Use, misuse and proper use of national accounts statistics

Bos, Frits (2007): Use, misuse and proper use of national accounts statistics. Published in: National accounts occasional papers , Vol. nr. NA-096, (2007)

Abstract

In this paper, the relevance of national accounts statistics and their underlying conceptual framework is investigated for their four roles: description and object of analysis, tool for analysis and forecasting, tool for communication and decision-making and input for alternative accounts budgetary rules and estimates. For each role, the merits and limitations of national accounts statistics are described and discussed. Proper use should be stimulated by improving education and marketing and by supplementing national accounts with information about their meaning and reliability.

• Item Type: MPRA Paper
• Additional Information: The worldwide use of national accounts statistics for many important purposes raises fundamental questions about the national accounts as a measuring tool. Are the national accounts statistics sufficiently suited for these jobs? How fair and relevant are the underlying concepts? What are the major differences with concepts used in economic theory or for administrative purposes? How comparable and reliable are the national accounts statistics of the various countries? Despite the worldwide use of the national accounts, the answers to these questions are not commonly known. The problem is that national accounts are a language not very well spoken and understood anymore. This applies to economic researchers, policy-makers and national accountants alike. Among economic researchers there is a worldwide illiteracy in national accounting. A decade ago, national accounting has been dropped as a separate topic of research on the list of the Journal of Economic Literature. The economic researchers skilled in national accounting have become more and more extinct. Furthermore, the introduction of new guidelines on national accounting has made a substantial part of their knowledge obsolete. However, for the analysis of economic statistics solid knowledge of the merits and limitations of their concepts and measurement is indispensable. According to Schumpeter (1945, p. 14): ”We need statistics not only for explaining things, but also in order to know precisely what there is to explain. ... It is impossible to understand statistical figures without understanding how they have been compiled. It is equally impossible to extract information from them or to understand the information that specialists extract for the rest of us without understanding the methods by which this is done- and the epistemological backgrounds of these methods. Thus, an adequate command of modern statistical methods is a necessary (but not a sufficient) condition for preventing the modern economist from producing nonsense”. In this paper, the of use national accounts statistics will be investigated for their four roles: 1. Description and object of analysis (section 2). 2. Tool for analysis and forecasting (section 3). 3. Tool for communication and decision-making (section 4). 4. Input for alternative accounts, budgetary rules and estimates (section 5). For each role, the merits and limitations of national accounts statistics are described and discussed. This indicates the potential relevance of national accounts statistics. However, national accounts statistics not used at all or not used in a proper way are not very relevant. So, the actual relevance of national accounts statistics depends also on their actual use and their proper use. This is therefore a central topic in all four sections. Proper use of national accounts statistics can be stimulated by improving the national accounts as such and by marketing and education. These are the topics of section 6 and 7. A summary is provided by section 8. The literature about the various uses of national accounts statistics is limited. Major exceptions are Kendrick (1972), SNA93 (United Nations, 1993) and United Nations (2002). A historical view of the national accounts as a tool for analysis and policy is provided by Bos (2003, pp. 8-40), Bos (2006b) and Vanoli (2005). Distinctive features of this paper are: - National accounts statistics and their concepts are regarded as stocks of knowledge. - Discussion of the merits and limitations of bookkeeping explanations. - National accounts statistics and their concepts are regarded as a tool of communication. - The focus on misuse of national accounts statistics in practice
• Institution: Statistics Netherlands
• Language: English
• Keywords: National accounts; relevance and reliability; forecasting; economic and fiscal policy
• Subjects: H - Public Economics > H0 - General > H00 - General; C - Mathematical and Quantitative Methods > C0 - General; E - Macroeconomics and Monetary Economics > E0 - General > E01 - Measurement and Data on National Income and Product Accounts and Wealth

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