bluuebunny/crossref_metadata_2025 huggingface dataset:
THE RELATIVE INCOME HYPOTHESIS‐A CROSS COUNTRY ANALYSIS
Authors: Singh Balvir , Kumar Ramesh C.
Published: March 2005

This paper presents an attempt to examine the applicability of the relative income hypothesis (RIH) in terms of its various specifications proposed by Duesenberry, Duesenberry, Eckstein and Fromm (DEF), Davis and the authors (MD). Using the time series data for 1951 through 1968 the analysis has been carried out for Canada, Finland, Guatemala, Honduras, India, Japan, Philippines, Sweden, United Kingdom and the United States. It is found that RIH provides a fairly good representation of the consumption behaviour of all the countries included in the study. All specifications, however, do not perform equally well. DEF and Davis functions score the maximum points; MD comes at par with DEF in case of Finland, Guatemala, and India. The original Duesenberry specification performs very poorly. This leads us to conclude that the process of habit formation is continuous contrary to what is implied by Duesenberry's original specification and that consumption is a better indicator of the standard of living than income is. Estimates of the long‐run marginal propensities to consume are essentially the same as those computed from the permanent income hypothesis by Singh and Drost [1970]. This lends support to the view that the two hypotheses have essentially the same long‐run implications.
ON THE EIGHT BASIC UNITS OF A DYNAMIC ECONOMY CONTROLLED BY FINANCIAL INSTITUTIONS*
Authors: Shubik Martin
Published: March 2005

The elegant general equilibrium world of Arrow and Debreu has had a considerable mathematical development in the last decade. Underlying this work is an extremely parsimonious model of the economic system. In particular, only one economic actor is distinguished, the consumer who maximizes his welfare (the firm which maximizes profit is an automation). One class of economic entities is considered. These are goods and services. There is no important operational distinction made between a good, which is durable, and a service, which is not.

It is suggested here that a more fruitful basic economic model needed to achieve a unification of micro and macroeconomic theory needs both more actors and more basic economic units. Specifically, the structure of process in a political‐economy is such that even at the level of relatively abstract theory operational differences among consumers, entreprenuers, administrators, financiers, and politicans should be discernible. Furthermore, several basic economic entities (or “basic particle”) must play important discernible roles in an adequate theory. In partiuclar, in the “real sector” physical assets should play a mahor role, i.e., the distinction between durable goods and consumables or services should be important. The paper sector must also be present with the roles of flat money, ownership claims and contracts all distinguished. It is argued here that any economy can be characterized in terms of two real and six paper basic units: goods, services and six financial instruments. All other financial instruments can be obtained as mixtures of this basic set.
THE SIZE DISTRIBUTION OF FAMILY INCOME IN U.S. SMSAs, 1959*
Authors: Farbman Michael
Published: March 2005

An attempt is made in this paper to identify and quantify the relative influence of several economic, social, and demographic factors on variations in the size distribution of family incomes in 208 Standard Metropolitan Statistical Areas (SMSAs) in the United States in 1959. Using a simple ordinary least squares model with Gini's concentration ratio (R) as the proxy for family income inequality, the estimating equations explain up to 89 percent of the SMSA‐to‐SMSA variation. The “best” explanatory variables are those having to do with size of nonwhite population, occupational structure, and median years of education. City size and region—which are represented by dummy variables—are also revealed as playing an important role, both on their own and in conjunction with other of the independent variables.
TAXES AND INCOME: A MICROUNIT ANALYSIS
Authors: Okner Benjamin A.
Published: March 2005

The paper details the methodology used and the results obtained in a recently completed study of the total U.S. tax burden based on microdata survey files. The method of constructing the data base—the 1966 MERGE file—is discussed, and the needed imputations and adjustments to income and taxes to bring the file totals up to national income aggregates are described. An explanation is included of adjusted family income, a unique income concept used in the study to measure and compare tax burdens.

The study involved the evaluation of errective tax burdens under eight different assumptions regarding the incidence of the various major taxes. Those assumptions are detailed and the results of the study are presented. The essential conclusion of the study is that the overall impact of the tax system is virtually proportional for 90 percent of the families in the United States regardless of the incidence assumptions used. However, substantial differences in tax burdens were found among various subgroups of the population.
INCOME ESTIMATION FROM MONETARY DATA: FURTHER EXPLORATIONS
Authors: Hawke G. R.
Published: March 2005

This note explores further the utility of national income estimates derived from monetary data, an issue recently revived in this journal by Professor Leff. Income estimates for New Zealand are extended back from 1918 to 1870 and it is argued that while such figures are not a substitute for more laboriously compiled product or factor reward estimates, they are a useful stop‐gap in what is otherwise an historical vacuum.
LIFE EXPECTANCY AS AN INTEGRATING CONCEPT IN SOCIAL AND DEMOGRAPHIC ANALYSIS AND PLANNING1
Authors: Seers Dudley
Published: March 2005

