An Introduction to the National Income and Product Accounts
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Introduction to Macroeconomics Lecture Notes
Introduction to Macroeconomics Lecture Notes Robert M. Kunst March 2006 1 Macroeconomics Macroeconomics (Greek makro = ‘big’) describes and explains economic processes that concern aggregates. An aggregate is a multitude of economic subjects that share some common features. By contrast, microeconomics treats economic processes that concern individuals. Example: The decision of a firm to purchase a new office chair from com- pany X is not a macroeconomic problem. The reaction of Austrian house- holds to an increased rate of capital taxation is a macroeconomic problem. Why macroeconomics and not only microeconomics? The whole is more complex than the sum of independent parts. It is not possible to de- scribe an economy by forming models for all firms and persons and all their cross-effects. Macroeconomics investigates aggregate behavior by imposing simplifying assumptions (“assume there are many identical firms that pro- duce the same good”) but without abstracting from the essential features. These assumptions are used in order to build macroeconomic models.Typi- cally, such models have three aspects: the ‘story’, the mathematical model, and a graphical representation. Macroeconomics is ‘non-experimental’: like, e.g., history, macro- economics cannot conduct controlled scientific experiments (people would complain about such experiments, and with a good reason) and focuses on pure observation. Because historical episodes allow diverse interpretations, many conclusions of macroeconomics are not coercive. Classical motivation of macroeconomics: politicians should be ad- vised how to control the economy, such that specified targets can be met optimally. policy targets: traditionally, the ‘magical pentagon’ of good economic growth, stable prices, full employment, external equilibrium, just distribution 1 of income; according to the EMU criteria, focus on inflation (around 2%), public debt, and a balanced budget; according to Blanchard,focusonlow unemployment (around 5%), good economic growth, and inflation (0—3%). -
Calculation of Owner-Occupied Dwelling Services In
Calculation of Owner-Occupied Dwelling Services in Georgia Abstract Output of owner-occupied dwellings (OOD) is included within the production boundary according to the System of National Accounts. Different methods may be selected for measuring OOD services due to housing market development level. The paper presents estimation of services produced by OODs based on a User Cost Method, which replaced a self-assessment method in 2019 year in the National Accounts of Georgia during the general revision of time series. Key words: Owner-Occupied Dwellings, Imputed rent, User Cost Method Author: Levan Karsaulidze – Head of National Accounts Department, National Statistics Office of Georgia Introduction Imputed rents, representing services produced by owner-occupied dwellings (OOD), has always been included within the production boundary of National Account and are part of the official GDP estimates of Georgia as well. In 2019 transition to the SNA 2008 was implemented1 in the National Accounts of Georgia from the SNA 1993, accompanied with a general revision of time series. Along with other major changes related to the newly adopted methodology, user-cost method was implemented for measuring imputed rents for owner occupied houses, while self-assessment method was used until 2019 year. The paper describes a methodological background and detailed calculation steps for measuring imputed rents of OODs in Georgia, based on the user-cost method, briefly summarizes widely used approaches for estimating services of OODs and provides arguments for adopting the use-cost method for the country. Final results are presented in the last part of the paper. 1. Methodological Framework Methodology for measuring imputed rents of owner-occupied dwellings differs by country based on a rental market development level. -
2015: What Is Made in America?
