An introduction to national economic accounting Essay

THE purpose of this introduction is twofold. First, it presents
the conceptual basis and framework of the U.S. national income and
product accounts (NIPA’s). Second, using this framework, it
relates the NIPA’s to the other branches of national economic
accounting.



National income and product accounting, capital finance and balance
sheet accounting, and input-output accounting are the major branches of
national economic adccounting in the United States today. Each
illuminates some aspects of the structure, workings, and performance of
the economy. The NIPA’s–the most widely used of the
three–display the value and composition of national output and the
distribution of incomes generated in its production. The capital
finance accounts, better known in the United States as flow of funds accounts, show the role of financial institutions and instruments in
transforming saving into investment and the changes in assets and
liabilities that result from this transformation; associated balance
sheet accounts present assets and liabilities at particular points in
time. Input-output accounts trace the flow of goods and services among
industries in the production process and show the value added by each
industry and the detailed commodity composition of national output.

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Closely related to these national accounts are international
economic accounts–the balance of payments, for example–and regional
economic accounts. The international accounts portray the transactions
of the residents of the Nation with the residents of the rest of the
world, highlighting international trade flows and the international
payments mechanism. Regional accounts disaggregate the national economy
by geographic subdivision and serve for the various subdivisions the
purposes that the national economic accounts serve for the Nation as a
whole.


The fundamental aim of national economic accounting is to provide a
coherent and comprehensive picture of the Nation’s economy. More
specifically, national economic accountants want to answer two
questions. First, what is the output of the economy–its size, its
composition, and its use? Second, what is the economic process or
mechanisim by which this output is produced and distributed?



The national output about which these questions are raised in
defined, with a few exceptions, to be the production that is reflected
in the sales and purchases of the market economy. Although, for some
purposes, a broader definition that includes the nonmarket activities
associated with household production is useful, it is difficult to take
account of many of the activities that take place outside the market in
any systematic and nonarbitrary way.



National output can be measured either by the sum of goods and
services sold to final users, or by the sum of income payments and other
costs; in both cases, business purchases on current account from other
businesses are subtracted sot hat national output is an unduplicated
total. National economic accountants take these two equivalent measures
of ouput and construct from them a set of accounts showing production
and distribution, consumption and saving.



The national economic accounts are aggregations of the accounts
belonging to the individual transactors in the economy, whether or not
formal acounting statements exist explicitly for all of them. The basic
approach is to distinguish groups of economic transactors; to set up
uniform types of acconts for them; and to show in these accounts the
broad categories of economic transactions in which they engage.
Transactors are aggregated into homegeneous groups, or sectors, the
members of which are engaged in the same types of transactions and are
affected by, and respond to, economic developments in a similar manner.
Four sectors are commonly distinguished: (1) Business, (2) household,
(3) government, and (4) foreign; for special purposes, these sectors can
be disaggregated or supplemented with other groupings.



Business enterprises give rise to the bulk of national output;
therefore, this introduction first derives economic accounts for a
business firm from its financial statements and then establishes similar
accounts for the business sector and the other sectors. The first
section recasts the financial statements of a firm into a production
account, an appropriation account, and a saving-investment account, the
building blocks for national economic accounts. (This section assumes
some familiarity with business accounting as it is presented in
accounting textbooks.) The following section, using these three
accounts, sets up national economic accounts for the business sector as
a whole, for the other major sectors, and for the Nation, the last as a
summary of the accounts for the sectors. The final section considers
the branches of U.S. national economic accounting–national income and
product accounting, capital finance accounting, and input-output
accounting–and the relationships among them. The presentation
introduces the underlying concepts and structure of the U.S. national
economic accounts; it omits some entries and simplifies definitions.


Economic Accounts of a Business Firm



The economic accounts of a business firm–the building blocks for
the national economic accounts–can be derived from the three accounting
statements in common use for business financial reporting. The first of
these is the balance sheet, which provides a picture of the condition of
the firm at some particular time, usually the last day of its fiscal
year. The second is the statement of income and retained earnings,
which shows the firm’s operating results–that is, the amount and
disposition of the income arising from its activities–over the
accounting period between balance sheets. The third is the statement of
change in financial position, which shows the contribution of the
firm’s operating results to the change in its working capital.



Three simplifying assumptions are made in this introduction: (1)
All business firms are corporations. (2) Firms value goods withdrawn
from inventory in prices of the current accounting period. (3) Plant
and equipment prices are stable over time, so that firms’ charges
for the use of these assets (depreciation) also are valued in prices of
the current accounting period. In addition, the presentation in this
introduction follows the NIPA convention that only business firms make
nonfinancial investments and own fixed assets.



Business accounting statements



Balance sheet. –The basic identity underlying the balance sheet
is: The value of the firm’s assets is equal to the value of the
liabilities and equity claims against these assets; that is,



Assets=liabilites+stockholders’ equity.



Assets generally are carried at fixed values equivalent to their
costs of acquisition; liabilities consist of promises to pay specified amounts of money to creditors. If total assets rise without an
offsetting increase in total liabilities, stockholders’ equity–the
owners’ claim on the assets–rises; if liabilities rise without a
corresponding increase in assets, stockholders’ equity falls.



On the left side of the balance sheet shown in table 1, current
assets are resources that can be converted to cash or consumed within
the accounting period: Currency, bank deposits, and short-term
interest-bearing assets that can be easily converted to cash; short-term
credit extended to customers who have received, but not yet paid for,
products shipped to them; and inventories, which are stocks of raw
materials, partly fabricated items (work in process), anf finished
goods. Securities are financial assets with maturity dates beyond the
accounting period. Fixed assets consist of plant and equipment and of
land. Plant and equipment are net of accumulated depreciation, a charge
for the using up of these assets over time. Land includes mineral
rights; it is shown net of accumulated depletion, a charge for using up
exhaustible resources over time.



On the right side of the balance sheet, current liabilities are
others’ claims on the business firm–loans and payables to
suppliers–that are due within the accounting period. Bonds are
long-term debts that do not mature until after the accounting period.
Stockholders’ equity, the residual, consists of two parts: First,
the capital contributed by owners in exchange for stock, and second, the
cumulative sum of earnings retained in the business rather than paid to
owners.



The balance sheet does not convey much information about the scale
of the operations, the incomes generated, or indeed whther or not the
owners received any payment–other than the enhanced value of their
equity as represented by retained earnings–for the use of their
capital. Such information can be obtained from the statement of income
and retained earnings.



