross checking, cross checking, cross checking • believe in common sense

6. ICP 2004 expenditure questionnaire • Structure of the questionnaires (1) • follows the ICP expenditure classification • Maximum version as used by Eurostat/ OECD • Minimum version for ICP • regions may decide on intermediate levels • regions may split certain basic headings

7. ICP 2004 expenditure questionnaire • Structure of the questionnaires(2) • 222/ 158 Basic Headings (level 6 of the software) • 152/ 126 Classes (level 5 of the software) • 71/ 61 Groups (level 4 of the software) • 31/ 26 Categories (level 3 of the software) • 7/ 7 Main Aggregates (level 2 of the software) • 1/ 1 GDP (level 1 of the software)

8. Handling of the software Every number has to be entered only once.

9. Handling of the software • weights at Basic Headings’ level to be entered • all subsequent aggregations are calculated • if weights only exist at aggregated level, formula can be overwritten by respective number • manually entered aggregated numbers are copied to all levels they belong to and are used for all subsequent aggregations

10. Sources for final consumption expenditure by HH Reminder 1 • we want to compare price levels and volumes • not only structure of GDP (weights), but also level of GDP matters • in parallel to price collection GDP must be improved, particularly exhaustiveness • consistency between prices collected and prices underlying GDP is important

11. Sources for final consumption expenditure by HH Reminder 2 • always cross-check different sources • simple comparison, common sense, what do you believe more? • set up simple use and supply tables (SUT) or input output tables (IOT) • use product balances and commodity flow

12. Sources for final consumption expenditure by HH Reminder 3 National Accounts is not the police • we do not care if something is legal or illegal • all economic activity and all expenditure should be covered in exhaustive accounts

13. Sources for final consumption expenditure by HH Supporting NA material from Eurostat • Exhaustiveness project guidelines and templates • Guidelines and analytical tables for private household consumption estimates • NA questionnaire on income in kind, own account production and tips

14. Sources for final consumption expenditure by HH Need for co-operation (1) • Coverage and structure of GDP can only be improved if there is good co-operation between: • Statistical offices • Ministry of Finance/ Economy/ Planning • Tax offices (VAT, income taxes) • Police and customs • professional and consumers organisations • Charities

15. Sources for final consumption expenditure by HH Need for co-operation (2) • RC should recommend countries’ NSI to invite these other bodies and explain them objectives and scope of the exercise • win understanding and support • get access to sources you did not know they exist or which were confidential • RC may try to help NSI with particular co-operation problems

16. Sources for final consumption expenditure by HH Timing of weights exercise • RC provide countries with the expenditure weights questionnaire and NA questionnaires after this workshop • Countries complete questionnaires with the most recent information available by June 2003 • RC analyse responses and identify countries in need for technical assistance by September 2003 • discussion at regional workshops • RC/ global office organise technical assistance from January 2004 • acceptable weights available by mid-2005

17. Sources for final consumption expenditure by HH Typical sources: expenditure point of view • household budget/ expenditure surveys (HBS) • typical problems: • undercoverage of certain expenditure • undercoverage of poor and very rich households

18. Sources for final consumption expenditure by HH Typical sources: production point of view • Retail trade statistics (RT) • Production statistics (industry, agriculture) • VAT or sales tax statistics • Sales by utility companies and state monopolies • Import and export statistics • typical problems: • undercoverage of small units, thresholds • tax aviation, “double” bookkeeping, underground economy • smuggling

19. Sources for final consumption expenditure by HH Typical sources: others • Nutrition surveys/ health statistics • national food balances • FAO food balances’ database • Motor vehicle registration • statistics by professional organisations

20. Sources for final consumption expenditure by HH Food and non-alcoholic beverages • less problematic, but watch: • own account production • charities • sources: • HBS • RT, VAT, • production statistics, imports, exports • food balances, nutrition surveys

21. Sources for final consumption expenditure by HH Alcoholic beverages and tobacco • very problematic: • own account production • HBS understates considerably • production statistics and RT underreport • foreign trade statistics underreport (smuggling) • additional sources: • Ministry of health (smoking and drinking habits) • capture rates of customs/ police • mirror foreign trade statistics

22. Sources for final consumption expenditure by HH Narcotics • Politically very problematic, but if important production/ expenditure exists, estimate should be made • additional sources: • Ministry of health • capture rates of customs/ police • assistance organisations for drug addicts • number of consumers of drugs by type of drug • per head consumption • street prices

23. Sources for final consumption expenditure by HH Clothing and footwear • less problematic, but watch: • own account production • charities • sources: • HBS • RT, VAT, • production statistics, imports, exports