U.S. Department of Commerce Economics and2015: Statistics What is Made Administration in America? Office of the Chief Economist 2015: What is Made in America? In October 2014, we issued a report titled “What is Made in America?” which provided several estimates of the domestic share of the value of U.S. gross output of manufactured goods in 2012. In response to numerous requests for more current estimates, we have updated the report to provide 2015 data. We have also revised the report to clarify the methodological discussion. The original report is available at: www.esa.gov/sites/default/files/whatismadeinamerica_0.pdf. More detailed industry By profiles can be found at: www.esa.gov/Reports/what-made-america. Jessica R. Nicholson Executive Summary Accurately determining how much of our economy’s total manufacturing production is American-made can be a daunting task. However, data from the Commerce Department’s Bureau of Economic Analysis (BEA) can help shed light on what percentage of the manufacturing sector’s gross output ESA Issue Brief is considered domestic. This report works through several estimates of #01-17 how to measure the domestic content of the U.S. gross output of manufactured goods, starting from the most basic estimates and working up to the more complex estimate, domestic content. Gross output is defined as the value of intermediate goods and services used in production plus the industry’s value added. The value of domestic content, or what is “made in America,” excludes from gross output the value of all foreign-sourced inputs used throughout the supply March 28, 2017 chains of U.S. -
Quantitative Aspects of the Economic Growth of Nations: IV. Distribution Of
Quantitative Aspects of the Economic Growth of Nations: IV. Distribution of National Income by Factor Shares Author(s): Simon Kuznets Reviewed work(s): Source: Economic Development and Cultural Change, Vol. 7, No. 3, Part 2 (Apr., 1959), pp. 1- 100 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/1151715 . Accessed: 19/12/2011 08:16 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. The University of Chicago Press is collaborating with JSTOR to digitize, preserve and extend access to Economic Development and Cultural Change. http://www.jstor.org ECONOMIC DEVELOPMENT AND CULTURAL CHANGE Volume VII, No. 3, Part II April 1959 QUANTITATIVE ASPECTS OF THE ECONOMIC GROWTH OF NATIONS IV. DISTRIBUTION OF NATIONAL INCOME BY FACTOR SHARES* Simon Kuznets, The Johns Hopkins University I. Conceptual Problems The distribution for recent years of national income by shares approxi- mating factor payments can be illustrated by using the United Nations Yearbook of National Accounts Statistics, 1957. 1 The following shares are distinguished: i. Compensation of employees--all wages, salaries, and supplements, whether in cash or kind, to normal residents employed by private and public enterprises, households and non-profit institutions, and general government. -
Conceptual Framework
Chapter 2 CONCEPTUAL FRAMEWORK 2.1. Introduction .............................................................................................................................................. 19 2.2. Production Boundaries ........................................................................................................................... 19 2.3. Transactions and Other Flows................................................................................................................ 22 2.4. Units and Classifications of Units .......................................................................................................... 23 2.4.1. Institutional Units, Sectors and Subsectors ...............................................................................23 2.4.2. Kind of Activity Units, Local Units and Establishments ........................................................... 25 2.5. Economic Territory and Residence ....................................................................................................... 25 2.6. Current Price and Volume Measures..................................................................................................... 25 2.7. Labour Related Concepts....................................................................................................................... 26 2.8. The Production Approach....................................................................................................................... 28 2.8.1. Introduction................................................................................................................................... -
1. General Background of the Survey 1.1 Introduction the Economic
1. General Background of the Survey 1.1 Introduction The Economic Sector in Jordan is considered one of the most important sectors that contribute to the Gross Domestic Product (GDP), and in the employment of manpower. Due to this importance, the Department of Statistics conducts an annual sample survey for the establishments engaged in this sector. The survey covers all establishments. The importance of this survey arises from the detailed data that it provides, such as the number of establishments, compensation of employees, paid up capital, material inputs, other production expenditures, gross output, value added and size of investment. These data provide economic indicators and help in preparing the National Accounts of the Country. 