Income and retained earnings.– The basic identity underlying the
statement of income and retained earnings is: The value of the
firm’s net income is equal to its revenues less its costs; that is,
Net income=revenues-costs.



In the statement of income and retained earnings shown in table 2,
revenues come from sales, from investment income earned on interest- and
dividend-paying securities, and from gains (net of losses) on sales of
fixed assets and securities; costs include both costs of goods and
services sold and the interest paid on borrowed money. Hence, net income
is largely operating income, but also includes income from other
sources.



The depreciation and depletion charges included in the cost of
goods and services sold represent the period’s addition to the
cumulative depreciation and depletion appearing in the balance sheet.
Indirect business taxes include sales taxes, excise taxes, and property
taxes; they do not include taxes levied directly on the net income of
the firm, which are shown in table 2 as corporate income tax. Finally,
net income less corporate income tax and dividend payments is retained
in the business and added to the retained earnings in the balance sheet.



The first six items, listed under cost of goods and services sold
(purchased materials, purchased services, wages and salaries,
depreciation, depletion, and indirect business taxes) are costs incurred
during the current period. To convert this sum of costs incurred to the
cost of the goods and services sold during the period, it is necessary
(1) to add the costs incurred in previous periods in producing the goods
sold and (2) to remove the costs incurred in obtaining or producing
goods retained in inventory at the end of the accounting period. These
adjustments are accomplished by including in cost of goods and services
sold, along with current-period costs, the differene between the value
of the beginning and ending inventories. In effect, cost of goods and
services sold includes the value of goods withdrawn from the beginning
inventory during the period, and excludes the value of goods obtained or
produced during the period, but retained in ending inventory.



The statement of income and retained earnings explains the change
in retained earnings between successive balance sheets; it does not deal
with changes in the other entries in the balance sheet. Such
information can be obtained from the statement of change in financial
position.



Change in financial position.– The purpose of the statement of
change in financial position is to link certain income statement and
balance sheet transactions so as to show the effect of the firm’s
operations on its liquidity. The basic identity underlying the
statement is: The change in the firm’s working capital is equal to
the change in its current assets less the change in its current
liabilites; that is, Change in working capital=change in current assets.
-change in current liabilites.



In the statement of change in financial position shown in table 3,
the change in current assets is the sum of the changes in cash and
equivalent, accounts receivable, and inventories; the change in current
liabilities is the sum of the changes in loans and accounts payable.



Table 3 accounts for the change in working capital in terms of the
additions provided by operations, of sales and purchases of fixed assets
and securities, of payment of dividends, and of changes in bonds and
capital stock outstanding. The main component of additions provided by
operations is net income after tax; the depreciation and depletion
charges deducted in deriving it are added, because they are internal to
the firm’s books and are not cash outlays affecting its financial
position. The gains included in net income after tax are subtracted;
they are included in the proceeds from the sales of fixed assets and
securities entered under other sources elsewhere in the statement.



Derivation of the three basic economic accounts



rearranged and modified, these accounting statements for the
business firm provide the economic accounts–the production account, the
appropriation account, and the saving-investment account–that are the
starting point for deriving the national economic accounts. The
production account is based on the statement of income and retained
retained earnings, and it records the production attributable to the
firm in terms of both goods and services produced and the income
payments and other costs arising in production. The appropriation
account is also based on the statement of income and retained earnings;
it records the firm’s income, payments of that income to the
stockholders or to the government, and the income retained within the
firm. The saving-investment account is based on the statement of change
in financial position rearranged as the change in the balance sheet; it
records the firm’s savings, borrowing, and acquisitions of
nonfinancial and financial assets. The derivation of each of these
economic accounts is described in two steps: (1) The rearrangement of
the business accounting statements into the T-account form and (2) the
modification of the T-accounts to obtain economic accounts.



Each T-account contains the firm’s sources of funds on the
right side and uses of funds on the left side. In general, sources of
funds are receipts or borrowings, and uses of funds are current outlays
or acquisitions of assets. There are differences in perspective among
the accounts, however. For example, net income is a use in the
production account because it is a charge against production, but it is
a source of the income to be distributed or saved in the appropriation
account. Similarly, additions to retained earnings are a use of income
in the appropriation account, but a source of funds to finance the
acquistion of assets in the saving-investment account. In each account,
total sources equal total uses, preserving the accounting identities of
tables 1, 2, and 3.



Production account.– The first panel of table 4 shows the items
from the income statement in table 2 rearranged in T-account form. The
items from the income statement are those taht establish net income
before tax. The revenue items–sales, interest and dividend received,
and gains (net of losses) on sales of fixed assets and securities–are
entered as sources of funds on the right side; the cost items, including
interest paid and net income before tax, are entered as uses of funds on
the left side. The total of the sources it total revenue; the total of
the uses is total charges against revenue.



To derive the firm’s production account, wchih is shown in the
second panel, the income statement T-account shown in the first panel is
modified by (1) ordering the entries to establish the value of the
firm’s production during the accounting period, and (2) adjusting
net income before tax to yield a new entry termed “profits,”
which is defined to be earnings arising from current production.



The first modification is necessary because total revenue, shown in
the first panel, is not equal to the value of the firm’s
production, for the following reasons. (1) Revenues are not equivalent
to sales, because the firm may have nonoperating income. (2) Sales are
not equivalent to gross output, because the firm may either make sales
from inventories of finished goods produced in previous periods or place
current production in work-in-process or finished goods inventories.
(3) Gross output is not equivalent to the value of the firm’s
production, because the firm may incorporate in its output (consume)
materials or services purchased from other firms. Such materials may
have been purchased either in the current accounting period or in a
previous period.



The ordering of the entries in the income statement T-account to
establish the value of the firm’s production involves four steps.
(1) Interest and dividends received and gains (net of losses) on sales
of fixed assets and securities are subtracted from both sides of the
income statement T-account; as shown in the production account, this
subtraction converts the right side to sales, and enters the receipts of
interest and of dividends and the gains on sales of fixed assets and
securities on the left side as negative values. (2) The inventory
entries in the income statement T-account–beginning inventory less
ending inventory–are combined to yield the equivalent expression.
Less: Change in inventories.



This expression is decomposed into Less: Change in raw materiasl
inventories +change in work-in-process and finished goods inventories.
(3) The change in work-in-process and finished goods inventories is
added to both sides of the income statement T-account. This addition
converts the right side to gross output–the sum of sales and change in
work-in-process and finished goods inventories–and cnacels the
work-in-process and finished goods component of the inventory entries on
the left side. (4) on the left side of the income statement T-account,
the sum Purchased materials plus purchased services less the change in
raw materials inventories equals the consumption of materials and
services by the firm during the accounting period. The consumption of
materials and services is subtracted from both sides of the income
statement T-account. As shown in the production account, this
subtraction converts the right side to the value added by the firm and
cancels the components of consumption on the left side.



