THE purpose of this introduction is twofold.
First, it presentsthe conceptual basis and framework of the U.S. national income andproduct accounts (NIPA’s). Second, using this framework, itrelates the NIPA’s to the other branches of national economicaccounting. National income and product accounting, capital finance and balancesheet accounting, and input-output accounting are the major branches ofnational economic adccounting in the United States today. Eachilluminates some aspects of the structure, workings, and performance ofthe economy. The NIPA’s–the most widely used of thethree–display the value and composition of national output and thedistribution of incomes generated in its production.
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The capitalfinance accounts, better known in the United States as flow of funds accounts, show the role of financial institutions and instruments intransforming saving into investment and the changes in assets andliabilities that result from this transformation; associated balancesheet accounts present assets and liabilities at particular points intime. Input-output accounts trace the flow of goods and services amongindustries in the production process and show the value added by eachindustry and the detailed commodity composition of national output. Closely related to these national accounts are internationaleconomic accounts–the balance of payments, for example–and regionaleconomic accounts.
The international accounts portray the transactionsof the residents of the Nation with the residents of the rest of theworld, highlighting international trade flows and the internationalpayments mechanism. Regional accounts disaggregate the national economyby geographic subdivision and serve for the various subdivisions thepurposes that the national economic accounts serve for the Nation as awhole. The fundamental aim of national economic accounting is to provide acoherent and comprehensive picture of the Nation’s economy. Morespecifically, national economic accountants want to answer twoquestions.
First, what is the output of the economy–its size, itscomposition, and its use? Second, what is the economic process ormechanisim by which this output is produced and distributed? The national output about which these questions are raised indefined, with a few exceptions, to be the production that is reflectedin the sales and purchases of the market economy. Although, for somepurposes, a broader definition that includes the nonmarket activitiesassociated with household production is useful, it is difficult to takeaccount of many of the activities that take place outside the market inany systematic and nonarbitrary way. National output can be measured either by the sum of goods andservices sold to final users, or by the sum of income payments and othercosts; in both cases, business purchases on current account from otherbusinesses are subtracted sot hat national output is an unduplicatedtotal. National economic accountants take these two equivalent measuresof ouput and construct from them a set of accounts showing productionand distribution, consumption and saving. The national economic accounts are aggregations of the accountsbelonging to the individual transactors in the economy, whether or notformal acounting statements exist explicitly for all of them. The basicapproach is to distinguish groups of economic transactors; to set upuniform types of acconts for them; and to show in these accounts thebroad categories of economic transactions in which they engage.Transactors are aggregated into homegeneous groups, or sectors, themembers of which are engaged in the same types of transactions and areaffected 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 canbe disaggregated or supplemented with other groupings. Business enterprises give rise to the bulk of national output;therefore, this introduction first derives economic accounts for abusiness firm from its financial statements and then establishes similaraccounts for the business sector and the other sectors. The firstsection recasts the financial statements of a firm into a productionaccount, an appropriation account, and a saving-investment account, thebuilding blocks for national economic accounts.
(This section assumessome familiarity with business accounting as it is presented inaccounting textbooks.) The following section, using these threeaccounts, sets up national economic accounts for the business sector asa whole, for the other major sectors, and for the Nation, the last as asummary of the accounts for the sectors. The final section considersthe branches of U.S. national economic accounting–national income andproduct accounting, capital finance accounting, and input-outputaccounting–and the relationships among them. The presentationintroduces the underlying concepts and structure of the U.
S. nationaleconomic accounts; it omits some entries and simplifies definitions. Economic Accounts of a Business Firm The economic accounts of a business firm–the building blocks forthe national economic accounts–can be derived from the three accountingstatements in common use for business financial reporting.