1.2 Objectives of the Survey The overall aim of the survey is to provide data on, or for the calculation of the following items by type of activity: a. Number of establishments. b. Compensation of employees whether in cash or in kind. c. Gross output and intermediate consumption. d. Size of investment and capital formation during the year. e. To compute the contribution to the GDP. f. Providing data for further economic analysis. 1.3 Survey Coverage The Survey covers all establishments classified in one of the economic divisions of the International Standard Industrial Classification for all Economic Activities, Third Revision, (ISIC3). 1.4 Sample Design In designing the sample of this survey, the stratified random sampling method was used. Moreover, the sample was selected on the regional level, where, the survey universe in each region was divided into different strata . 2. Preparatory Stage 2.1 Survey Main Documents The documents include, the survey questionnaire, the instructions manual and the coding manual. -
L1A Production Accounts
PFTAC GDP Compilation and Forecasting Workshop Measuring GDP by production Suva, Fiji October 17-21, 2016 Session Outline • The production account • The production boundary • The production account and value added • Output • Intermediate consumption • Data sources 2 Production account • Starting point for the sequence of accounts • Compiled for – institutional units, sectors, industries and also for the total economy • Examples: . Production account for agriculture, manufacturing industries, etc. Production account for financial corporations (banks, insurance companies, etc.), general government sector 3 Production • Production is an activity in which an enterprise uses inputs to produce outputs. • It is a process carried out under the responsibility, control and management of an institutional unit . Where labour and assets are used to transform inputs of goods and services into outputs of other goods and services. It does not cover purely natural processes without any human involvement or direction (e.g. natural fish stocks, wild forests) • The production account describes this transformation and the additional value created through the production process. 4 Production account • Output from production - resources • Intermediate consumption and consumption of fixed capital - uses • Value added is the balancing item – intended to measure the value created by production • At the economy level, resources include taxes less subsidies on products as well . Sum of GVA by sectors+T&S on prods = GDP 5 Products • Products are goods and services -
Compilation of Production-Based GDP of Macao
Compilation of Production-based Gross Domestic Product of Macao Compilation of Macao’s Gross Domestic Product (GDP) is in accordance to the concepts, definitions and classifications of System of National Accounts 1993 (SNA 1993), with considerations to the characteristics of the local economy. In Macao, quarterly and annual GDP at current prices and constant prices are compiled using the expenditure approach, while GDP measured under production approach is compiled only annually at current prices due to lac k of sufficient data. Therefore, expenditure-based GDP is the principal indicator used to measur e the economic growth of Macao. Macao’s annual production-based GDP at basic prices is compiled based on the recommendations of SNA 1993, which is the sum of Gross Value Added (GVA) of all economic activities at basic prices, adding taxes on products, less Financial Intermediation Services Indirectly Measured (FISIM). GVA at basic prices equals value of Gross Output (GO) at basic prices , less value of Intermediate Consumption (IC) at purchasers’ prices. Besides, GVA at producers’ prices (including some of taxes on product) is an important reference to Macao, this is because concession tax (part of taxes on product) collected from concessionaire of water supply, electricity supply, telec ommunications, public car parks, as well as operators of the gaming sector in Macao is deducted from the respective gross receipts or sales revenues, different from value added tax that is collected separately. Hence, concession tax is considered as part of the output generated from activities of the industry and should be included in GVA. As the leading industry of Macao, gaming sector generates enormous amount of tax revenues; however, inclusion of gaming tax in its output will bring in considerable change to both the gaming sector and structure of the entire economy. -
National Accounts Methods to Achieve Exhaustiveness
Chapter 5 NATIONAL ACCOUNTS METHODS TO ACHIEVE EXHAUSTIVENESS 5.1. Introduction .............................................................................................................................................. 69 5.2. Production Approach: General Methods .............................................................................................. 70 5.2.1. Introduction................................................................................................................................... 70 5.2.2. Supply Based Methods ............................................................................................................... 71 5.2.3. Labour Input Method................................................................................................................... 72 5.2.4. Demand Based Methods............................................................................................................. 73 5.2.5. Income Based Methods............................................................................................................... 74 5.2.6. Commodity Flow Method............................................................................................................ 74 5.3. Production Approach: Industry Specific Methods............................................................................... 75 Agriculture........................................................................................................................................ 75 Mining and quarrying...................................................................................................................... -