The second modification to the income statement T-account is
necessary because net income before tax is not equal to profits, that
is, earnings arising from current production. Profits exclude dividends
received and gains (net of losses) on the sale of fixed assets and
securities. Moreover, they differ from the operating income shown in
the income statement because of the treatment of natural resources in
the national economic accounts. Natural resource discoveries are not
considered to be capital formation in the national economic accounts;
consequently, a charge for the using up of these discoveries is not an
appropriate charge against production. Therefore, profits include the
depletion charges that are deducted in measuring net income before tax.
Profits equal net income before tax plus depletion, less dividends
received, and less gains (net of losses) on sales of fixed assets and
securities.



The resulting production account shows, on the right side, the
value of the firm’s production in terms of goods and services
produced and, on the left, the value added by the firm in terms of
income payments and other costs.



For most purposes, it is useful to simplify the presentation of the
production account by rearranging terms and dropping some detail, as
shown in the first panel of table 7. On the right side, the term
“consumption” has disappeared and the change in raw materials
inventories has been combined with the change in work-in-process and
finished goods inventories. On the left side, the detail under profits
has been dropped, and depreciation has been renamed “capital
consumption allowances” to introduce the standard terminology of
the national economic accounts. (In this introduction, depreciation and
capital consumption allowances can be considered equivalent.) The
production account of the firm, as shown in table 7, serves as the basis
for the production account for the business sector and for the Nation as
a whole.



Appropriation account.–The first panel of table 5 shows the items
from the statement of retained earnings in table 2 rearranged in
T-account form. The item “net income before tax” is entered
in the retained earnings T-account of table 5 as a source of funds; the
items “corporate income tax,” “dividends paid,” and
“additions to retained earnings” are entered as uses of funds.



To derive the firm’s appropriation account, the retained
earnings T-account is modified by adjusting net income before tax and
its components to conform to profits as defined in the production
account. Dividends received and gains (net of losses) on sales of fixed
assets and securities are subtracted from both sides of the account, and
depletion is added to both sides. The adjustments define a new residual
entry “undistributed profits,” which includes additions to
retained earnings and depletion charges and excludes gains (net of
losses) on the sales of fixed assets and securities.



Table 7 shows, in the second panel, a simplified presentation of
the appropriation account. On the left side, the detail under
undistributed profits has been dropped, and corporate income tax has
been renamed “profits taxes” to move toward the terminology of
the national economic accounts.



Savings-investment account.–The first panel of table 6 shows the
items from the statement of change in financial position (in table 3)
rearranged in T-account form to display the change in each entry in the
balance sheet (in table 1) over the accounting period. The entries for
changes in current assets and in current liabilities are those in the
statement of change in financial position. The change in holdings of
securities consists of purchases, less sales, and plus gains (net of
losses) on sales of securities; similarly, the change in bonds
outstanding consists of issues less retirements. The change in fixed
assets consists of purchases, less sales, less depreciation and
depletion charges, and plus gains (net of losses) on sales of fixed
assets. Finally, the change in retained earnings consists of net income
after tax less dividends.



To derive the firm’s saving-investment account, the change in
balance sheet T-account is modified so that it shows on the right side
the part of the profits that the firm saves, and on the left side, the
disposition of that saving in terms of investment. Both saving and
investment are defined to be gross of depreciation: Saving includes
depreciation as well as undistributed profits; and purchases of fixed
assets include replacement of plant and equipment as well as additions.



The modifications necessary to obtain saving from profits and the
disposition of that saving are listed below. (1) Depletion is added to
both sides of the change in balance sheet T-account and gains (net of
losses) on sales of fixed assets and securities are subtracted from both
sides; as shown in the saving-investment account, these changes
introduce undistributed profits, as defined in the appropriation
account, on the right side and cancel the entries on the left side. (2)
Depreciation is added to both sides of the change in balance sheet
T-account; as shown in the saving-investment account, this addition
introduces gross saving on the right side and cancels the entry on the
left side. (3) Entries for change in current financial assets and
purchases and sales of securities on the left side of the change in
balance sheet T-account are regrouped to show, on the left side of the
saving-investment account, a new entry (net acquisitions of financial
assets,” consisting of the change in current financial assets, plus
purchases of securities, less sales of securities. (4) On the right
side of the change in balance sheet T-account, regrouping yields a new
entry “net increase in liabilities,” consisting of the change
in current liabilities, plus issues of bonds and capital stock, less
retirements of bonds and capital stock; subtracting this entry from both
sides cancels it on the right side and enters it on the left side of the
saving-investment account as a negative value.



The simplified saving-investment account is shown in the third
panel of table



7. Detail is suppressed under net acquisitions of financial assets
and net increase in liabilities on the left side and under undistributed
profits on the right side.



Sector and National Economic Accounts



The three accounts for a business firm shown in table
7–production, appropriation, and saving-investment–form the basis of
the national economic accounts. Accounts must now be designed for the
major economic groups that are distinguished in a national economic
accounting system; these sectors are business, household, government,
and foreign.



First, accounts for the business sector will be derived from the
corresponding accounts of the single business firm. Then, accounts for
the other types of economic transactors will be established; the pattern
for these accounts will follow closely the three accounts for the
business sector. The production account records the production
attributable to a sector, in terms of both goods and services and the
income payments and other costs arising from production. The
appropriation account records the sources of the sector’s income,
its current outlays, and its saving. The saving-investment account
records the sector’s gross savings and gross investment, the latter
defined as net acquisitions of assets less the net increase in
liabilities. Taken together, these sector accoutns constitute a
double-entry system in which a use recorded in one account for one
sector is also recorded as a source in another of the sector’s
accounts or as a source in an account for another sector.



In construction national economic accounts, it is necessary to add
together corresponding accounts belonging to two or more transactors
and, occasionally, to add together two or more accounts belonging to the
same transactor. In the aggregate account, an entry may occur twice,
either once on each side of the account, or twice–with opposite
signs–on the same side. If such entries are netted out, the aggregate
account is a consolidated account; if these cancellations are not made,
the aggregate account is a combined account.