The first ofthese is the balance sheet, which provides a picture of the condition ofthe firm at some particular time, usually the last day of its fiscalyear. The second is the statement of income and retained earnings,which shows the firm’s operating results–that is, the amount anddisposition of the income arising from its activities–over theaccounting period between balance sheets. The third is the statement ofchange in financial position, which shows the contribution of thefirm’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 withdrawnfrom inventory in prices of the current accounting period. (3) Plantand equipment prices are stable over time, so that firms’ chargesfor the use of these assets (depreciation) also are valued in prices ofthe current accounting period. In addition, the presentation in thisintroduction follows the NIPA convention that only business firms makenonfinancial investments and own fixed assets. Business accounting statements Balance sheet.
–The basic identity underlying the balance sheetis: The value of the firm’s assets is equal to the value of theliabilities and equity claims against these assets; that is, Assets=liabilites+stockholders’ equity. Assets generally are carried at fixed values equivalent to theircosts of acquisition; liabilities consist of promises to pay specified amounts of money to creditors. If total assets rise without anoffsetting increase in total liabilities, stockholders’ equity–theowners’ claim on the assets–rises; if liabilities rise without acorresponding increase in assets, stockholders’ equity falls. On the left side of the balance sheet shown in table 1, currentassets are resources that can be converted to cash or consumed withinthe accounting period: Currency, bank deposits, and short-terminterest-bearing assets that can be easily converted to cash; short-termcredit extended to customers who have received, but not yet paid for,products shipped to them; and inventories, which are stocks of rawmaterials, partly fabricated items (work in process), anf finishedgoods. Securities are financial assets with maturity dates beyond theaccounting period. Fixed assets consist of plant and equipment and ofland. Plant and equipment are net of accumulated depreciation, a chargefor the using up of these assets over time. Land includes mineralrights; it is shown net of accumulated depletion, a charge for using upexhaustible resources over time.
On the right side of the balance sheet, current liabilities areothers’ claims on the business firm–loans and payables tosuppliers–that are due within the accounting period. Bonds arelong-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, thecumulative sum of earnings retained in the business rather than paid toowners. The balance sheet does not convey much information about the scaleof the operations, the incomes generated, or indeed whther or not theowners received any payment–other than the enhanced value of theirequity as represented by retained earnings–for the use of theircapital. Such information can be obtained from the statement of incomeand retained earnings. Income and retained earnings.– The basic identity underlying thestatement of income and retained earnings is: The value of thefirm’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- anddividend-paying securities, and from gains (net of losses) on sales offixed assets and securities; costs include both costs of goods andservices sold and the interest paid on borrowed money.
Hence, net incomeis largely operating income, but also includes income from othersources. The depreciation and depletion charges included in the cost ofgoods and services sold represent the period’s addition to thecumulative depreciation and depletion appearing in the balance sheet.Indirect business taxes include sales taxes, excise taxes, and propertytaxes; they do not include taxes levied directly on the net income ofthe firm, which are shown in table 2 as corporate income tax.
Finally,net income less corporate income tax and dividend payments is retainedin 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 incurredduring the current period. To convert this sum of costs incurred to thecost of the goods and services sold during the period, it is necessary(1) to add the costs incurred in previous periods in producing the goodssold and (2) to remove the costs incurred in obtaining or producinggoods retained in inventory at the end of the accounting period. Theseadjustments are accomplished by including in cost of goods and servicessold, along with current-period costs, the differene between the valueof the beginning and ending inventories. In effect, cost of goods andservices sold includes the value of goods withdrawn from the beginninginventory during the period, and excludes the value of goods obtained orproduced during the period, but retained in ending inventory. The statement of income and retained earnings explains the changein retained earnings between successive balance sheets; it does not dealwith changes in the other entries in the balance sheet. Suchinformation can be obtained from the statement of change in financialposition. Change in financial position.