This paper considers the need for a more integrated system of social and demographic statistics than SSDS and discusses the advantages of building it on the concept of life expectancy. The system would include a network of additive tables which would (as SNA does for economic variables) bring together leading social variables in a way that would permit the effects of exogenous changes to be quantified and compared. The author proposes as the base of such a system a table giving the expected duration of various life states (education, employment, retirement, etc.). This would be supplemented by a family of social co‐efficients and fixed‐weight index numbers that slot into it, allowing inter‐temporal and international comparisons. The system would facilitate analysis of inequalities (regional, ethnic, etc.) and social change, and government planning of such change. It would also provide a framework for the development of national systems of social statistics.
ACCOUNTING FOR BUSINESS INCOME UNDER INFLATION: CURRENT ISSUES AND VIEWS IN THE UNITED STATES*
Authors: Fabricant Solomon
Published: March 2005

To adjust business accounting for inflation, one current proposal is to convert all dollar figures in existing financial statements to units of fixed general purchasing power. A widely offered alternative is to retain the dollar units but replace the historical‐cost figures by current values. The two alternatives would yield very different results. After reviewing these and variant proposals, the analysis concentrates on certain major issues: the unit of measurement; the treatment of capital gains; the concept of capital maintenance; and the treatment of changes in the purchasing power of debt. Current value accounting would not correct for changes in the general price level and would involve far more difficult problems of concept and measurement than general purchasing power accounting. The latter is therefore preferable.
TOTAL INCOMES IN THE UNITED STATES, 1959 AND 1969
Authors: Eisner Robert
Published: March 2005

Preliminary estimates of the total incomes system of accounts (TISA) are provided for 1959 and 1969. They extend conventional accounts to include all consumption services produced by government and households as well as by enterprises, but define household purchases of durable and semi‐durable goods as investment. Acquisitions of capital throughout the economy, intangible as well as tangible, and not only in the business sector, are included in capital accumulation along with, for tangible capital, net revaluations, that is capital gains net of increases in the general price level. Imputations are offered for non market consumption and capital accumulation, most prominently in unpaid household work and education. Much of government output, particularly police services and defense, is recalculated as intermediate, along with expenses related to work, while media services, treated by the United States Bureau of Economic Analysis (BEA) as business purchases of intermediate product, enter into TISA consumption. Subsidies are included in the value of product, as are services of volunteers and imputations for the underpayment of military conscripts and of jurors. Separate accounts are offered for the national income and product, business, nonprofit institutions, government enterprises, government and households.

The ratios of BEA to TISA Net National Product were 81.4 percent and 76.5 percent in 1959 and 1969, respectively. BEA national income was 74.1 percent of the corresponding TISA net national income in 1959 and 69.6 percent in 1969, reflecting a greater per annum rate of growth of TISA net national income, 7.49 percent, as against 6.82 percent for the corresponding BEA national income.

BEA gross private domestic investment, restricted to business acquisitions of tangible capital at original cost, was estimated as only approximately 22 percent of comprehensive TISA gross domestic capital formation in 1959 and some 20 percent in 1969. The BEA net private domestic investment growth rate of 7.32 percent per annum from 1959 to 1969 may be compared with a TISA net domestic capital formation growth rate of 9.42 percent.
QUANTITY AND PRICE INDEXES FOR CONSTRUCTION
Authors: Jones C. M. , Garston G. J. , Ansmits A. E.
Published: March 2005

Construction has traditionally constituted one of the problem areas in the preparation of industry price and quantity statistm with in the system of national accounts of most countries. The difficulty stems from what is considered to be the unique character of construction projects. This has unnecessarily impeded the calculation of output price indexes and has resulted in the use of various input‐based prices as proxies for output prices.

One of the objectives of the development of the system of construction price statistics described in this paper is to permit deflation of the outputs of construction industries in order to produce industry output data in constant prices in a manner consistent with measures for the rest of the economy. This is a more promising approach to improving constant price industry and expenditure measures within the SNA framework than attempting such improvements through the collection of a vast array of quantity data.

Construction industries sell specified configurations of materials‐in‐place which are, to borrow the jargon of other fields, sub‐assemblies of some total system. As in other areas of industrial pricing, some of these products are simple and some are complex. Trade contractors sell these sub‐assemblies or commodities mainly to an owner‐builder or to a general contractor who, in turn, resells the trade contractors’ commodities along with whatever sub‐assemblies the general contractor has produced. These sub‐assemblies, when combined with, for example, the relevant outputs (or sub‐assemblies) of manufacturers, the design services of service industries and the purchasers’ own contributions, yield the wide variety of plant and structures which constitute the various classes of gross fixed capital formation, which are not typically solely the outputs of the construction industries.

