Which way forward for national accounts ? An overview

1. Which way forward for national accounts ?An overview

2. Which way forward for national accounts ? • The central framework : what is not changing ? what is changing ? which open issues ? • Income distribution and well-being : - breaking down the households’ account into categories • - articulation with social satellite accounts • Micro/macro articulation in the enterprises’ sector • National accounts and globalization of production processes • Interactions Economy / Nature • Implementation: which governance ?

3. The central framework (1) • No change • Reference units grouped into few institutional sectors • An accounting framework including current accounts, accumulation accounts and balance sheets • specificity: « capital gains » accounts • Classifications: transactions, other flows, assets and liabilities • Accounting rules • Are part of the central framework • IOT – including data on production factors • volume-price decomposition • Estimates are mostly derived from observed data; modelling takes up limited room

4. The central framework (2) • No change - Beyond GDP • Net macro aggregates • Disposable income and adjusted disposable income • The link between flow accounts and balance sheets accounts : the three origins of the changes in net worth • Production is still a key concept : the necessary equality between value added and income (at the global level) • Possibility to use revaluation accounts to undertake additional analyses

5. The central framework (3) • Innovations et open issues Innovations (SNA08) Welcome ones… • Treatment of R&D as fixed asset • Evaluation of pension entitlements, whatever the kind of pension scheme considered … and a less happy one • Treatment of military equipment as fixed asset • Open issues • Output measurement for financial activities • Improvements in price/volume measurement (GFCF, non market) • An economy of products for free

6. Income distribution and well-being Breaking down the households’ account by groups (1) Why ? • HH account : An indispensable account, built up directly at a macro level by way of « mirroring », thanks to the central NA framework… …that says however nothing about the heterogeneity of individual situations • Bridging micro and macro approaches, on the basis of HH surveys : knocking down the « dictatorship of average figures », while enhancing their credibility • A productive dialogue between specialists in micro social statistics and national accountants, that can trigger quality enhancement of statistics produced on both sides

7. Income distribution and well-being Breaking down the households’ account by groups (2) First results (for France) • HH account by category - standard of living, household composition, employment status, age of the head of household - in 2003 : income, final consumption expenditure, actual final consumption Work to undertake • Complete the breaking down exercise to capital account, financial accounts and balance sheets (in practice, only the last one seems attainable at medium term for France) • Produce an evaluation of HH account by category in evolution • Coordinate this type of work at international level (see OECD/Eurostat recent initiatives)

8. Income distribution and well-being Link with social satellite accounts exemple : education • Within the scope of NA • Factors of production (nb of teachers, schools) • Volume of service output (nb of students, successful exams) • Taking into account a quality effect (reasoning « every things being equal  » for succeeding in an exam)  • Outside the scope of NA • Well-being derived from the use of education services, which depends upon the volume of services provided but also of other factors (student’s leasure time, socio-cultural environment…) • Social satellite accounts should be designed to present ressources put at disposal by the economy and well-being indicators

9. Micro/macro linkage in the enterprises’ sector Work to undertake • Breaking down the non financial corporations into categories : small/medium/large, public/private, listed/ unlisted on stock markets • Possible to compile production and generation of income accounts using existing business statistical sources ; • Investigate the feasibility of the compilation of distribution of income account • For the purpose of this project, it is necessary to raise the issue of the reference statistical unit : switching from the legal unit to the « real » corporation from an economic point of view, profiling multinational enterprises in « operational divisions »

10. National accounts and globalization of production processes (1) • MNEs’ development is weakening the estimation quality of national macroeconomic aggregates Large and increasing part of exchanges in goods and services and of distributive transactions between the national economy and the RoW are « intra-OD » Work to undertake • Distinguishing within the corporation sector « resident corporations » and « resident subsidiaries of multinational corporations» • Compiling a complete account of multinational corporations that are (partially) resident • Systematically distinguishing in SUT the transactions on products taking place within a same economic unit

11. National accounts and globalization of production processes (2) • Today: M + P = IC + C + GCF + X • Tomorrow : Within economic units M’ + P’ = IC’ + C’ + GCF’ + X’ Between economic units M’’ + P’’ = IC’’ + C’’ + GCF’’ + X’’ multinational country

12. Put the emphasis (also) on final demand Estimate physical quantities of pollutants due to final demand products (carbon footprint for instance) Evaluate ecological hidden costs, in monetary value Increase the value of final demand = costs payed (price) + ecological costs not payed related to damages to environmental assets Interactions Economy / Nature (1)

13. An enlarged central framework - 1 Interactions Economy / Nature (2) planet Nature Economy

14. An enlarged central framework - 2 Interactions Economy / Nature (3)

15. Work to undertake Produce « footprint » accounts by type of pollutants on a regular basis How to estimate unpaid ecological costs in monetary value ? Launch pilot operations Interactions Economy / Nature (4)

16. Implementation: which governance ? • Large improvements to make on concepts, methods and information to be collected • Develop international statistical collaborations (exchanges and co-production of statistical information) and inter-disciplinary collaborations (statistics, economy, engineer sciences, social sciences) • A logic of « clusters » : experiment before launching large scale projects under the umbrella of international comparisons. • Building up Purchasing Power Parities at a global scale: a governance model to follow ?

17. Thank you for your attention