— The purpose of the statement ofchange in financial position is to link certain income statement andbalance sheet transactions so as to show the effect of the firm’soperations on its liquidity. The basic identity underlying thestatement is: The change in the firm’s working capital is equal tothe change in its current assets less the change in its currentliabilites; 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 andequivalent, accounts receivable, and inventories; the change in currentliabilities is the sum of the changes in loans and accounts payable. Table 3 accounts for the change in working capital in terms of theadditions provided by operations, of sales and purchases of fixed assetsand securities, of payment of dividends, and of changes in bonds andcapital stock outstanding. The main component of additions provided byoperations is net income after tax; the depreciation and depletioncharges deducted in deriving it are added, because they are internal tothe firm’s books and are not cash outlays affecting its financialposition. The gains included in net income after tax are subtracted;they are included in the proceeds from the sales of fixed assets andsecurities entered under other sources elsewhere in the statement. Derivation of the three basic economic accounts rearranged and modified, these accounting statements for thebusiness firm provide the economic accounts–the production account, theappropriation account, and the saving-investment account–that are thestarting point for deriving the national economic accounts.
Theproduction account is based on the statement of income and retainedretained earnings, and it records the production attributable to thefirm in terms of both goods and services produced and the incomepayments and other costs arising in production. The appropriationaccount is also based on the statement of income and retained earnings;it records the firm’s income, payments of that income to thestockholders or to the government, and the income retained within thefirm. The saving-investment account is based on the statement of changein financial position rearranged as the change in the balance sheet; itrecords the firm’s savings, borrowing, and acquisitions ofnonfinancial and financial assets. The derivation of each of theseeconomic accounts is described in two steps: (1) The rearrangement ofthe business accounting statements into the T-account form and (2) themodification of the T-accounts to obtain economic accounts. Each T-account contains the firm’s sources of funds on theright side and uses of funds on the left side. In general, sources offunds are receipts or borrowings, and uses of funds are current outlaysor acquisitions of assets. There are differences in perspective amongthe accounts, however. For example, net income is a use in theproduction account because it is a charge against production, but it isa source of the income to be distributed or saved in the appropriationaccount.
Similarly, additions to retained earnings are a use of incomein the appropriation account, but a source of funds to finance theacquistion of assets in the saving-investment account. In each account,total sources equal total uses, preserving the accounting identities oftables 1, 2, and 3. Production account.– The first panel of table 4 shows the itemsfrom the income statement in table 2 rearranged in T-account form. Theitems from the income statement are those taht establish net incomebefore tax.
The revenue items–sales, interest and dividend received,and gains (net of losses) on sales of fixed assets and securities–areentered as sources of funds on the right side; the cost items, includinginterest paid and net income before tax, are entered as uses of funds onthe left side. The total of the sources it total revenue; the total ofthe uses is total charges against revenue. To derive the firm’s production account, wchih is shown in thesecond panel, the income statement T-account shown in the first panel ismodified by (1) ordering the entries to establish the value of thefirm’s production during the accounting period, and (2) adjustingnet 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 inthe first panel, is not equal to the value of the firm’sproduction, for the following reasons. (1) Revenues are not equivalentto sales, because the firm may have nonoperating income.
(2) Sales arenot equivalent to gross output, because the firm may either make salesfrom inventories of finished goods produced in previous periods or placecurrent production in work-in-process or finished goods inventories.(3) Gross output is not equivalent to the value of the firm’sproduction, because the firm may incorporate in its output (consume)materials or services purchased from other firms. Such materials mayhave been purchased either in the current accounting period or in aprevious period. The ordering of the entries in the income statement T-account toestablish the value of the firm’s production involves four steps.(1) Interest and dividends received and gains (net of losses) on salesof fixed assets and securities are subtracted from both sides of theincome statement T-account; as shown in the production account, thissubtraction converts the right side to sales, and enters the receipts ofinterest and of dividends and the gains on sales of fixed assets andsecurities on the left side as negative values.