The resulting contractors’ selling price indexes will provide deflators for the whole range of outputs of the various construction industries. These will become part of the system of industry selling price indexes from which relevant indexes for the various goods and services can be selected and combined with appropriate weights to yield arrays of deflators for the highly complex capital expenditures of business, institutions and government.

Ultimately this integrated system of construction industry statistics will permit the preparation of gross output and value added measures, in both current and constant prices, to be calculated for the construction industries as an integral part of the Canadian System of National Accounts, as well as provide a key element for improving the deflation of fixed capital formation.
ESTIMATES OF THE VALUE OF HOUSEHOLD WORK CANADA, 1961 and 1971*
Authors: Adler Hans J. , Hawrylyshyn Oli
Published: March 2005

The paper presents some estimates of the imputed dollar value of household work (HW)for Canada in 1961 and 1971, finding this to be about $16 and $38 billion respectively, equal to 40 percent of GNP. From the results we derive some implications about five questions raised in the relevant literature. First, no clear evidence of a downward trend for the ratio HW/GNP is found, contrary to U.S. results. Second, addition of HW to GNP as a welfare measure does not affect the general pattern of past growth estimates. Third, a cost–by‐function method of estimating HW is found superior in its theoretical support and the detail it provides, but the opportunity‐cost method, despite doubts on its theoretical validity, gives a good approximation in the aggregate, and, being simpler, is likely to remain popular. Fourth, disaggregation does matter if detail by region or family type is required, in which case data by number and ages of children and market‐employment status of females are needed; for the total, a reasonable estimate (6–7 percent error)is given by further aggregated data. Fifth, sensitivity of HW to accuracy in the data used is large only for female wages chosen, in particular for the function “cooking”. Finally, though available data must be manipulated to fit the needs of HW, especially for earlier years, the extent of this is not all that much more than is commonly found for GNP estimations.
CURRENT COST ACCOUNTING: IMPLICATIONS FOR THE DEFINITION AND MEASUREMENT OF CORPORATE INCOME
Authors: Walton John
Published: March 2005

This paper is in 7 sections. Section 1 gives as background a chronological account of the steps taken in the United Kingdom, from 1974 to late 1977, towards the development of a new system of accounting in company reports which would allow for the effect of changing costs and prices on the measurement of profit and of capital employed in the business. Section 2 discusses the main features of the system, known as current cost accounting, as it is seen in the United Kingdom. Section 3 surveys the relationship between current cost accounting and the national income and expenditure statistics, and the likely implications of the introduction of current cost accounting upon the quality of macro‐economic statistics, including estimates of national and sector balance sheets. Section 4 describes some of the problems of implementing current cost accounting, particularly in special situations, and outlines the solutions which were proposed in the “Exposure Draft” published in 1976 by the accountancy profession in the United Kingdom. Section 5 considers the definition of distributable profit in relation to the need to maintain capital, considering the concept of gain, the system of valuing assets and liabilities, and the enterprise's capacity to take on additional debt as a means of financing its assets. Section 6 briefly surveys the implications for taxation, price control and price setting. Section 7 concludes by surveying the scene at the end of 1977 and by looking at likely future developments.
THE APPLICATION OF THE CONSTANT PRICE METHOD FOR EVALUATING THE TRANSFER RELATED TO INFLATION: THE CASE OF FRENCH HOUSEHOLDS
Authors: Babeau Andre
Published: March 2005

The constant price method is used here to evaluate transfers related to inflation either between households and other economic agents (essentially enterprises) or among groups of households defined by occupation, age class and so on. The results obtained are only fragmentary due to a lack of many pieces of information. The method requires in fact the splitting up of every value variation into a price component and a size component.

Nevertheless, some interesting results are shown. In recent years, if the total productivity surplus has always been positive, the wealth surplus of households is sometimes positive, sometimes negative. Concerning the distribution of the productivity surplus among household groups, it has not been possible to find significant distortions, other than those which are related to differences in the propensity to save. On the contrary, marked distortions appear in the distribution of the wealth surplus due to wide differences in estate composition and indebtedness level.
INTER‐OCCUPATION DIFFERENCES IN THE PATTERN OF MONETIZED AND NON‐MONETIZED CONSUMER EXPENDITURE IN RURAL INDIA*
Authors: Coondoo D́Ipankor , Mukherjee Robin , Prasada Rao D. S.
Published: March 2005

This study attempts to examine the inter‐occupational differences in the patterns of cash and in‐kind expenditure in rural India on the basis of a special tabulation of The National Sample Survey (NSS), 18th round (February 1963‐January 1964) consumer expenditure data. The occupational groups considered here are (i) cultivators, (ii) agricultural labourers, (iii) other agriculture, and (iv) non‐agricultural occupations.

