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Integrating Industry and National Economic Accounts

Integrating Industry and National Economic Accounts. Ann Lawson, Brian Moyer, Sumiye Okubo, and Mark Planting Industry Economics Division Presentation for the 2004 OECD National Accounts Expert Meeting October 12-15, 2004. Outline. BEA’s vision for integrating the accounts

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Integrating Industry and National Economic Accounts

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  1. Integrating Industry and National Economic Accounts Ann Lawson, Brian Moyer, Sumiye Okubo, and Mark Planting Industry Economics Division Presentation for the 2004 OECD National Accounts Expert Meeting October 12-15, 2004

  2. Outline • BEA’s vision for integrating the accounts • Methodologies for integration • Steps for integration • Future research www.bea.gov

  3. BEA Accounts 1. Expenditures approach: GDP = C + I + G + (X - M) 2. Income approach: GDP = Compensation of employees + Gross operating surplus + Taxes on production and imports, less subsidies 3. Production approach: GDP = Gross output - Intermediate inputs Three approaches to estimate GDP www.bea.gov

  4. BEA’s Vision for Integrating the Accounts • Long-term: Full Integration (2008-2010) • Integration of all industry accounts and integration of industry accounts with the national income and product accounts (NIPAs) • Provide a third independent measure of GDP • Short-term: Partial Integration (2004-2007) • Integration of the Annual I-O and GDP-by- industry accounts www.bea.gov

  5. I-O accounts Value added = Gross output - intermediate inputs Quality of gross output is high, but overall quality of intermediate inputs is not GDP-by-industry accounts Value added = Compensation of employees + gross operating surplus + taxes on production and imports, less subsidies Quality depends on source data; gross operating surplus is most problematic Value Added Estimates Depend on Quality of Data www.bea.gov

  6. Partial Integration: Five Steps to Integrate Industry Accounts • Develop consistent level of industry detail • Develop revised 1997 benchmark I-O table • Develop time series of gross output and value added by industry • Apply I-O framework to develop time series of annual accounts • Develop real (inflation adjusted) measures www.bea.gov

  7. Step 1: Develop Consistent Level of Industry Detail www.bea.gov

  8. Step 2: Develop Revised 1997 Benchmark I-O Table • Incorporate results of 2003 NIPA revisions • Set best levels and composition of value added for each industry • Incorporate the best estimates from both sets of accounts www.bea.gov

  9. Good Benchmark data/ poor GDP-by-industry data  e.g., Mining Good Benchmark data/ good GDP-by-industry data e.g., Health care Poor Benchmark data/ good GDP-by-industry data e.g., Transportation/ Warehousing Poor Benchmark data/ poor GDP-by-industry data e.g. Construction Merging Information for Value-Added Levels Benchmark I-O Value Added GDP-by-Industry Value Added www.bea.gov

  10. Evaluation Criteria: (1) Benchmark I-O Accounts • Share of an industry’s intermediate inputs covered by quinquennial economic census • Share of an industry’s total gross output accounted for by quinquennial census www.bea.gov

  11. Evaluation Criteria: (2) GDP-by-Industry Accounts • Quality and size of adjustments made to convert enterprise-based, profit-type income to establishment basis • Share of an industry’s value added accounted for by proprietors’ income www.bea.gov

  12. Merging Information from Benchmark I-O & GDP-by- Industry Accounts • Based on our criteria: • Identify point estimate and variance of value added for each publication-level industry in the benchmark I-O and GDP-by-industry accounts • Develop probability distribution of value added for each industry in each set of accounts • Combine the two distributions to get the “best” estimate of value added for each industry www.bea.gov

  13. Merging Information: An Example www.bea.gov

  14. Step 3: Time Series of Gross Output and Value Added by Industry • Set levels of industry gross output and value added to the revised 1997 benchmark I-O table • Extrapolate gross output by industry using annual survey data from the Bureau of the Census • Develop time series of value added by industry by applying GDI extrapolators to 1997 levels • Adjust industry estimates to take into account statistical discrepancy and extrapolation errors www.bea.gov

  15. Step 4: Develop Time-Series of Balanced Annual I-O Accounts • Prepare annual I-O tables, given estimates of gross output, value added, and final demand • Balance annual I-O tables to establish internal consistency and consistency with GDP-by-industry accounts www.bea.gov

  16. Input-Output Use Table www.bea.gov

  17. Step 5: Develop Real Measures • Apply double-deflation procedure to these measures of gross output and intermediate inputs to develop real measures of value added www.bea.gov

  18. Future Research • Evaluate coverage, quality, and consistency of source data from statistical agencies • Develop additional procedures to incorporate new data from 2002 Economic Census and intermediate input data from expanded annual surveys • Develop new processes and procedures for incorporating information from a production-based approach to measuring GDP into the NIPAs www.bea.gov

  19. Questions? • Sumiye.okubo@bea.gov www.bea.gov

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