(2) The inventoryentries in the income statement T-account–beginning inventory lessending inventory–are combined to yield the equivalent expression.Less: Change in inventories. This expression is decomposed into Less: Change in raw materiaslinventories +change in work-in-process and finished goods inventories.(3) The change in work-in-process and finished goods inventories isadded to both sides of the income statement T-account. This additionconverts the right side to gross output–the sum of sales and change inwork-in-process and finished goods inventories–and cnacels thework-in-process and finished goods component of the inventory entries onthe left side. (4) on the left side of the income statement T-account,the sum Purchased materials plus purchased services less the change inraw materials inventories equals the consumption of materials andservices by the firm during the accounting period. The consumption ofmaterials and services is subtracted from both sides of the incomestatement T-account.
As shown in the production account, thissubtraction converts the right side to the value added by the firm andcancels the components of consumption on the left side. The second modification to the income statement T-account isnecessary because net income before tax is not equal to profits, thatis, earnings arising from current production. Profits exclude dividendsreceived and gains (net of losses) on the sale of fixed assets andsecurities. Moreover, they differ from the operating income shown inthe income statement because of the treatment of natural resources inthe national economic accounts. Natural resource discoveries are notconsidered to be capital formation in the national economic accounts;consequently, a charge for the using up of these discoveries is not anappropriate charge against production. Therefore, profits include thedepletion charges that are deducted in measuring net income before tax.Profits equal net income before tax plus depletion, less dividendsreceived, and less gains (net of losses) on sales of fixed assets andsecurities. The resulting production account shows, on the right side, thevalue of the firm’s production in terms of goods and servicesproduced and, on the left, the value added by the firm in terms ofincome payments and other costs.
For most purposes, it is useful to simplify the presentation of theproduction account by rearranging terms and dropping some detail, asshown in the first panel of table 7. On the right side, the term”consumption” has disappeared and the change in raw materialsinventories has been combined with the change in work-in-process andfinished goods inventories. On the left side, the detail under profitshas been dropped, and depreciation has been renamed “capitalconsumption allowances” to introduce the standard terminology ofthe national economic accounts. (In this introduction, depreciation andcapital consumption allowances can be considered equivalent.) Theproduction account of the firm, as shown in table 7, serves as the basisfor the production account for the business sector and for the Nation asa whole. Appropriation account.–The first panel of table 5 shows the itemsfrom the statement of retained earnings in table 2 rearranged inT-account form. The item “net income before tax” is enteredin the retained earnings T-account of table 5 as a source of funds; theitems “corporate income tax,” “dividends paid,” and”additions to retained earnings” are entered as uses of funds.
To derive the firm’s appropriation account, the retainedearnings T-account is modified by adjusting net income before tax andits components to conform to profits as defined in the productionaccount. Dividends received and gains (net of losses) on sales of fixedassets and securities are subtracted from both sides of the account, anddepletion is added to both sides. The adjustments define a new residualentry “undistributed profits,” which includes additions toretained earnings and depletion charges and excludes gains (net oflosses) on the sales of fixed assets and securities. Table 7 shows, in the second panel, a simplified presentation ofthe appropriation account. On the left side, the detail underundistributed profits has been dropped, and corporate income tax hasbeen renamed “profits taxes” to move toward the terminology ofthe national economic accounts. Savings-investment account.–The first panel of table 6 shows theitems from the statement of change in financial position (in table 3)rearranged in T-account form to display the change in each entry in thebalance sheet (in table 1) over the accounting period. The entries forchanges in current assets and in current liabilities are those in thestatement of change in financial position.
