Balancing supply-use tables

1. Balancing supply-use tables Ann Lisbet Brathaug Steinar Todsen Statistics Norway OECD WP NA October 2006

2. Introduction • SUT integrated part of the Norwegian national accounts system for more than 30 years. • Detailed SUT in current and constant prices are compiled as part of the final annual accounts, • Published with a delay of about two years. • GDP and other important macroeconomic aggregates are derived directly from the SUT.

3. The SUT framework • 150 activities specified in terms of NACE specifications, + 30 cross-classified by categories of production (market, government, NPISH etc). • 1250 products • 700 goods • 300 services • 250 aggregate products or products of a technical nature

4. Supply table

5. Use table

6. Use of aggregation accounts • Use of aggregation accounts for intermediate consumption and asset types for GFCF • Way of combining the detailed product information on the supply side with the more limited info on uses. • An aggregation account • Receives detailed NA-products • Supplies a single aggregate product, which is then allocated to users

7. Aggregation accounts • Reduces the size of the use table significantly • 68 asset types for GFCF • 34 aggregate products for intermediate consumption • About half relate to repairs and military equipment • In 2003, about 33 per cent of the total value of intermediate consumption was allocated to these ”products”

8. IT system • Based on SAS • Graphical user interface • Data in SAS datasets during the balancing process • Finished SUT copied to Oracle database for permanent storage and easy access. • Multi-user system,data stored on a central UNIX server • Clients (Windows PCs) connected to the server

9. Inputs to the current price SUT • Output at producers’ value, by industry and product • Intermediate consumption at purchasers’ value (excluded deductible VAT), by industry and product (detailed and aggregated) • GFCF at purchasers’ value (excluded deductible VAT), by industry and asset type

10. Inputs to the current price SUTcont. • Final consumption expenditures at purchasers’ value, by function (COICOP etc) and product • Imports (cif), custom duties and exports (fob) by product • Possible to use value indices for industries/use categories, and use product structure of previous year • VAT rates, by product and use category • Taxes and subsidies on products, time adjusted and allocated to products and to producers or traders • Trade and transport margin rates, by product and use category

11. Initial establishing of the SUT • The inputs are loaded into the SUT application as text files with a fixed format • The supply table in current prices is first established in producers' value • Taxes on products are distributed between domestic suppliers and imports of the products • Subsidies on products are distributed between domestic suppliers of the products • Finally, the supply table is calculated in basic value by deducting net taxes on products from the producers' value

12. Initial establishing of the SUT cont. • Use table in current prices is first established in purchasers' value. • VAT rates and trade and transport margin rates are applied to form the various valuation layers. • Taxes and subsidies on products are distributed among the domestic uses (proportionally with some exceptions). • Use table in basic value is calculated by deducting net taxes and margins from the purchasers’ value. • Changes in inventories by product are calculated by the commodity flow method, as the difference between supply and other uses.

13. Result of the first phase SUT with all the required cells filled in, but with a number of imbalances: • There will be changes in inventories on products that cannot be stored (most services and some perishable goods). • Changes in inventories on products that can be stored (mainly goods) may be too big (negative or positive). • Sum of trade and transport margins in the use table will not be in line with the output of trade and transport services. • Aggregation accounts for asset types and "undistributed intermediate consumption" will not balance.

14. Balancing • Mainly manual process • Begin by printing a detailed report with data for the current year and finalised data for the previous two years. • Useful for identifying missing data and other errors in the inputs, and to see if the development over time looks reasonable. • Changes made either interactively or by loading a text file with a fixed format • When a variable is changed, all dependent variables are recalculated automatically

15. Balancing cont. • During manual balancing changes in inventories for services and perishable goods are set (close) to 0. • Adjustment process involves changing other components of use or supply. • Where the adjustments are made depend on the strengths and weaknesses of the various source statistics. • If large adjustments are necessary, the person responsible for preparing the inputs is contacted, and possible errors and estimation problems discussed. • Unless we decide to change the overall balance of supply and use, residuals for services is transferred to residuals for goods that can be stored • Automatic adjustment procedure (simple RAS) is used for “fine-tuning”

16. SUT at constant prices • Compiled by deflating the current price SUT by price indices at the product level. • This results in integrated Laspeyres volume indices and Paasche price indices. • Each of the 1000 CPA products has three price indices: • Domestic production delivered to domestic uses (basic or producers’ prices) • Imports (CIF) • Exports (FOB) • The three price indices are used to deflate the corresponding current price figures.

17. SUT at constant prices cont. • For each product, total domestic use at constant prices is calculated at basic value as total domestic supply plus imports minus exports. • Distributed proportionally with domestic uses at current prices. • Supply and use of each product in constant prices will balance. • Purchasers' value: Applying tax rates and trade margins from the previous year to basic value. • Household consumption expenditures are adjusted to reflect CPI, which will have consequences for output from wholesale and retail trade services at both current and constant prices