Transcript Use of national accounts: European unification Frits Bos CPB Netherlands Bureau for Economic Policy Analysis.

Use of national accounts: European
unification
Frits Bos
CPB Netherlands Bureau for
Economic Policy Analysis
• Yesterday: Use of national accounts:
– Historical overview
– The Dutch case
– See presentation and paper on website
conference (in general: google “frits bos national
accounts”)
• Now: focus on European unification, a major
case of administrative use of national
accounts
EU-uses of national accounts
• Member States contribution: percentage of
GNI
• Maximum total expenditure by EC: percentage
of GNI (about 1%)
• Agricultural policy: agricultural accounts
showing also the development of farmer
income
• Regional policy: Low regional domestic
product is yardstick for granting regional funds
• Development aid: Low domestic product per
capita is yardstick for granting aid
• Monetary policy and public finance:
government deficit and debt as a percentage
of GDP; various other statistics, e.g. Financial
accounts, economic growth figures and
harmonized CPI
• Productivity and growth policy (Lisbon
agenda): economic growth figures,
expenditure on R&D and education as a
percentage of GDP, EU-KLEMS
• Social policy: European social protection
statistics closely linked to national accounts
concepts (includes now also info on pensions)
• Defence policy: Expenditure on defence as a
percentage of GDP
• EU good user of national accounts:
– Use for the right purposes (not better alternatives
exist for such administrative uses)
– Did not accept current state of European statistics
but took a lot of measures to fit European national
accounts statistics better to these data uses
• Measures taken:
– Extra money for many specific projects
– Special committees on GNP and CMFB
– Regulations for extra/better inputs, e.g. Business
registers, surveys on industries, more surveys on
services, harmonised labour force survey, also
abolition of intra-EU customs borders, so
deterioration of Foreign trade statistics
– New guidelines: ESA95 , handbook on price and
volume measures, handbook on government deficit
and debt
• GNP Committee:
– Jurisprudence on interpretation of ESA concepts,
e.g. What are taxes on products and do the
imputed services of owner-occupied dwelling
include also holiday homes abroad and free
standing garages? Input for ESA95, so in this
respect more specific than SNA93
– Unique documentation of data sources and
compilation methods for GNP by country, plus
discussions on their merits and limitations
– Sometimes drastic revisions of Member States
GNP figures, e.g. Greece, Portugal 10-20% up!
• ESA95: more specific than SNA93:
– Input from GNP committee
– Important issues not resolved in SNA, should be
resolved in EU, e.g. Market-non-market. SNA93 so
vague and misleading (economically significant
prices) that non-market output was actually not
defined and that therefore also sector
government was not defined
• Contribution to EU linked to GNP:
– Capital intensive countries pay more
– Countries with small unpaid household services
pay more
– Countries with relatively a lot of indirect taxes pay
more
• European norms on government deficit and
debt linked to national accounts (Treaty of
Maastricht):
– Deficit should not exceed 3% GDP
– Debt should not exceed 60% GDP or decline in a
satisfactory rate
• So, national concepts on public finance replaced
by European concepts fully linked to national
accounts. Consequences:
– Change in concepts used nationally, e.g. No financial
transactions included, government includes now also
local government
– Concepts can not be changed any more by the
national government over time
– More limited role of ministries of finance, much more
important and new role for statistical offices: they
should translate European concepts into national
operational concepts and provide the figures
• Bad incentives for government behaviour, e.g.
– Government deficit:
• Lease buildings, planes , cars
• Sell all kinds of property, e.g. Land, buildings
• Substitute income transfers and investment grants into
loans at non-market interest rates
• Decrease interest payments only in nominal terms:
Italian approach initiated by Modigliani
• Government debt:
– Sell equity of public corporations
– Reduce outstanding loans
– Sell natural resources (e.g. Gas) or other property
• Solution:
– Generational accounts
– Complete balance sheets for the government
• Figures for the Netherlands since 1994:
– Gross debt decreased with 27% GDP
– But no improvement in terms of net worth: it
decreased wit 14% GDP (selling equity, less loans
to housing corporations and less natural gas
reserves)
• So, gross debt does not suffice, also
generation accounts do not suffice, also net
worth is needed:
– Gives a different picture of past performance
(much better than gross debt)
– Is important for the link to generational accounts:
how can gross debt go down while CPB claims
there still remain problems with the
substainability of Dutch public finance? Data users
and politicians do not understand that