Operating Surplus (Income from Property)
Class No.9: Unit 1 (National Income and related aggregates) Objective: After the class/ content you will become familiar with the components of operating surplus (income from property) Operating surplus: It is an income generated from property (rent + interest) and income from entrepreneurship (profit). Royalty is included in rent. Alternatively, it is the sum of rent, interest and profit. We can also define ‘It is Net value added at FC (i.e. domestic income) minus Compensation of employees (traditionally called wages) and mixed income of self-employed.’ Factor income (NDPFc) Mixed income of self Compensation of employees Operating surplus employed Income from property Income from entrepreneurship Rent Royalty interest Profit dividend profit tax Undistributed profit (Note: Interest on National Debt is not the part of Interest from property and thus it is ignored) Components of operating surplus: (1) Income from Property: It is an income generated from the property in form of rent, interest and royalty. (i) Rent: It is any periodic payment to an owner or factor of production in excess of the costs needed to bring that factor into production. It also refers as ‘Economic surplus’ as it is received by landlord without any effort. (ii) Royalty: A royalty is a legally-binding payment made to an individual, for using his or her originally- created assets, including copyrighted works, franchises, and natural resources. For example, use of mineral deposit such as coal, oil etc. Royalty is also associated with musicians, who receive such payments whenever their originally-recorded songs are played on the radio or television, used in movies, performed at concerts, bars, and restaurants, or consumed via streaming services. -
Modeling the Economic Surplus in a SAM
Modeling the Economic Surplus in a SAM Framework Erik K. Olsen Dept. of Economics Univ. of Missouri Kansas City 5100 Rockhill Rd. Kansas City, MO 64110 [email protected] June 21, 2011 1 Introduction The concept of an economic surplus is something that Marxian and Sra¢ an economics share in common. Both theories recognize the importance of an eco- nomic surplus that is produced and subsequently utilized for various purposes, but they each de…ne this surplus in very di¤erent ways. The surplus of Sra¢ an theory is the net product of the economy as de…ned in conventional national accounts. The surplus in Marxian theory is de…ned through its class theory. Draft prepared for 2011 Association for Heterodox Economics conference, Nottingham Trent University. 1 From the Marxist perspective the surplus created by production provides the resources that support the array of nonproduction activities associated with the capitalist enterprise as well as for many activities and individuals that may be quite distant. Shareholders of a corporation, for example, receive an in- come derived from the surplus created in production, but this is simply one of many potential uses. Identifying the connection between the surplus created in production and the subsequent recipients is the task of Marxian class theory, and this provides a means to understand how the surplus created in production plays a role in the reproduction of the economic system itself. This emphasis on a complex class structure that is part of the fabric of the economy is what distinguishes Marxian class theory from the Sra¢ an one, and it is also what distinguishes their two di¤erent theories of surplus. -
Macroeconomic Accounts
VWL II – Makroökonomie WS2001/02 Dr. Ana B. Ania Macroeconomic Accounts The system of national accounts Macroeconomic accounting deals with aggregates and accounting identities, that is with macroeco- nomic magnitudes and how they relate to each other by definition. Macroeconomic accounting does not explain how each magnitude changes as a result of a change in other magnitudes. This will be the task of macroeconomic analysis, that we will look at in the next units of the course. In this first unit, we just deal with definitions. All that we say will therefore always hold by definition. The purpose of the system of national accounts is to keep record of the transactions that take place in any economy for the purpose of measuring productive activity and income generated in the economy. Since 1998 all countries should conform the new system of national accounts of the UN—System of National Accounts 1993 (SNA93). Additionally, the Eurostat (Central Statistical Agency of the EU) has produced a standard for members of the EU in accordance with SNA93 called the European System of Accounts 1995 (ESA95). The exposition here will be in accordance with these new systems. Institutional units In the view of the system of national accounts an economy is a system of decision-making units that interact with each other and perform economic transactions. The basic decision-making unit is called an institutional unit, which is any entity capable of owning assets, incurring liabilities, engaging in economic activities and transactions. Institutional units are either households or legal persons like cor- porations, governmental agencies, associations.