Value ``added'': Why consistency in aggregation is essential for global accounting standards, and how to achieve it

Article type: Research Article

Authors: Reich, Utz-Peter

Affiliations: Mainz University of Applied Sciences (em.), Starnberger Wiese 80, D-82319 Starnberg, Germany E-mail: [email protected]

Abstract: The paper argues that additive inconsistencies in national accounts may be admissible, and coped with, within the scope of a national economy, and over a short period of time, but they are destructive when carried up to a supranational, or even global level, and over the long run. The paper proves that in contrast to current tenets an additive chain index consistent in aggregation exists, and it demonstrates the theoretical fact by application to actual data from Denmark, and Germany. The theory behind is simple, not mathematics but pure logic: a value added which is not additive is a contradiction, in itself. The paper has been presented to the IARIW-OECD Special Conference on ``The Future of the SNA'' held at Paris, France, on April 16-17, 2015.

Keywords: National accounts, value added, volume measures, consistency, aggregation

DOI: 10.3233/JEM-160431

Journal: Journal of Economic and Social Measurement, vol. 41, no. 3, pp. 307-327, 2016