The change in holdings ofsecurities consists of purchases, less sales, and plus gains (net oflosses) on sales of securities; similarly, the change in bondsoutstanding consists of issues less retirements. The change in fixedassets consists of purchases, less sales, less depreciation anddepletion charges, and plus gains (net of losses) on sales of fixedassets. Finally, the change in retained earnings consists of net incomeafter tax less dividends. To derive the firm’s saving-investment account, the change inbalance sheet T-account is modified so that it shows on the right sidethe part of the profits that the firm saves, and on the left side, thedisposition of that saving in terms of investment. Both saving andinvestment are defined to be gross of depreciation: Saving includesdepreciation as well as undistributed profits; and purchases of fixedassets include replacement of plant and equipment as well as additions. The modifications necessary to obtain saving from profits and thedisposition of that saving are listed below. (1) Depletion is added toboth sides of the change in balance sheet T-account and gains (net oflosses) on sales of fixed assets and securities are subtracted from bothsides; as shown in the saving-investment account, these changesintroduce undistributed profits, as defined in the appropriationaccount, on the right side and cancel the entries on the left side.
(2)Depreciation is added to both sides of the change in balance sheetT-account; as shown in the saving-investment account, this additionintroduces gross saving on the right side and cancels the entry on theleft side. (3) Entries for change in current financial assets andpurchases and sales of securities on the left side of the change inbalance sheet T-account are regrouped to show, on the left side of thesaving-investment account, a new entry (net acquisitions of financialassets,” consisting of the change in current financial assets, pluspurchases of securities, less sales of securities. (4) On the rightside of the change in balance sheet T-account, regrouping yields a newentry “net increase in liabilities,” consisting of the changein current liabilities, plus issues of bonds and capital stock, lessretirements of bonds and capital stock; subtracting this entry from bothsides cancels it on the right side and enters it on the left side of thesaving-investment account as a negative value.
The simplified saving-investment account is shown in the thirdpanel of table7. Detail is suppressed under net acquisitions of financial assetsand net increase in liabilities on the left side and under undistributedprofits on the right side. Sector and National Economic Accounts The three accounts for a business firm shown in table7–production, appropriation, and saving-investment–form the basis ofthe national economic accounts. Accounts must now be designed for themajor economic groups that are distinguished in a national economicaccounting system; these sectors are business, household, government,and foreign. First, accounts for the business sector will be derived from thecorresponding accounts of the single business firm. Then, accounts forthe other types of economic transactors will be established; the patternfor these accounts will follow closely the three accounts for thebusiness sector. The production account records the productionattributable to a sector, in terms of both goods and services and theincome payments and other costs arising from production.
Theappropriation account records the sources of the sector’s income,its current outlays, and its saving. The saving-investment accountrecords the sector’s gross savings and gross investment, the latterdefined as net acquisitions of assets less the net increase inliabilities. Taken together, these sector accoutns constitute adouble-entry system in which a use recorded in one account for onesector is also recorded as a source in another of the sector’saccounts or as a source in an account for another sector. In construction national economic accounts, it is necessary to addtogether corresponding accounts belonging to two or more transactorsand, occasionally, to add together two or more accounts belonging to thesame transactor. In the aggregate account, an entry may occur twice,either once on each side of the account, or twice–with oppositesigns–on the same side. If such entries are netted out, the aggregateaccount 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 togetherfor all business firms each type of account shown for the individualfirm in table 7.
The accounts are prepared on a consolidated basis. Theentries for a transaction between two business firms cancel, leavingonly transactions between the business sector and other sectors. Thebusiness sector accounts, with hypothetical numbers, are shown in thebusiness column of table 8. Business production account.–On the left side of the productionaccount for the business sector, there are no intrasector transactionsfor wages and salaries, for capital consumption allowances, and forindirect taxes.
Therefore, each entry is the sum of the entries in theindividual firms’ production accounts. For interest and profits, there are intrasector payments andreceipts that cancel. The interest paid by one firm to another iscanceled by the receipt of that payment by the other firm, leaving as aconsolidated entry “net interest”–the business sector’sinterest payments to, less its interest receipts from, the othersectors. Similarly, the consolidated entry for profits representsprofits available either to be distributed to other sectors or to besaved by the business sector; the component of profits representingdividends paid by one firm to another is canceled by the correspondingdividend receipt. On the right side, there are no intrasector transactions for thechange in business inventories; the entry is the sum of the entries forthe individual firms. For purchased materials and services and forsales, intrasector payments and receits cancel; the purchase ofmaterials and services by one firm on current account is canceled by thecorresponding sale by another firm.