The analysis is carried out primarily in terms of curves relating item‐specific cash/kind expenditure to total cash/total kind expenditure for fifteen selected item‐groups of expenditure. For each item‐occupation combination, four two‐parameter forms of Engel curve together with the log‐log‐inverse form are estimated and the comparisons across occupation groups are made separately on the basis of each of the two‐parameter curve forms which were found to give the best fit for at least one occupation group as well as the log‐log‐inverse form, using analysis of covariance technique.

The results indicate that so far as the cash components of item expenditures are concerned, the pattern of expenditure is considerably influenced by occupational factors. It is observed that cultivators have a cash expenditure pattern different from those of agrictural labourers and of households with non‐agricultural activities. The comparison of the kind expenditure patterns does not, however, reflect any clear picture primarily because in most cases the itemwise kind expenditure functions could not be estimated satisfactorily. This analysis also suggests that the specification of itemwise cash and kind expenditure functions employed here may not be the most satisfactory ones in an economy with a high degree of non‐monetization and therefore alternative specifications need be examined.
EXPANDING IMPUTED VALUES IN THE NATIONAL INCOME AND PRODUCT ACCOUNTS*
Authors: Kendrick John W.
Published: March 2005

After defining economic activity the author lists the chief types of non–market economic activities for which he has prepared estimates for the United States 1929–1973, and briefly describes his methodology and data sources. Some major findings are:

(1) As of 1973 GNP adjusted to include the additional imputations was 63.5 percent larger than the official estimate.

(2) At least since 1929 imputed values have grown faster than official GNP, especially when both are measured in terms of real factor costs.

(3) The personal sector comprises a far larger portion of the national economy‐almost one‐third—when account is taken of imputed labor and property compensation, and its relative importance has grown.

(4) Gross government product is more than 60 percent higher when the imputed rental value of public property is added to the compensation of general government employees.

(5) Reflecting the relative growth of non‐business wealth, imputed property income has risen much faster than monetized property income. This has mitigated the decline in the property share of expanded gross national income compared with its share in the official estimates.
ON MEASURING POVERTY
Authors: Thon Dominique
Published: March 2005

This paper investigates the properties of various measures of poverty and of the “difficulty of alleviation of poverty”. It is found that the ranking properties of both kinds of indices can be quite counter‐intuitive and that they could be misleading if used for policy evaluation. An alternative index is proposed; it is compared to the other indices and seems to fare rather well. To illustrate, a special reference is made to S. Anand's recent article on poverty in Malaysia.
CONSUMER SERVICES PROVIDED BY BUSINESS THROUGH ADVERTISING‐SUPPORTED MEDIA IN THE UNITED STATES
Authors: Cremeans John E.
Published: March 2005

The purpose of this paper is to examine and attempt to solve a longstanding “puzzle” in national economic accounting. Radio and television broadcasting are services clearly designed for and used by consumers but not purchased by them and, consequently, not counted in personal consumption expenditures (PCE); the costs of broadcasting (and a part of the costs of newspaper and magazine publication) are not counted in final product but are counted as intermediate expenses in the manufacture and distribution of advertised products. An important result of this treatment is that an increase in broadcasting services will not increase real product, but will be reflected as price increases in advertised goods. Are consumer services provided by advertisers properly handled in the conventional accounts? How should they be valued? If their value is to be added to PCE, where does the offsetting income originate?

The paper argues that the puzzle is resolved by recognizing the nonmarket exchange between the consumer and the broadcaster; the consumer provides the reception and display of audiovisual advertisements in his home in return for broadcast entertainment. The exchange rate‐e.g. 501/2 minutes of entertainment for 91 minutes of commercial messages in “prime time”‐is established in the United States by the National Association of Broadcasters. Similar exchanges occur between consumers and radio broadcasters, newspaper and magazine publishers. This concept is used as the basis for a new treatment shown in abbreviated sample accounts. Estimates for the U.S. in 1976 are included.
CAPITAL MAINTENANCE AND THE MEASUREMENT OF CORPORATE INCOME
Authors: Walton John
Published: March 2005