Accounts for the business sector are obtained by adding together
for all business firms each type of account shown for the individual
firm in table 7. The accounts are prepared on a consolidated basis. The
entries for a transaction between two business firms cancel, leaving
only transactions between the business sector and other sectors. The
business sector accounts, with hypothetical numbers, are shown in the
business column of table 8.



Business production account.–On the left side of the production
account for the business sector, there are no intrasector transactions
for wages and salaries, for capital consumption allowances, and for
indirect taxes. Therefore, each entry is the sum of the entries in the
individual firms’ production accounts.



For interest and profits, there are intrasector payments and
receipts that cancel. The interest paid by one firm to another is
canceled by the receipt of that payment by the other firm, leaving as a
consolidated entry “net interest”–the business sector’s
interest payments to, less its interest receipts from, the other
sectors. Similarly, the consolidated entry for profits represents
profits available either to be distributed to other sectors or to be
saved by the business sector; the component of profits representing
dividends paid by one firm to another is canceled by the corresponding
dividend receipt.



On the right side, there are no intrasector transactions for the
change in business inventories; the entry is the sum of the entries for
the individual firms. For purchased materials and services and for
sales, intrasector payments and receits cancel; the purchase of
materials and services by one firm on current account is canceled by the
corresponding sale by another firm. The only purchases of materials and
services that do not cancel are those from foreigners (imports). The
consolidated entry for sales consists of sales to households as
consumers, to governmnet, to business (of plant and equipment), and to
foreigners (exports).



The totals of the sources and of the uses in the business sector
production account are designated “gross business product” and
“charges against gross business product,” respectively. They
are equal to the sum of the values added by the individual business
firms.



Business appropriation account.–On the left side of the business
appropriation account, dividends paid by one firm to another cancel; the
entry thus consists of dividends paid by the business sector to other
sectorss. Dividends received from foreigners do not cancel, however,
and are shown as a negative item. For the remaining entries, there is
no cancellation.



On the right side, the profits entry is net of dividends recieved
from foreigners and from other business firms, as it was in the
production account.



Business saving-investment account.–Because of the convention that
all nonfinancial investment is made by the business sector, all
transactions in existing fixed assets are intrasector transactions.
Consequently, on the left side of the saving-investment account,
purchases of land and of existing plant and equipment by one firm are
canceled by the sales of those assets by other firms. The plant and
equipment purchases that remain are those of newly produced goods, equal
to the sales to business of plant and equipment recorded in the business
sector’s production account.



Purchases of financial assets by one firm from another cancel; the
entry for net acquisition of financial assets represents the business
sector’s net acquisitions of newly issued assets and assets
acquired from other sectors. The business sector’s entry for net
increase in liabilities represents the difference between new issues and
retirements of current liabilities, bonds, and capital stock, summed
over all firms. In some presentations of saving-investment accounts,
the difference between net acquisitions of financial assets and net
increase in liabilities is shown instead of separate entries. Separate
entries are shown in table 8, however, to facilitate the presentation of
capital finance accounting later.



Household sector



Sector accounts closely resembling those for business can be
constructed for the household sector, which consists of households and
the nonprofit institutions serving them. Most of the transactions of
the household sector appear in the appropriation and saving-investment
accounts. The following discussion of these accounts deals immediately
with the sector accounts, which are consolidated from accounts that can,
in principle, be established for individual households.



Household production account.–The household production account,
shown in the household column of table 8, is used to record as
production the services rendered by paid household workers and the
services rendered by nonprofit institutions serving households. Interest
paid on consumer debt is not recorded here because it is not regarded as
a payment for a productive service in the U.S. national economic
accounts. The illustration in table 8 is limited to the recording of
services rendered by paid household workers.



In accounting for the productive services rendered by paid
household workers, the wages and salaries paid by employers are entered
as a use of funds on the left side of the account, as was done in the
business production account. On the right side, the sale of the
services by paid household workers to their employers is entered as a
source of funds; it represents the value of the services produced, on
the assumption that the only cost of production are the wages paid to
obtain the services. This entry is analogous to the entry of sales as a
source of funds in the business production account, although the
procedure appears somewhat artificial because household production lacks
the clear distinction between the sales and wage transactions
characteristic of business production.



Household appropriation account.–The household appropriation
account resembles the corresponding business account in that both show
the income of the sector, detail the outlays, and derive the balance
that is saved. The two accounts differ substantially, however, in the
sources of income and the nature of the outlays. Although business
income is derived from the operations of the business system, household
income is derived primarily from payments by business and other sectors.
The main category of expenditures in the household account is consumer
purchases; this item has no counterpart in the business account, inw
hich taxes and dividends are the main categories of expenditures. The
household appropriation account also records the sector’s payment
and receipt of interest, items recorded in the business sector’s
production account rather than its appropriation account.



Income received by the household sector is entered on the right
side of the household appropriation account. The wages and salaries of
paid household workers are entered as a component of household receipts
of wages and salaries, an entry that continues the accounting for
household production begun in the production account. Income received
from the business sector–wages and salaries, interest, and
dividends–has already been discussed. The income from other sectors
consists of wages and salaries received from government, interest
received from government and from foreigners, dividends received from
foreigners, and government transfer payments. The last category
consists of items such as retirement income and unemployment benefits
that do not involve, as quid pro quo, the rendering of productive
services by the recipient during the accounting period. The total of
the sources–incomes received–is designated “personal
income.”



On the left side of the household appropriation account, personal
taxes–primarily income taxes–are the first category of outlay. Most of
household purchases, the next category, are sales by business, which
also appear as a source of funds in the business production account; the
services rendered by paid household workers are entered as a purchase
from households, an entry that completes the accounting for household
production. The remaining outlay is household interest payments to
business, to government, and to foreigners.



The final entry is saving, which is derived as the difference
between personal income and the sum of personal taxes, consumer
purchases, and interest payments.



Household saving-investment account.–In the household
saving-investment account, net acquisitions of financial assets
represent the household sector’s net acquisitions of financial
assets from other sectors; purchases of assets by one household from
another cancel in the consolidation. Net increase in liabilities
represents new borrowing less repayment of debt, summed over all
households.



Consistent with the convention that business makes all nonfinancial
investment, all saving in the household sector is defined to be in
financial form; it does not include any investment in nonfinancial
assets. Although several types of assets might be considered to be
household sector investment, they are defined to be either consumption
by the household sector or investment by the business sector. For
example, household expenditures on durables–automobiles, refrigerators,
and the like–are defined to be consumption; homeowners’ investment
in residential property is defined to be business investment.



