national accounts quarterly national accounts - a view of the crisis

National Accounts Quarterly National Accounts - a view of the crisis

UCC 9 March 2011

Michael Connolly

Integration and Large Cases Division, National Accounts

Central Statistics Office, Ireland 2

A Visual Guide to the Financial Crisis by Jess Bachman

Jess from WallStats put this together for the Mint blog. I'm pretty sure they have him on retainer.

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GDP – GNPGap widening

European ComparisonsGDP Seasonally Adjusted, Chain Linked

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Expenditure components of GDP (2009)

GDP = C + I + G + X - M

= GDP

Consumption

52%

Government

15.8%

Investment

11.8%

Exports

97%

Imports

76.6%

+ + + -

Exports & Imports of Goods and Services as % GDP - 2006

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= GDP

GDP by Sector of Origin (2009)

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Proportions of GDP by Activity - Value Added Type 2002 - 2010

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GDP by Sector of Origin/Expenditure Based – Bread Economy

Baker buys flour and makes bread sells bread at €4 to shop

Farmer grows wheat sells to miller @ €1 per bag

Miller buys wheat makes flour sells flour to baker for €2 per bag

Shop buys bread and sells it to customers at €6.00

GDP by Sector of Origin : Sum of value added :Farmer (€1) +Miller (€1) +Baker €2+Shopkeeper €2) = €6.00 = GDP Bread Economy

Expenditure Based GDP Estimate :Total sales of Bread to Households = €6.00 = GDP Expenditure

How Do We Calculate Constant Prices?

Several methods

deflation of current price data

using CPI for example

extrapolation using volume index

using Industrial Production Index or RSI

double deflation

separately deflate outputs and inputs

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Chain Linking - Rationale

Previously used a fixed base year (1995).

Each year’s GVA calculated to a base of previous year.

Benefit of more up-to-date weights than with fixed base calculations.

Year-on-year changes then linked together and GVA expressed in prices of reference year.

Components do not add to total GDP, as GDP is chain-linked separately using sum of components’ GVA’s at previous year prices.

Statistical discrepancy cannot be calculated.

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Creating a Chain Linked Series of GDP

referenced to 2008

Year Current PricesPrevious Year Prices Growth rate Chain Linked

2002 130,464 124,804 144,876

2003 140,008 136,219 4.4% 151,267

2004 149,344 146,446 4.6% 158,223

2005 162,314 158,329 6.0% 167,742

2006 177,343 170,952 5.3% 176,669

2007 189,374 187,321 5.6% 186,609

2008 179,989 182,655 -3.5% 179,989

2009 159,646 166,345 -7.6% 166,345

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For 2003 Growth rate = 136,219/ 130,464 = 4.4% . Chain link 2003 to 2004 158,223/1.044 = 151,267

Inputs into National Accounts

Macro Balance of Payments Industry and Services

statistics Prices data Labour Market Administrative data -

Corp Tax etc. Trade

FISIM

Micro – Large Cases Unit Consistency of LCU data

across survey areas

Consistency of Prices data

Consistency of administrative data - Corporation Tax and Trade Data

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Globalisation in the Irish Economy

Irish economy has developed into a highly Globalised Economy

For MNCs in Ireland top 10 account for 34% of value of exports and 33% of imports

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Exports %GDP Imports %GDP

Goods 44 30

Services 38 40

Total 82 70

Large Cases & Consistency Network

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Large Cases Unit &Consistency

Employment in Industry 1985-2005

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Industry Output - by ownership 1985 - 2005

Numbers Employed and Output per Head

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Summary and Conclusions

The quarterly National Accounts give a comprehensive picture of where the economy is positioned

Benefits from Chain linking of constant price data compared to fixed base year indexation

Extensive data sources obtained both within and outside of CSO

Strategy for dealing with MNC statistics through Consistency Unit

Distortions to Macro economic variables

GDP

Productivity

23 November 2010 Globalisation –Impact