This paper considers the impact upon measures of corporate income of a number of concepts of the maintenance of the existing capital of an incorporated trading enterprise. A main distinction is drawn between the maintenance of all the assets employed in trading and the maintenance of the net assets attributable to the owners. Measures of income and of rates of return to capital depend on whether all the assets, or only the net assets attributable to the owners, are being considered. There are three sections of the paper after an introduction. Section 2 is conceptual and section 3 illustrates the concepts, with figures for U.K. manufacturing industry in 1975 to 1977, in which the figures in company balance sheets are adjusted from book values to estimated replacement cost, and estimates are made of depreciation at replacement cost and of the consumption of stock (inventories) at replacement cost. These figures follow the concept of maintaining physical assests. I have added calculations which extend the concept of capital maintenance to all operating or trading assets, including monetary working capital; and which then calculate the amounts necessary to maintain the assets attributable to the owners of a business. The three main methods are: to apply a gearing adjustment to abate the additional capital maintenance provisions for operating assets (which are realized revaluations by reference to their original cost); to take into income additionally the geared (or debt financed) portion of unrealized revaluations; and‐what is conceptually much the same thing‐to count as the charge for debt only real interest (which may be negative) rather than nominal interest. Section 4 considers some problems of aggregation, particularly the derivation of aggregates for the sectors of the economy, when based on figures for individual enterprises using the various approaches to capital maintenance.
THE DISTRIBUTION OF INCOME IN TRINIDAD AND TOBAGO, 1957–76*
Authors: Dookeran Winston
Published: March 2005

This article describes what happens to income distribution during intensive changes in gross domestic product due to external market conditions. It deals specifically with an open market petroleum‐based economy, Trinidad and Tobago, and reviews changes in national product and income levels and the income distribution pattern over the twenty year period 1957–76.

The paper argues that during the period characterized by subperiods of steady growth and rapid growth in GDP (the latter associated with the petroleum price rise), income inequality increased between 1957 and 1972 and then decreased in the post petroleum‐price‐rise period of rapid growth 1973–76. While the effect of intensive changes in national product did trickle down to the lower income groups, income inequality in 1975–76 was greater than that existing in 1957–58. An examination of the spatial, occupational and temporal aspect of the distribution pattern points towards the elimination of structural dualism in the economy as the surest path towards greater income equality in Trinidad and Tobago.
THE MEASUREMENT OF TERMS OF TRADE EFFECTS
Authors: Gutmann Pierre
Published: March 2005

The change in goods and services available in a national economy brought about by the shifting of external price relationships is referred to as the terms of trade effects. This paper reviews the various methods which have been devised since the war to define and quantify such effects on the Gross National Product. The statistical annex shows that, as far as OECD countries are concerned, the differences between the various measures are not significant. Whereas the effects from terms of trade represented, on average, less than one half of one percent of the GNP of OECD countries during the 1960's the percentage has increased substantially since 1973, due most importantly to the increase in the oil price; by 1977 (on a 1970 price basis), it had reached 5 percent of GNP in Japan and up to 6 percent in Italy. On the other hand, the extreme case of Saudi Arabia where various formulas generate effects amounting to between one half and the whole of GNP, indicates that the measurement of terms of trade effects by various methods may give different results.
IS U.S. GROWTH UNDERSTATED BECAUSE OF THE UNDERGROUND ECONOMY? EMPLOYMENT RATIOS SUGGEST NOT
Authors: Denison Edward F.
Published: March 2005

Has the underground economy caused the increase in United States GNP in recent years to be understated relative to earlier periods? The ratio of employment to population provides powerful evidence that it has not. This ratio’ was as high in the middle 1970s as in previous periods and in 1978–80 rose to its highest level of the postwar era, suggesting that employment growth has not been understated. Employment series based on both establishment reports and household surveys yield exceptionally high ratios in recent years. This article provides a step‐by‐step explanation of why employment data are pertinent to the question raised about GNP.

This explanation may be summarized as follows. GNP measured as the sum of final products is not understated unless GNP measured as the sum of national income and other charges against GNP is also understated. Appreciable understatement of the growth of charges against GNP as a result of growth of the underground economy is highly unlikely in the absence of understatement of the growth of wages and salaries, because of the way the estimates are made. Understatement of the growth of wages and salaries without understatement of the growth of employment based on establishment reports is highly unlikely because of the way data are collected.

The article explains briefly the relationship between income tax evasion and errors in measuring the various components of charges against GNP. It also explains how illegal activities are meant to be handled in GNP measurement.
PURCHASING POWER PARITIES IN INTERNATIONAL COMPARISONS: QUANTITY vs. PRICE COMPARISONS
Authors: Drechsler Laszlo , Krzeczkowska Eugenia
Published: March 2005

Just as intertemporal price indices have two functions, to measure price changes and to deflate current values to constant values, this is true also for interspatial price indices, purchasing power parities (PPPs). In practice these two functions of PPPs, for conversion and for comparing price levels, are not always distinguished, and this may have some disadvantages since in a number of cases the differences between the two PPPs might be considerable. The authors review the differences in content of the two types of PPPs, and make some suggestions for making the distinction more explicitly.
NATIONAL ACCOUNTING WITH LIMITED DATA: LESSONS FROM NEPAL
Authors: Barkay Richard M.
Published: March 2005