Government sector



Sector accounts for government can be constructed by consolidating
the budget statements of the various governmental units in the Nation.
As in the household sector, most of the transactions appear in the
appropriation and saving-investment accounts; government production is
confined to the services rendered by government employees.



Government production account.–The government production account,
shown in the government column of table 8, is used to record as
production the services rendered by government employees, using an
approach similar to that used in the household sector to record the
output of paid household workers. On the left side of the government
production account, wages and salaries paid by the government to its
employees are entered as a use of funds. On the right side, the sale of
the services of government employees to the government is entered as a
source of funds. These sales to government appear in the government
appropriation account, under the heading “purchases from
government.” The wages have already appeared in the household
appropriation account under wages and salaries received.



Government interest payments are not considered to be payments for
a productive service; they are, therefore, not recorded in the
government production account.



Government appropriation account.–The government appropriation
account is used to record the receipts and expenditures of the
government. On the right side, the categories of income consist of
taxes collected from the business and household sectors and of interest
received from business, households, and foreigners. The total of these
items is termed “government receipts.”



On the left side, the categories of expenditures consist of
purchases from business and from government, the latter equal to the
wages and salaries paid to government employees; of transfer payments to
persons and to foreigners; and of interest paid to business, to
households, and to foreigners. The final entry is government surplus
(or deficit), which is derived as the difference between government
receipts and government expenditures.



Government saving-investment account.–In the government
saving-investment account, the entry for net acquisitions of financial
assets represents the government sector’s net purchases of assets
from other sectors; purchases by one unit of government from another
cancel. The net increase in liabilities is new issues of debt less
retirement of debt, summed over all units of government.



Consistent with the convention that business makes all nonfinancial
investment, all government saving is defined to be in financial form.
Government acquisitions of nonfinancial assets–plant and equipment
purchases and change in inventories–are defined to be consumption and
included in government purchases.



Foreign sector



Foreign production account.–The output considered so far is
produced within the territory of the Nation. It is usually called the
domestic, or geographic, product. However, another measure is featured
in the national economic accounts of the United States. It is the
national product, a measure of the output on which residents of the
Nation have a claim. It includes output produced in the foreign sector
as well as in the domestic sectors.



To obtain the national product, the output produced abroad by the
Nation’s residents must be added to output produced domestically,
and the output produced domestically by foreigners must be subtracted.
The value of the output produced abroad is measured by the Nation’s
receipts of factor income from abroad–in this introduction, interest
and dividends from abroad. Similarly, the value of the part of domestic
output produced by foreigners is measured by the Nation’s payments
of factor income to them. In the terminology of national economic
accounting, national product equals domestic product plus the product
originating in the foreign sector. The latter, usually called product
originating in the rest of the world, is measured by the Nation’s
receipts of factor income from abroad less its payments of factor income
to foreigners.



In table 9, the foreign production account is shown as the
difference between two production accounts, one of which records output
produced abroad by the Nation’s residents, and the other the output
produced domestically by foreigners. In the production account for
output produced abroad by residents, dividends and interest paid by
foreigners are entered, as a use of funds, on the left side; and the
sale to foreigners of factor services–that is, the services for which
factor income is paid–is entered, as a source of funds, on the right
side. In the production account for output produced domestically by
foreigners, dividends and interest received by foreigners are entered,
as a use of funds, on the left side; and the purchase from foreigners of
factor services is entered, as a source of funds, on the right side.



The difference between these two accounts is the foreign production
account, shown in the foreign column of table 8; it records the net
product originating in the foreign sector. The interest and dividend
receipts and payments in the foreign production account have already
appeared in the business production and appropriation accounts and in
the household and government appropriation accounts; the sales and
purchases of factor services are entered in the foreign appropriation
account.



Foreign appropriation and saving-investment accounts.–The foreign
appropriation account records the receipts and expenditures of
foreigners in their dealing with residents of the Nation.



On the right side, receipts consist of sales by foreigners of goods
and of factor and nonfactor services to the Nation (imports), of
transfer payments, and of interest received from government.



On the left side, expenditures consist of foreigners’
purchases of goods and nonfactor services from business and of factor
services from residents (exports). Saving, the final entry on the left,
is derived, as usual, as the difference between receipts and
expenditures.



The design of the foreign saving-investment account follows
previously established procedures, with all saving by foreigners defined
to be in financial form.



Summary national accounts



The national economic accounting system as presented so far does
not provide a summary for the Nation as a whole. One such summary set
of accounts, described in this section, is obtained by consolidating,
for the four sectors, each of the three accounts. Other configurations
that provide national summaries are taken up in the next section.



National production account.–The National production account shown
in table 8 is obtained by consolidating the sector production accounts;
only two cancellations are involved, both in interest.



On the right side, sales to consumers consist of sales by the
business and household sectors; sales to government consist of sales by
the business and government sectors; and sales to foreigners consist of
sales by the business sector of goods and nonfactor services and sales
by residents of factor services. Sales to business of plant and
equipment and change in business inventories are carried over directly
from the business production account to the national account. Finally,
purchases from foreigners consist of purchases by the business sector of
goods and nonfactor services and purchases by residents of factor
services.



On the left side, wages and salaries consist of those paid by the
business, the household, and the government sectors. Capital
consumption allowances and indirect business taxes are carried over
directly from the business production account. Net interest is defined
as interest paid less interest received; it consists of payments of
interest to households and government by both business and foreigners
less the interest received by business and foreigners from households
and government (other than government interest payments to foreigners).
In the consolidation, interest paid by business to foreigners is
canceled by the negative entry for interest received by foreigners from
business; adn interest paid by foreigners to business is canceled by the
negative entry for interest received by business from foreigners.
Profits are the sum of business profits and paymentls of dividends by
foreigners, less the dividends received by foreigners.



The totals of the sources and of the uses are the gross national
product (GNP) and the charges against gross national product,
respectively. GNP measures the Nation’s output in terms of goods
and services. The charges against GNP measure the Nation’s output
in terms of income payments and other costs.



National appropriation account.–The consolidation of the sector
appropriation accounts involves several cancellations. Payments of
profits taxes in the business sector cancel the receipts in the
government sector. Likewise personal taxes paid and received cancel in
the household and government sectors, and transfer payments paid and
received also cancel in the government, household, and foreign sectors.



