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Addressing cross-cutting issues for SPPI’s – 2008 Revision

Addressing cross-cutting issues for SPPI’s – 2008 Revision. Matt Berger 23 rd Voorburg Group, Aguascalientes, Mexico 2008. Why are we here?. Establishing internationally comparable methodologies for service sector GDP “ Constant dollar output of the service industries ”

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Addressing cross-cutting issues for SPPI’s – 2008 Revision

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  1. Addressing cross-cutting issues for SPPI’s – 2008 Revision Matt Berger 23rd Voorburg Group, Aguascalientes, Mexico 2008

  2. Why are we here? • Establishing internationally comparable methodologies for service sector GDP • “Constant dollar output of the service industries” • Emphasis on SPPI’s, classifications and turnover surveys • And bringing them together for service sector GDP Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  3. Revision? Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  4. Revision! • Need identified at 21st Voorburg Group, Wiesbaden 2006 • Presented at 22nd Voorburg group, Seoul 2007 • Discussion • Clarifications and suggested changes • Paper updated • Presentation will focus on key issues Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  5. Product versus Industry • National accounts require product level SPPI’s • Industry SPPI’s exist because • National statistics office historical infrastructure • Multiple uses of SPPI’s • Deflators, upstream indicators of inflation, contracts, international comparison • Use of industry SPPI’s not appropriate • Except under strict assumptions regarding secondary production & quality Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  6. Scope of SPPI’s • National accounts require SPPI’s to measure all outputs of service sector • Not just business-to-business • Not just domestic sales • Exports of services can occur even though service delivered within geographic boundaries • Non-resident purchaser • Difficulties might arise in separately identifying export transactions • But different destination mean different products Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  7. Methods based on working time • Pricing method results in biased measures of GDP • Except for supply of personnel type services • Arise frequently in practice because: • Model pricing too burdensome • Pricing mechanisms use working time • Steps to mitigate bias • Only partial - bias still exists! • Suitable only when consistent relationship between constant quality price of the service and labour inputs • Need to determine when this relationship changes • Subcontracting! Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  8. Changes to the production function • Changes to production function might change the service • IT changes typical example • SPPI measurement needs to identify • When change occurs • Whether products have changed Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  9. Bundling • Feature of a pricing mechanism • Resolved via component approach • difficult in practice • Aggregate of components may cross “product classification” lines • “Logistic solution” includes freight plus storage • Common problem across all price indices • Work with Ottawa Group? Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

  10. Questions? • Thank you Voorburg 2008 ONS - Cross Cutting Issues for SPPI's - 2008 Revision, 22-26 September 2008

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