The only purchases of materials andservices that do not cancel are those from foreigners (imports). Theconsolidated entry for sales consists of sales to households asconsumers, to governmnet, to business (of plant and equipment), and toforeigners (exports). The totals of the sources and of the uses in the business sectorproduction account are designated “gross business product” and”charges against gross business product,” respectively. Theyare equal to the sum of the values added by the individual businessfirms. Business appropriation account.
–On the left side of the businessappropriation account, dividends paid by one firm to another cancel; theentry thus consists of dividends paid by the business sector to othersectorss. Dividends received from foreigners do not cancel, however,and are shown as a negative item. For the remaining entries, there isno cancellation.
On the right side, the profits entry is net of dividends recievedfrom foreigners and from other business firms, as it was in theproduction account. Business saving-investment account.–Because of the convention thatall nonfinancial investment is made by the business sector, alltransactions 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 arecanceled by the sales of those assets by other firms. The plant andequipment purchases that remain are those of newly produced goods, equalto the sales to business of plant and equipment recorded in the businesssector’s production account.
Purchases of financial assets by one firm from another cancel; theentry for net acquisition of financial assets represents the businesssector’s net acquisitions of newly issued assets and assetsacquired from other sectors. The business sector’s entry for netincrease in liabilities represents the difference between new issues andretirements of current liabilities, bonds, and capital stock, summedover all firms. In some presentations of saving-investment accounts,the difference between net acquisitions of financial assets and netincrease in liabilities is shown instead of separate entries. Separateentries are shown in table 8, however, to facilitate the presentation ofcapital finance accounting later. Household sector Sector accounts closely resembling those for business can beconstructed for the household sector, which consists of households andthe nonprofit institutions serving them. Most of the transactions ofthe household sector appear in the appropriation and saving-investmentaccounts.
The following discussion of these accounts deals immediatelywith 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 asproduction the services rendered by paid household workers and theservices rendered by nonprofit institutions serving households. Interestpaid on consumer debt is not recorded here because it is not regarded asa payment for a productive service in the U.S. national economicaccounts.
The illustration in table 8 is limited to the recording ofservices rendered by paid household workers. In accounting for the productive services rendered by paidhousehold workers, the wages and salaries paid by employers are enteredas a use of funds on the left side of the account, as was done in thebusiness production account. On the right side, the sale of theservices by paid household workers to their employers is entered as asource of funds; it represents the value of the services produced, onthe assumption that the only cost of production are the wages paid toobtain the services. This entry is analogous to the entry of sales as asource of funds in the business production account, although theprocedure appears somewhat artificial because household production lacksthe clear distinction between the sales and wage transactionscharacteristic of business production.
Household appropriation account.–The household appropriationaccount resembles the corresponding business account in that both showthe income of the sector, detail the outlays, and derive the balancethat is saved. The two accounts differ substantially, however, in thesources of income and the nature of the outlays. Although businessincome is derived from the operations of the business system, householdincome is derived primarily from payments by business and other sectors.The main category of expenditures in the household account is consumerpurchases; this item has no counterpart in the business account, inwhich taxes and dividends are the main categories of expenditures. Thehousehold appropriation account also records the sector’s paymentand receipt of interest, items recorded in the business sector’sproduction account rather than its appropriation account. Income received by the household sector is entered on the rightside of the household appropriation account.
The wages and salaries ofpaid household workers are entered as a component of household receiptsof wages and salaries, an entry that continues the accounting forhousehold production begun in the production account. Income receivedfrom the business sector–wages and salaries, interest, anddividends–has already been discussed. The income from other sectorsconsists of wages and salaries received from government, interestreceived from government and from foreigners, dividends received fromforeigners, and government transfer payments. The last categoryconsists of items such as retirement income and unemployment benefitsthat do not involve, as quid pro quo, the rendering of productiveservices by the recipient during the accounting period. The total ofthe sources–incomes received–is designated “personalincome.” On the left side of the household appropriation account, personaltaxes–primarily income taxes–are the first category of outlay.