On the right side of the national appropriation account, the
derivation of the entries for wages and salaries and indirect business
taxes has already been described. In aggregating the profits
transactions, dividends paid by business to households cancel when the
accounts for these two sectors are consolidated. After this
cancellation, the profits entries tha would remain on the left side of
national appropiration account are dividends paid by business to
foreigners less dividends paid by foreigners to households. Subtracting
the entries on the left from both sides of the national appropriation
account leaves, on the right side of table 8, the proftis total shown in
the national production account. In aggregating the interest
transactions, those between the household and government sectors cancel,
as do government interest payments to foreigners, leaving in the
national account interest payments by the business and foreign sectors
to households and government less interest payments by he household and
government sectors to business and by the household sector to
foreigners–net interest as defined in the national production account.
Sources of funds, therefore, consist of wages and salaries, net
interest, indirect business taxes, and profits.



On the left side, the entries consist of purchases–consumer
purchases, government purchases, and foreign purchases–less purchases
from foreigners, and the various types of saving–undistributed business
profits, personal saving, government surplus or deficit, and foreign
saving; all of these items are carried over directly from the sector
accounts.



The total of the sources is the net national product, which
represents the Nation’s output after allowing for the using up of
plant and equipmnt in the business sector; the total of the uses is
consumption and net saving.



National saving-investment account.–In the consolidation of the
sector saving-investment aconts, the total of net acquisitions of
financial assets for the Nation as a whole must equal the total net
increase in liabilites; the entries, equal in size, cancel in summing
the uses. The total of the uses is gross investment, which consists of
business purchases of plant and equipment and change in business
inventories. The total of the sources is gross saving, which consists
of the saving of each sector.



Branches of National Economic Accounting



In the United States, the major branches of national economic
accounting are national income and product accounting, capital finance
accounting, and input-output accounting. Each of these is a specialized configuration of the sector accounts in table 8.



National income and product accounting



Of the three, the national income and product accounting system has
gained the widest prominence because it has the greatest general
usefulness. Table 10 presents a simplified version of the U.S. national
income and product accounts (NIPA’s).



The first account in the NIPA system is the national income and
product (NIP) account; it is a consolidation of the sector production
accounts and the business appropriation account. On the left side, the
inclusion of the business appropriation account in the consolidation
replaces business profits int he nationla production account by its
components–profits tax, dividends (net of dividends received), and
undistributed profits; the total of the uses is not distrubed, and
continues to equal charges against GNP. In the NIP account, sales to
foreigners are termed “exports” and purchases from foreigners
are termed “imports”; import are subtracted from exports, and
the result is entered as net exports. Again the total of the sources
measures GNP.



The second account, the personal income and outlay account, is the
household appropriation account; it is carried over directly from table
8. The third account, the government receipts and expenditures account,
is the government appropriation account. In this account, interest
receipts are subracted from both sides so that the interst entry on the
left side is net interest paid; therefore, total receipts, as well as
total expenditures and surplus, are less than the table 8 totals.



The fourth account–the foreign transactions account–is a
consolidation of the foreign appropriation and saving-investment
accounts. Some entries are carried over directly from table 8–receipts
from foreigners (exports) on the left side and payments to foreigners
(imports, transfer payments, and interest paid by government) on the
right side; the entries for foreign saving cancel when the foreign
appropriation and saving-investment accounts are consolidated. However,
the perspective on saving is reversed from that in the foreign
saving-investment account in table 8, which highlighted foreigners’
acquistion of the claims against the United States (net of U.S. claims
on foreigners). In the NIPA foreign transactions account,
foreigners’ net acquisitions of financial assets and the net
increase in foreign liabilities are subtracted fromb toh sides; the
resulting entry on the right side, termed “net foreign
investment,” is equal to the net increase in liabilities of
foreigners to the United States less foreigners’ net acquisition of
financial assets that are U.S. liabilities.



The fifth account, the gross saving and investment accoun, is a
consolidation of the saving-investment accounts of the three domestic
sectors. On the left side, the entries for undistributed profits,
personal saving, government surplus, and capital consumption allowances
are carried over directly from the sector accounts. On the right side,
gross private domestic investment is the sum of business plant and
equipment pruchases and the change in business inventories. In the
process of consolidatinof the financial entries, financial assets that
represent claims on other domestic sectors cancel liabilities that
represent obligations to other domestic sectors, but claims on
foreigners and liabilities to them do not. Therefore, the last item on
the left side of the gross saving and investment account is net foreign
investment–the Nation’s net acquisitions of claims on foreigners
less the net increase in its liabilities to them; it is the entry in the
foreign transactions account.



This overview of the NIPa system takes numerous shortcuts to
simplify the presentation. Most important, it has assumed away both the
treatment of noncorporate business and the adjustments necessary to
convert the historical prices used in business accounting for
inventories and depreciation to the desired current-price valuation. It
has also omitted the treatment of homeownership, nonprofit institutions,
government enterprises, financial institutions, secondhand goods, and
the several types of nonmarket transactions that are included in the
NIPA’s. These topics will be take up in a future paper.



The origin of the NIPA system’s configuration of accounts is
pragmatic. The information presented was selected because of its
importance for economic analysis. The NIP account preserves the detial
of the buisness detail on sector production accounts because production
outside the business sector is limited. The household appropriation
account and the government appropriation account are shown separately
because the behavior of these factors is important in economic analysis.
The first account presents information on the income, expenditures, and
saving of consumers; and the second provides a government budget
integrated with the rest of the national economic accounts. Because of
the interest that attaches to foreigh transactions, a separate foreign
account is presented, but no important information is lost by the
consolidation of the foreign appropriation and saving-investment
accounts.



In order to present a simple and easily undertsood system cnetered
on an unduplicated measure of prodcution, the NIPA’s do not show
some information that is useful in more specialized analyses. This
information can be found in other sets of acounts that complement the
NIPA’s: The capital finance accounts and the input-output accounts.



Capital finance accounting



The need for more information on saving and investment than that
presented in the NIPA system is filled by capital finance accounting.



Capital finance accounts present the information in the secot
saving-investment accounts in such a way as to illuminate the process by
which financial institutions and financial markets transform the
economy’s savings into investment. By presenting considerably
greater detai on both sectors and types of financial assets and
liabilities than that shown in the saving-investment accounts in table
8, these accunts show the funds among sectors by lending and borrowing,
and the use of these funds for investment.