The Kingdom of Nepal is one of the least developed and least known countries. In order to understand the sometimes non‐conventional estimating procedure used, a background section is included, describing the physical, socio‐economic and institutional framework. In the second part of the paper some illustrative examples of the approaches used are given, the full description being published in four volumes, National Accounts of Nepal, National Planning Commission, Kathmandu. The last part of the paper considers the usefulness of national accounts based upon the market economy, and in general, the problem of applicability of international concepts to a developing country. What is the significance of international concepts to a developing country? What is the significance of national value aggregates in a country in which the unit of national currency does not serve as a nation‐wide standard of value? Can a common denominator be found if the scale of values and the whole outlook of different groups are so different? What do people value, and does the rural population in localized economies put a monetary price on the value? Has the concept of labour force or employment, as used in industrial societies, any meaning in a society where all those capable, including small children, of contributing to daily survival do so? The conceptual problems have not yet been solved. National accounts are a useful first step in providing planners with symbols for telling a complex story in simple terms and as a kind of statistical reconnaissance, but as development planning is moving more and more in the direction of planning from below and into regional and rural development projects, household surveys are becoming essential planning and evaluation tools. Based upon twenty‐five years of field experience, the author reflects upon problems and possible solutions, discussing managerial, training, substantive and statistical aspects.
COMMENTS ON: “SELECTED PROBLEMS OF INTERCOUNTRY COMPARISONS ON THE BASIS OF THE EXPERIENCE OF THE EEC”
Authors: Kravis Irving B. , Summers Robert , Heston Alan
Published: March 2005

The paper by Gerardi covers considerable ground, touching on a wide variety of issues in the area of international comparisons of product and purchasing power. Since our views on most of these subjects have been expounded in one or another of the International Comparison Project volumes and we will concentrate mainly on the central issue raised by Gerardi of the selection of an aggregation process that must somehow take account of the tastes of all the people who are the subject of an international comparison inquiry. In addition, we comment on some other points including the notion of special purpose PPPs. Finally, we make a brief statement about where we think future research will be most useful in improving international comparisons.
COMPILATION OF INPUT‐OUTPUT TABLES: CANADA*
Authors: Lal Kishori
Published: March 2005

This paper provides a description of the annual Input‐Output Tables for Canada. It describes the accounting framework and notes its close affinity to the one described in the United Nations report, A System of National Accounts. It demonstrates the ready derivation of GDP and Expenditure on GDP, both in current and constant prices, from the Input‐Output Accounts as well as their relationship to the other subsystems of the Canadian System of National Accounts, particularly the Income and Expenditure Accounts and Real Domestic Product by Industry. Compatibility of basic accounting records of the transactors with the rectangular (commodity‐industry) format of the Canadian tables is described. The need to have a consistent commodity classification and to develop a consistent valuation of all transactors in the economy is emphasized. The particular formulation of the Input‐Output Impact tables is noted. The problem of deflating trade margins and the resolution of this problem is described. A strong plea is made for the economics profession to pay more attention to the problem of aggregation; all economic analysis is approached with blinkers but the aggregation problem isn't even recognized as a blind spot in most analyses.
NATIONAL ACCOUNTING FOR NON‐RENEWABLE NATURAL RESOURCES IN THE MINING INDUSTRIES*
Authors: Steven Landefeld J. , Hines James R.
Published: March 2005

This paper discusses alternatives to current national accounting procedures for non‐renewable natural resources in the mining industries. Three alternative approaches to valuing the discovery and use of these resources are compared and alternative estimates for U.S. oil and gas for the period 1948‐79 are presented. The focus is on the conceptual and empirical difficulties associated with valuing non‐renewable natural resources.
TREATMENT OF SUBSIDIES IN NATIONAL ACCOUNTS*
Authors: Roman Jean‐Claude
Published: March 2005

This document contains a critical analysis of some aspects of the treatment of subsidies in the present system of national accounts (United Nations SNA and the ESA, i.e. the European System of Integrated Economic Accounts) as background to the current discussion of their revision. One of the conventions used is that subsidies are recorded as a resource in the accounts of the market producer units which actually receive them. Should this rule of the receiver be applied in every case? The paper suggests that it would be preferable to attribute subsidies to the beneficiary in those cases where a subsidy received by one unit is the counterpart of a reduction in price which he grants to another unit which buys something from him (and which is the real beneficiary), so long as the discount is only granted to specific categories of purchasers. Recording in the accounts of the beneficiary results in a better distribution in the branch accounts and moreover greater stability of the national accounts in the face of minor institutional changes.

