Abstract: Price indices serve many different purposes and their definition, coverage and construction depends on the precise use for which they are being constructed. Once constructed however their use is frequently extended to other areas. For example, a consumer price index may be designed as an inflation target, a measure of price stability or a compensation index, but may also be used as a deflator. Usually the original use will determine which particular agents the index covers, which range of goods and services are covered and the way in which prices are measured and the index constructed. However key economic concepts…such as productivity and welfare are residuals derived by subtracting a series from a first deflated number. Inappropriate use of price indices will render such measures meaningless. This paper reviews the systems of price indices and the supporting frameworks which facilitate the process of identifying and defining in statistical terms user needs for price indices and making best use of all the prices collected. Whilst the paper considers price indices in general its focus is on consumer price indices.
Keywords: International standards, conceptual frameworks, practical constraints, consumer price indices, laspeyres, cost-of living indices, SNA1993, social accounting matrices, stage of processing framework, stage of production framework, deflators
Abstract: Statistics Netherlands has decided to re-design the Consumer Price index (CPI). The aim is to improve its quality and bring the CPI more in line with a cost of living index. This article provides background information on the (total survey) re-design. It focuses on the bottle-necks in the methodology and the production process of the current Dutch CPI, and discusses the changes planned for 2007.
Keywords: Consumer price index, cost of living index, total survey re-design
Abstract: The possible long-run relationships between the Consumer Price Index and the Wholesale Price Index are analyzed for three inflation targeting countries – Canada, Sweden and the UK – using three different statistical techniques. The Engle-Granger test finds cointegration only for Sweden. The Johansen's test and the model-free and seasonality robust periodogram based test conclusively show that the two price indexes are not cointegrated in the three countries included in the sample. Hence, the values of these indexes may consistently diverge over time. However, the two price indexes move together in the short run. These findings have some implications for the…success of inflation targeting monetary policies.
Keywords: Cointegration, periodogram, price indices
Abstract: In recent years, globalization has been the subject of an increasingly intense public dialog, as international trade and investment have grown and as patterns of trade and investment have evolved and assumed new forms. Economic statisticians are charged with compiling information on globalization that is relevant, timely, and accurate. This paper discusses issues that may be encountered in carrying out this mandate with respect to two major ways in which globalization manifests itself in real terms – cross-border trade in goods and services and foreign direct investment and the resulting international activities of multinational companies. The paper assesses the importance…of measurement and examines some of the pitfalls that may be encountered in constructing indicators of globalization and in using those indicators to quantify and describe the phenomenon and gauge its economic impact. The discussion is informed by the experiences of the United States in developing this information.
Abstract: Important problems of measurement and analysis in the national accounts have emerged in recent years due to rapidly growing globalisation of production, expanding trade in services, performance of international transactions and flow of information over the internet. The paper addresses the measurement problems in connection with: Joint international production, outsourcing across borders, growing flows of services and transactions that are not covered by existing surveys and administrational data, complicated transactions in connection with for example mergers and swaps of stocks. The problems of analysis of growth and productivity under growing globalisation of production are also presented.…International recommendations for coverage and methods of measurement currently do not give satisfactory solutions to these problems. The experience with these difficulties in Israel have resulted in the development of possible solutions, which include use of new sources and measurement methods, construction of decision trees for registration of certain transactions, and linkage to statistical frameworks abroad.
Keywords: Globalisation, national accounts, balance of payments
Abstract: ‘Goods for processing’ (‘toll processing’) has the potential to cause mismeasurement of key economic statistics. This paper outlines practical, economic and taxation aspects of the issue and describes the pragmatic approach adopted by the UK's Office for National Statistics (ONS). This paper concludes that it is clear that ‘goods for processing’/toll processing presents a range of practical and statistical problems that need to be addressed via international agreement on the definition, treatment and measurement of such activity. As part of the deliberations towards the revision of the System of National Accounts 1993, some progress has been made towards…deciding upon a common treatment but there remains a degree of disagreement and some unease about the practical implications of the recommended revised approach. The ONS pragmatic approach, described within the paper, is put forward as an example of how one country's NSI has dealt with the issue to date.
Keywords: Balance of payments, contract manufacturing, goods for processing, international trade, outsourcing, processing services, stripped-risk manufacturers, toll processing, transfer pricing
Abstract: Globalization makes an accurate description of the national economy increasingly difficult. Two parallel processes characterise Dutch firms: on the one hand developing into companies with activities abroad and on the other hand being affiliated to foreign multinational companies. Many of these companies are considered ‘complex companies’ since their operations have led to major inconsistencies among several source statistics of the National Accounts of Statistics Netherlands. The interpretation of the source statistics related to multinational enterprises is problematic. In National Accounts consistency of data is of prime importance. The System of National Accounts (SNA) and the European System of Accounts (ESA)…provide guidelines and definitions to measure the domestic economy and the links between an economy and the rest of the world. However, in many cases SNA and ESA do not offer a solution to the problems created by multinational enterprises. Statistics Netherlands is devising tailor-made solutions to solve these problems.
Keywords: Globalization, multinational enterprises, measurement, territorial principle, ownership of goods, steering of production processes, internal and mutual consistency, tailor-made solutions, practical examples, decision diagram
Abstract: To measure productivity accurately, the volume of work should correspond as closely as possible to the production boundary defined by the System of National Accounts. In practice, there is no single source in Canada to estimate a labour input that corresponds entirely to this frontier, both conceptually and with respect to coverage. Canadian data on hours worked are, therefore, obtained by combining the results of several surveys of establishments and households, supplemented by the results of the five-year censuses and administrative data. One advantage of our methodology comes from the fact that our SNA labour data at the aggregate level…remained consistent and reconcilable with the Labour Force Survey results, the seminal survey of the Canadian labour market. The aim of this paper is to describe the actual methodology used in Statistics Canada to estimate annual hours worked by industry and province in view to be consistent with the System of National Accounts.
Abstract: In the European Union, tens of billions of euros are spent on regional policy every year. A major part of this amount is allocated on the basis of regional gross domestic product per capita. Because of the administrative use of this statistical estimate, the requirements for the quality of these figures are very strict. This quality is, however, not easy to specify by means of a confidence interval. What can be done to monitor the quality as a basis for improvement? In this paper an inventory is drawn up of recent work on the quality of regional accounts estimates. Special…attention is paid to the instrument of process tables. In the last five years process tables have been developed for the national accounts (GNI Committee) as well as the regional accounts. The focus of the regional accounts process tables is on the treatment of multi-regional companies and the sources for top-down methods. The regional accounts should be compiled in close cooperation with the national accounts. The quality of the national accounts estimates and – indirectly – the regional accounts estimates, could be improved by the findings of the regional accounts compilation process.
Keywords: Regional accounts, quality, accuracy, process tables
Abstract: The first part of this paper describes how the systems and programs that feed Canada's sub-national economic accounts were built at Statistics Canada. A carefully chosen overview of challenges in developing these accounts offers insights into the issues and problems involved in building the statistical infrastructure that supports the present national and sub-national economic accounts. The second part of the paper deals with conceptual issues and challenges in developing a regional input-output framework that is capable integrating the sub-national data discussed earlier using national accounting principals and conventions.
Keywords: National accounts, Sub-national economic accounts, regional input-output tables