Table 11 illustrates the modifications that are made to the
saving-investment accounts shown in table 8 in setting up capital
finance accounts; these modification reintroduce the kinds of detial
supressed in deriving the saving-investment account of the business firm
in tables 6 and 7. The illustration is based on the business sector
account; similar modifications are made in the accounts of other
sectors. (1) The change in liabilities is added to each side of the
saving-investment account to convert the left side to investment and
funds supplied and the right side to saving and funds raised. 2) The
entries for net acquisition of financial assets and net increase in
liabilities are disaggregated to show four types of financils
instruments corresponding to the financial assets and liabilities shown
in tables 1 and 3: Deposits, the major constituent of cash positions;
loans; securities, including both stocks and bonds, as well as any
short-term interest-bearing assets included in business cash positions;
and trade credit–accounts receivable and payable. (3) The sector is
deconsolidated to show separate accounts for nonfinancial business and
for financial institutions.



In table 12, data from the mofified saving-investment accounts for
all sectors are arranged to show their transactions in each type of
financial instrument. The left side of the account of an instrument
records the funds supplied by the lending sectors; the right side
records the funds raised in this form by the borrowing sectors. The
totals of the fund supplied and raised are equal.



Table 12 shows the nonfinancial sectors acquiring deposit
balnces–a use of funds for lender–and financial institutions incurring deposit liabilities-a source of funds for borrowers. For loans and
securities, each sector is shown as both lender and borrower, acquiring
claims on other sectors by supplying funds–a use–and issuing
liabilites to other sectors by raising funds–a source. Trade credit,
in this illustration, is confined to the nonfinancial business sector.



The role of financial intermediation is pictured completely only
when the accounts in tables 11 and 12 are brought together in a matrix
such as that in table 13. This presentation is fashioned after the
matrix summary of the flow of funds accounts (FFA’s) of the United
States, prepared by the Board of Governors of the Federal Reserve
System. In table 13, the sector saving-investment accounts are placed
side by side. Each of the first five pairs of columns of the matrix
constitutes one of the sector-investment accounts shown in tables 8 and
11. (The foreign account reflects the perspective of foreigners, as in
table 8.) The last pair of columns in table 13 shows the totals of
saving and investment for the domestic sectors. It differs from the
saving-investment account in the NIPA’s in that net acquisitions of
financial assets and net increase in liabilites are entered separately
on opposite sides of the account.



The rows in the top portion of the matrix record nonfinancial
transactions–gross saving, by sector, and the business sector’s
plant and equipment purchases and change in inventories. The rows in
the bottom portion record financial transactions, by secto; each of
these rows constitutes an account foro one of the financial instrumetns
shown in table 12.



The rows in the top portion of the matrix record nonfinancial
transactions–gross saving, by sector, and the business sector’s
plant and equipment purchases and change in inventories. The rows in
the bottom portion record financial transactions, by sector; each of
these rows constitutes an account for one of the financial instruments
shown in table 12.



The middle rows of the matrix are in italics to indicate that the
entries in them are not included in the totals of the columns. The rows
show two ways of measuring net financial investment. One is calculated
from the nonfinancial transactions as gross saving less gross
nonfinancial investment; that is, Net financial investment=gross
saving–gross nonfinancial investment.



The other is calculated from the financial transactions as net
acquisition of financial assets less net increase in liabilities; that
is, Net financial investment=net acquisition of financial assets–net
increase in liabilities. Net financial investment measures a
sector’s excess of lending to other sectors over its borrowing from
them.



In this illustrtion, the household sector is a net lender of $15
billion, with a preference for holding assets in liquid form. The
nonfinancial business sector is a net borrower of $5 billion, with a
preference for loans as a source of funds. Financial institutions
intermediate between them, providing the household sector the assets
that it prefers–a deposit liability of financial institutions–and
providing the nonfinancial business sector with the type of credit it
desires.



Balance sheet accounting is an extension of capital finance
accounting. Balance sheet accounts, which are analogous to the balance
sheet of the business firm introduced earlier, show the total stocks of
assets and liabilities for the sectors and for the Nation. Revaluation accounts are needed to record the capital gains nand losses) in order to
reconcile the saving-investment accounts with total changes in the
balance sheet accounts ovr the accounting period, because the
saving-investment accounts show only part of the changes in the
sectors’ assets and liabilities.



The capital finance accounts described in this introduction differ
in several respects from the FAA’s of the Federal Reserve Board.
Some of these differences relate to the precise. manner of sectoring,
classification of transactions, and the netting and grossing of
transactions; further, the FAA’s do not follow the convention that
all nonfinancial investment is made by the business sector. Other
topics involved in the construction of the FAA’s are combination
versus consolidation of accounts, valuation, and timing. These and
other topics are covered in the descriptions of the FAA’s listed in
the “Suggestions for Further Reading.”



Input-output accounting



Information on the flows of goods and services that make up the
production relationships among industries is missing from the NIPA
system, but is provided by input-output (I-O) accounting. I-O
accounting can be viewed as



adeconsolidation, along detailed industry lines, of the national
production account of table 8, with a separate production account
presented for each industry. Both the NIPA’s and the I-O accounts
present GNP in terms of final product flows (final demand, in I-O
terminology) and in terms of charges against GNP (value added, in I-O
terminology). The distinctive feature of the I-O accounts is the
presentation of detailed information for each industry on the
consumption of purchased materials and services that canceled in
arriving at an unduplicated measure of production for the business
sector in table 8 and in the NIPA’s. This detailed information is
presented in a matrix–an I-O table.



In the I-O table, each column records the gross output of an
industry and the inputs used by that industry in production; that is,
Gross industry output=consumption of purchased materials and services
+value added.



Each row records the gross output of a good service (commodity, in
I-O terminology), the consumption of the commodity by producing
industries, and the final demand for the commodity, where final demand
consists of sales of the commodity to final users, the change in
inventories of the commodity held by both the producing and consuming
industries, less imports of the commodity; that is, Gross commodity
outpu=consumption by producing industries +sales to final users +change
in inventories -imports.



To illustrate the derivation of the I-O account, table 14 presents
production accounts for the three hypothetical industries–designated A,
B, and C–that make up the business sector. Unlike the production
accounts derived in table 4, these accounts in table 14 record
production on a gross basis; that is, consumption has not been
subtracted from both sides. For the three nonbusiness sectors, table 14
presents a single consolidated production account. In this account,
sales to final users consist of sales of factor services to consumers,
to government, and to foreigners, and imports consist of purchases from
foreigners of factor services; charges against gross output consist
entirely of value added. In practice, each nonbusiness sector is shown
separately in the I-O table.