The problem of allocation arises also for transfers designed to cover social risks or needs (illness, invalidism, old age, maternity). For this category of “social” goods and services for which general government wholly or partially assumes the costs to households, the transfer is treated either as a subsidy to collective consumption or a social benefit. The institutional arrangements, which vary from country to country, product to product and over time, give rise to profoundly different recording in the accounts. In order to restrict these differences, improve comparability between countries, permit analysis of trends over time, make the accounts less sensitive to different institutional arrangements and obtain a figure for household consumption which does not depend on the particular way in which the costs of such consumption is borne, the present document suggests that consumption subsidies should be treated as individual consumption expenditure of general government.
MEASURING THE VALUE OF THE CAPITAL STOCK BY DIRECT OBSERVATION
Authors: Lock J. D.
Published: March 2005

In the Netherlands the Central Bureau of Statistics (C.B.S.) carried out two experimental investigations into the possibility of observing the actual value of the capital stock by means of enquiries at enterprises.

This article reports on the investigation into the cigar‐industry. The intention is to carry out enquiries in one branch of industry after another. In due course (for instance after 10 years) it will again be the turn of the first branch of industry and so on. There are also branches of industry which have a fair amount of information regarding capital assets available at their disposal, so that enquiries are not necessary. In the long run the method described will supply statistical data on the value of the capital stock for all branches of industry together.

The gross actual value at current and constant prices is calculated for the cigar‐industry, broken down by type and vintage. The enquiry was carried out in two steps. Questionnaires were not sent to the enterprises but they were visited in order that C.B.S. staff could derive the data required from the accounts available. Within the C.B.S. this information was processed, C.B.S. staff making estimates for lacking data. It may be concluded that this method of enquiry for the capital stock is difficult but useful. The results of the enquiry are comparable throughout, the valuation having been carried out in the same way for all enterprises and care having been taken that in each enterprise all means of production were asked for.

In the future this new technique of enquiry will provide good detailed information on the capital stock in the Netherlands.
A SYNTHESIS OF POVERTY LINE DEFINITIONS*
Authors: Hagenaars Aldi J. M. , van Praag Bernard M. S.
Published: March 2005

A fundamental point of discussion in poverty research is whether poverty is an absolute or a relative concept. If poverty is seen to be a situation of absolute deprivation, a poverty line will usually be defined to be independent of the general style of living in society. If poverty is considered to be a situation of relative deprivation, a poverty line will be defined in relation to the general style of living in society. The choice for one of these two approaches has important consequences for social policy, as absolute poverty may be reduced by economic growth, while relative poverty will only decrease when income inequality decreases. This paper suggests a poverty line definition that is not a priori meant to be either absolute or relative, but depends on the perception of poverty in society. If the poverty line is higher in countries with higher median income (as an indicator of “general style of living”) the poverty line is said to be relative; if the poverty line does not vary with median income, it is said to be absolute. The poverty line definition suggested appears to be a generalization of almost all well‐known poverty line definitions. Poverty lines thus defined are estimated for eight European countries on the basis of a 1979 survey. The resulting lines appear to have an elasticity with respect to median income of 0.51, and hence can be said to be halfway on the scale between absolute and relative.
SHORT‐CUT ESTIMATES OF REAL INCOME
Authors: Clague Christopher
Published: March 2005

The United Nations International Comparisons Project (ICP) has conducted in‐depth purchasing‐power parity (PPP) studies of the so‐called “benchmark” countries (of which there were 34 in the 1975 sample). In the absence of PPP studies of the rest of the countries in the world, the ICP team has constructed “short‐cut” estimates of real income (that is, income converted from domestic currency to dollars at PPP) for the nonbenchmark countries. The idea of a “short‐cut” procedure for estimating real income is to run a regression of real income on nominal income (that is, income converted from domestic currency to dollars at a market exchange rate) and other variables among the benchmark countries and then to use this regression to estimate real income for the nonbenchmark countries. The most recent ICP short‐cut estimates have been based on regressions of real income on nominal income and the foreign trade ratio. The present study expands the list of candidate variables that might be included in a short‐cut regression. The list includes educational attainments, the share of minerals in GDP, the trade balance, the growth of the money supply, tourist receipts, and the share of nontradables in GDP. The theory underlying the inclusion of each of these variables is discussed. Regressions are run with various combinations of these variables and some short‐cut estimates of real income for 76 market economies are presented.
FURTHER THOUGHTS ON THE BANKING IMPUTATION IN THE NATIONAL ACCOUNTS*
Authors: Rymes T. K.
Published: March 2005

The banking problem in the National Accounts arises because interest rates paid by banks on deposits are generally lower than the rates charged for loans and service charges levied by banks are generally less than the cost of the banking services provided.

This paper offers two explanations for such observations: first there is the new neo‐classical theory of private banking and central banking which suggests that they arise because of distorting “taxes” levied by regulating central banks. Second there is the Keynesian theory which accounts for the observations by the fact that the public good services of monetary stabilization supplied directly by the central banks and indirectly by private banks cannot be priced.