24. Sources for final consumption expenditure by HH Actual rents for housing • often problematic: • unrepresentative rental markets • state regulated rental markets • subsidies, social transfers in cash and kind • infrequent sources with often small sample size • sources: • rent, real-estate agency surveys • census, micro-census • administrative information

25. Sources for final consumption expenditure by HH Imputed rents for housing (1) • Stratification or user cost? • Stratification: assume for owner-occupied dwelling same rent as for similar rented dwelling • sufficiently big rental market must exist • rents used must be representative • leads to rents approach in PPP

26. Sources for final consumption expenditure by HH Imputed rents for housing (2) • User cost: Establish GVA (as for other non-market production) by sum of the cost • criteria for stratification not fulfilled because of high owner-occupation • good estimate of capital stock necessary as consumption of fixed capital is vital part of the user cost method • see Eurostat project guidelines and templates • leads to quantity approach in PPP

27. Sources for final consumption expenditure by HH Water, Gas, electricity, other fuel • Problematic because of income in kind and social transfers in cash and kind • sources: • HBS • RT • sales by utility companies and state monopolies • imports and exports • administrative sources on free of charge (or at reduced prices) provision to households

28. Sources for final consumption expenditure by HH Furnishings, household equipment etc • less problematic, but watch: • own account production for furniture • sources: • HBS • RT, VAT, • production statistics, imports, exports

29. Sources for final consumption expenditure by HH Health • problematic because of • different social security systems • mixture of state and private systems • subsidies, social transfers in cash and kind • sources: • social security, ministry of health • hospital statistics • HBS • production statistics, imports, exports • statistics on pharmaceutical bulk and retail trade

30. Sources for final consumption expenditure by HH Purchases of vehicles • problematic because of • second hand cars, smuggling of stolen cars • discounts • sources: • HBS • RT, VAT • production statistics, imports, exports • car registration information • information from car dealer organisations and automobile clubs on discounts

31. Sources for final consumption expenditure by HH Operation of personal transport equipment • fuel • HBS • RT, VAT, mineral oil tax • production statistics, exports, imports • maintenance and repair: • HBS • service statistics • information from automobile clubs • watch: do it yourself, helping neighbors, black market for making stolen cars not recognizable

32. Sources for final consumption expenditure by HH Transport services • problematic because of • mixture of state and private systems • subsidies, social transfers in cash and kind • sources: • ministry of transport, service statistics • HBS • sales by state monopolies • administrative sources on free of charge (or at reduced prices) provision to households • internet

33. Sources for final consumption expenditure by HH Communication • problematic because of • mixture of state and private systems • mixture of services and goods • sources: • ministry of communication, service statistics • HBS • sales by state monopolies • internet

34. Sources for final consumption expenditure by HH Recreation items and equipment, personal effects • less problematic • sources: • HBS • RT, VAT, • production statistics, imports, exports

35. Sources for final consumption expenditure by HH Recreational and culture services • less problematic, but watch • subsidies, social transfers in cash and kind • sources: • ministry of culture, sport, tourism • culture statistics • tourism statistics • HBS • internet

36. Sources for final consumption expenditure by HH Education • problematic because of • mixture of state and private systems • subsidies • social transfers in cash and kind • sources: • ministry of education, service statistics • education statistics • HBS

37. Sources for final consumption expenditure by HH Restaurants and hotels, personal care • problematic because of • tips • consistency of prices in PPP and NA • sources: • service statistics • tourism statistics • HBS

38. Sources for final consumption expenditure by HH Prostitution • Politically very problematic, but if important production/ expenditure exists, estimate should be made • problematic borderline to legal services like massage and sauna clubs • sources: • Ministry of health • police • assistance organisations for prostitutes • number of persons providing and consuming services • prices, intermediate consumption

39. Sources for final consumption expenditure by HH Social protection • content: • payments of households for assistance and supports services provided to persons who are elderly, disabled, survivors, homeless etc. • sources: • HBS • organisations providing such services • respective ministries of health, social affairs etc.

40. Sources for final consumption expenditure by HH Insurance • Reminder: • we are only looking at the service charge • Sources: • insurance supervising bodies • ministry of finance/ economy • consumer organisations • insurance dealers • insurance company business accounts

41. Sources for final consumption expenditure by HH FISIM/ Other financial services • FISIM: calculations by the statistical offices based on information from: • ministry of finance/ economy • national central banks • banking and finance supervising bodies • Other financial services (banks charges): • banking supervising bodies • national central banks • consumer organisations • financial dealers

42. Sources for final consumption expenditure by HH Net purchases abroad • Purchases by residents abroad: • HBS • tourist surveys • national bank (money exchange) • Purchases by non-residents on economic territory of the country • tourist surveys • national bank (money exchange) • special survey among retail traders

43. Sources for final consumption expenditure by HH Thank you for your patience