Several features of the illustration in table 14 should be noted.
(1) Each industry produces a single commodity and that commodity is not
produced by an other industry; thus, industry a produces commodity A,
industry B, commodity B, and so on. (The more complex case of secondary
products, where industries produce commodities that are also produced by
other industries, is taken up later.) (2) The commodities produced by
industries A and B are goods, which are inventorable; the commodity
produced by industry C is a service, which is not inventoried. (3)
Firms in each industry purchase inputs from other firms in the same
industry. (4) Industry A consumes an imported commodity in addition to
domestically produced commodities. The import is designated as
noncomparable, signifying that no domestic counterpart exists. The
treatment of comparable imports is taken up later.



Table 15 illustrates the construction of the I-O table from the
information contained in table 14. The first four columns on the left
side of the matrix record the consumption of purchased materials and
services, as well as value added, by the producing industries. For each
industry, consumption is derived from the left side of the
industry’s production account in table 14 as the purchase of the
commodity less the change in raw material inventory. Value added is
also taken from the left side of the industry production account. The
nonbusiness sectors have value added as their only input.



Three columns, further to the right, record the components of final
demand. Sales to final users are obtained from the right side of the
production accounts in table 14. To obtain the inventory entries, it is
necessary to rearrange the information on inventory change shown in
table 14 to show the change in the inventories of each commodity
wherever held; theis rearrangement is shown in table 16. The entries
for the noncomparable import are taken from the production account of
industry A; the sum of the entries for consumption and inventory change
is offset by the entry in the import column so that the row total–gross
commodity output–is zero, appropriately reflecting the fact that the
commodity is not part of domestic output. The output of the nonbusiness
sectors consists of sales to final users less imports.



The matrix presented in table 15 is called a use table and shows
the consumption of each commodity and the composition of the inputs to
each industry. If a commodity were produced by two industries, the row
totals of gross commodity output and the column totals of gross industry
output would no longer correspond. For example, if $5 billion of
commodity A were produced by industry B instead of industry A, the gorss
industry output of industry A would be $122 biullion instead of $127
billion and that for B would be $131 billion instead of $126 billion.
In this case, a second table, called a make table, is compiled, in which
each row shows the commodity composition of an industry’s output
and each column, the industrial origin of the supply of a commodity.



The treatment of a comparable import in terms of the example is as
follows. If, instead of being a noncomparable import, the import used
by industry A was comparable to commodityB, industry A’s entries in
table 14 for the consumption and inventory change of commodity B would
include the import, and the entries for noncomparable imports would be
zero. Likewise, in table 15, the disposition of the import would be
included in the row of commodity B. In effect, the second and fourth
rows would be added together.



The U.S. I-O tables are in producer’s prices. Trade margins
and transportation costs incurred in the distribution of good are not
included in the row entries for these commodities, but are shown as
separate inputs to each using industry and as separate sales to final
users. The treatment of transportation and trade can be illustrated in
table 15 by designating industry C as trade and transportation services.
With this designation, the row entries for commodity C represent the
trade and transportation costs associated with moving goods from the
producer to the purchaser, and the row entries for commodities A, B, and
noncomparable imports are valued at producer’s prices.



A third way of measuring GNP may be derived from the I-O table. It
is termed “GNP originating,” or value added, by industry. In
this derivation, which is illustrated in table 17, the GNP originating
in each industry is established by subtracting consumption of materials
and services from gross output and then summing over all industries to
obtain total GNP. GNP originating in each industry also may be
established by the equivalent procedure of summing income payments and
other costs.



This discussion of the I-O accounts has omitted a number of topics
involved in the construction of the make and use tables and derivative I-O tables in which the flows are transformed into the direct
requirements and total requirements that each industry places on each
other industry in order to produce a unit of output. These topics are
covered in the references listed in “Suggestions for Further
Reading.”



Suggestions for Further Reading



The U.S. national income and products accounts are described in the
following: (1) Carol S. Carson and George Jaszi, “The National
Income and Product Accounts of the United States: An Overview,”
SURVEY OF CURRENT BUSINESS 61 (February 1981): 22-34; (2) U.S.
Department of Commerce, Office of Business Economics, National Income,
1954 Edition: A Supplement to the SURVEY OF CURRENT BUSINESS
(Washington, DC: U.S. GPO, 1954), reprinted, along with later
supplements and revisions, in U.S. Department of Commerce, Bureau of
Economic Analysis, Readings in Concepts and Methods of National Income
Statistics (Springfield, VA: NTIS, 1976), NTIS Accession No. PR-248-690;
(3) Studies in Income and Wealth, vol. 22, a Critique of the United
States Income and Product Accounts (Princeton, NJ: Princeton University Press for the National Bureau of Economic Research, 1958); (4) John W.
Kendrick (Assited by Carol S. Carson), Economic Accounts and Their Uses
(New York: McGraw hill, 1972); (5) Carol S. Carson, “The History of
the United States National Income and Product Accounts: Development of
an Analytical Tool,” Review of Income and Wealth 21 (June 1975):
153-181; and (6) Studies in Income and Wealth, vol. 47, The U.S.
National Income and Product Accounts: Selected Topics (Chicago:
University of Chicago Press for the National Bureau of Economic
Research, 1983).



The U.S. flow of funds accounts are discussed in Board of Governors
of the Federal Reserve System, Introduction to Flow of Funds
(Washington, DC: Board of Governors of the Federal Reserve System, June
1980) and the references therein.



The U.S. input-output accounts are described in the following: (1)
US.S Department of Commerce, Bureau of Economic Analysis, Definitions
and Conventions of the 1972 Input-Output Study, BEA Staff Paper SP80-034
by Philip M. Ritz, (July 1982); (2) Interindustry Economics Division,
“The Input-Output Structure of the U.S. Economy, 1977,”
SURVEY OF CURRENT BUSINESS 64 (May 1984): 42-84, and the references
therein.



Recent descriptions of alternative sets of national economic
accounts are the folliwing: (1) Richard Ruggles and Nancy D. Ruggles,
“Integrated Economic Accounts for the United States, 1947-80,”
SURVEY OF CURRENT BUSINESS 62 (May 1982): 1-53, and “Integrated
Economic Accounts: Reply,” SURVEY OF CURRENT BUSINESS 62 (November 1982): 36-53; and (2) Robert Eisner, “The Total Incomes Systems of
Accounts,” SURVEY OF CURRENT BUSINESS 65 (January 1985): 24-48.



The United Nations Systems of National Accounts is an international
standard for national economic accounting systems. It is specified in
Department of Economic and Social Affairs, Statistical Office of the
United Nations, Studies in Methods, Series F No. 2, Rev, 3, A System of
National Accounts, (New York: United Nations, 1968).

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