Expert Group Meeting to review the “Handbook on SUT: Compilation, Application and Good Practices”

1. Expert Group Meeting to review the “Handbook on SUT: Compilation, Application and Good Practices” Chapter 7: Balancing supply and uses Economic Statistics and National Accounts Section African Centre for Statistics (ACS) United Nations Economic Commission for Africa (UNECA) Addis Ababa, Ethiopia 24-28 October 2011

2. Outline of the presentation • Example 1 (Manual balancing) • Example 2 (Manual balancing) • Driving factors (of the manual balancing) • Automatic balancing: RAS Method • Comments • Questions for discussions

3. Example 1: garments

4. Example 1: Firm figures • The compiler decides on firm figures: • Imports and exports • Taxes and subsidies • Government and NPISH consumption expenditure • Gross fixed capital formation • Changes in inventories

5. Example 1: Data sources • The compiler analyses data sourcesto identify weaknesses : • For households expenditures, the coverage of the survey can be criticized: “Decision to reduce it of 4%” • For domestic production, the survey was made three years ago and the coverage can be criticized (because of the type of enterprises producing this type of products): “ Domestic production becomes a balancing item”

6. Example 1: Balanced table

7. Example 2: Advertising services

8. Example 2: Analysis • VAT are paid by HH: Estimation of HH expenditures is possible • HH expenditure = (Tax amount / % VAT) + Tax amount • Government does not usually purchase this type of products: • Enterprises must have purchased these products as intermediate consumption

9. Example 2: Balanced table

10. Driving factors • Identification of consistent figures to define pivots • Identification of the weaknesses of the data sources: adjustments needed • Experts opinion and good knowledge of the economy are important • Type of products under analysis will help also

11. Chapter 7: Automatic balancing • Example of balancing through the usage of the RAS method

12. RAS Method: assumptions • There exist an input-output table estimated from full-data for a past year. • Row and column sums for the input-output table of the present year are available. • The content of the matrix is empty.

13. RAS method: objectives • Objective: finding a set of multipliers to adjust the columns and the rows so that the sum of the cells of the adjusted matrix will be equal to the required rows and columns.

14. RAS Method: mathematical background • A(1) = • A (1) = Matrix of multipliers: substitution effects Matrix of multipliers: fabrication effects Coefficient matrix of the benchmark year

15. RAS method: example (1/5) • Benchmark year matrix

16. RAS method: example (2/5) Coefficient matrix of the benchmark year • Year 1

17. RAS method: example (3/5) • First iteration

18. RAS method: example (4/5) • Adjustment resulting from the 1st iteration

19. RAS method: example (5/5)

20. Comments • Presentation of the RAS method is not easily accessible • For the manual balancing, it would be good to list the key factors which do give orientations to the SUT compilers

21. Questions for discussions • What are the missing elements in the list of key factors used for manual balancing? • What are the advantages, the disadvantages resulting from the usage of the RAS method? • What is the bias resulting from the usage of the RAS method?

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