Both theories account for the empirical observations giving rise to the banking problem. Neither theory lends support to the banking imputation currently carried out in most National Accounts.
REAL INCOME CHANGES O F HOUSEHOLDS IN THE NETHERLANDS, 1977–1983
Authors: Keller Wouter J. , Cate Arie Ten , Hundepool Anco J. , van de Stadt Huib
Published: March 2005

This paper deals with the construction of statistics on real income changes of households in the Netherlands. Two different figures are computed, called the dynamic and the static figure. The dynamic figure reflects the change in real income as experienced by individuals. It is based on longitudinal data: two panels resulting from an exact match between three files from the Netherlands' IRS. The static figure reflects the change in real income of positions (e.g. of a 60‐year old civil servant) instead of individuals. It is based on micro‐simulation: changes in wages, taxes, etc. are simulated on a sample of individuals for whom socio‐economic and demographic positions are assumed constant.

In the paper we discuss both figures and some other problems, e.g. the concept of real income and the price index. Furthermore we give results for the years 1977–1983 and discuss some differences between the dynamic and the static figure. The most notable result is the large variation in the dynamic figure, exhibiting a very substantial income mobility.
A NEW METHOD OF ASSESSMENT OF THE INSURANCE SERVICE PRODUCTION
Authors: Schiltz M. T.
Published: March 2005

The French national accounts applied the insurance production assessment method recommended by the European system of accounts (ESA), for the years 1970 to 1985, in a particularly turbulent economic and financial environment. A better understanding of the sector was thereby obtained, but the problems set by the very “technical” production assessment method were thus brought to light. These problems are still not solved by the present accounting system, since, to summarize matters, it hides the importance of the sector's “financial” activity, whereas in fact the income drawn from this activity contributes to a high extent to the global balance of insurance operations. This is of course related to the reasons why in certain countries insurance companies are considered more as savings collecting and investment institutions rather than risk transformers.

This report sheds light on the significance of the present premiums, indemnities and reserves recording method and then presents the new method chosen by the french accounts to assess production; finally it analyses the remaining difficulties relating mainly to capital gains.
EQUIVALENCE SCALES, WELL‐BEING, INEQUALITY, AND POVERTY: SENSITIVITY ESTIMATES ACROSS TEN COUNTRIES USING THE LUXEMBOURG INCOME STUDY (LIS) DATABASE
Authors: Buhmann Brigitte , Rainwater Lee , Schmaus Guenther , Smeeding Timothy M.
Published: March 2005

The Luxembourg Income Study (LIS) database on which this article is based offers researchers exciting new possibilities for international comparisons based on household income microdata. Among the choices the LIS microdata allows a researcher, e.g. income definition, income accounting unit, etc., is the choice of family equivalence scale, a method for estimating economic well‐being by adjusting income for measurable differences in need.

The range of potential equivalence scales that can and are being used in the ten LIS countries and elsewhere to adjust incomes for size and related differences in need span a wide spectrum. The purpose of this paper is to review the available equivalence scales and to test the sensitivity of various income inequality and poverty measures to choice of equivalence scale using the LIS database. The results of our analysis indicate that choice of equivalence scale can sometimes systematically affect absolute and relative levels of poverty; and inequality and therefore rankings of countries (or population subgroups within countries). Because of these sensitivities, one must carefully consider summary statements and policy implications derived from cross‐national comparisons of poverty and/or inequality.
APPRAISING THE U.S. OUTPUT AND PRODUCTIVITY ESTIMATES FOR GOVERNMENT–WHERE DO WE GO FROM HERE?
Authors: Kendrick John W.
Published: March 2005

Output and productivity estimates for U.S. government organizations are a useful management tool, and are of potential value for improving national income accounts. Real gross government product is currently estimated on the basis of labor input data. However, this imparts a downward bias to real GNP estimates since labor productivity of federal civilian employees has risen, according to Labor Department estimates begun in 1972, at an average annual rate of 1; percent since 1967. The estimates now cover almost 70 percent of the employees. The chief avenue for further improvement lies in refinement of the output indicators. Coverage of state and local government employees is spotty and needs to be expanded. The author also recommends a major effort to estimate public capital stocks in current and constant prices as a basis for measuring rental values, capital inputs, and productivity.
CONSTRUCTING A TAX‐BENEFIT MODEL: WHAT ADVICE CAN ONE GIVE?
Authors: Sutherland Holly
Published: March 2005

This paper takes the form of advice given to a hypothetical government on the construction of a tax‐benefit model. The importance of the quality of the data and the care taken in its adjustment is emphasised. The choice of the unit of analysis, the requirements of the income data, methods of updating and the coverage and representativeness of the dataset as a whole is discussed. Caution in making use of estimates of behavioural change is advised. Throughout, examples drawn from the construction of TAXMOD, a model for the U.K., are used to illustrate particular points.