Most ofhousehold purchases, the next category, are sales by business, whichalso appear as a source of funds in the business production account; theservices rendered by paid household workers are entered as a purchasefrom households, an entry that completes the accounting for householdproduction. The remaining outlay is household interest payments tobusiness, to government, and to foreigners. The final entry is saving, which is derived as the differencebetween personal income and the sum of personal taxes, consumerpurchases, and interest payments.
Household saving-investment account.–In the householdsaving-investment account, net acquisitions of financial assetsrepresent the household sector’s net acquisitions of financialassets from other sectors; purchases of assets by one household fromanother cancel in the consolidation. Net increase in liabilitiesrepresents new borrowing less repayment of debt, summed over allhouseholds. Consistent with the convention that business makes all nonfinancialinvestment, all saving in the household sector is defined to be infinancial form; it does not include any investment in nonfinancialassets. Although several types of assets might be considered to behousehold sector investment, they are defined to be either consumptionby the household sector or investment by the business sector. Forexample, household expenditures on durables–automobiles, refrigerators,and the like–are defined to be consumption; homeowners’ investmentin residential property is defined to be business investment. Government sector Sector accounts for government can be constructed by consolidatingthe budget statements of the various governmental units in the Nation.As in the household sector, most of the transactions appear in theappropriation and saving-investment accounts; government production isconfined 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 asproduction the services rendered by government employees, using anapproach similar to that used in the household sector to record theoutput of paid household workers. On the left side of the governmentproduction account, wages and salaries paid by the government to itsemployees are entered as a use of funds. On the right side, the sale ofthe services of government employees to the government is entered as asource of funds. These sales to government appear in the governmentappropriation account, under the heading “purchases fromgovernment.” The wages have already appeared in the householdappropriation account under wages and salaries received. Government interest payments are not considered to be payments fora productive service; they are, therefore, not recorded in thegovernment production account. Government appropriation account.
–The government appropriationaccount is used to record the receipts and expenditures of thegovernment. On the right side, the categories of income consist oftaxes collected from the business and household sectors and of interestreceived from business, households, and foreigners. The total of theseitems is termed “government receipts.” On the left side, the categories of expenditures consist ofpurchases from business and from government, the latter equal to thewages and salaries paid to government employees; of transfer payments topersons and to foreigners; and of interest paid to business, tohouseholds, and to foreigners.
The final entry is government surplus(or deficit), which is derived as the difference between governmentreceipts and government expenditures. Government saving-investment account.–In the governmentsaving-investment account, the entry for net acquisitions of financialassets represents the government sector’s net purchases of assetsfrom other sectors; purchases by one unit of government from anothercancel. The net increase in liabilities is new issues of debt lessretirement of debt, summed over all units of government. Consistent with the convention that business makes all nonfinancialinvestment, all government saving is defined to be in financial form.Government acquisitions of nonfinancial assets–plant and equipmentpurchases and change in inventories–are defined to be consumption andincluded in government purchases. Foreign sector Foreign production account.–The output considered so far isproduced within the territory of the Nation.
It is usually called thedomestic, or geographic, product. However, another measure is featuredin the national economic accounts of the United States. It is thenational product, a measure of the output on which residents of theNation have a claim. It includes output produced in the foreign sectoras well as in the domestic sectors.
To obtain the national product, the output produced abroad by theNation’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’sreceipts of factor income from abroad–in this introduction, interestand dividends from abroad. Similarly, the value of the part of domesticoutput produced by foreigners is measured by the Nation’s paymentsof factor income to them. In the terminology of national economicaccounting, national product equals domestic product plus the productoriginating in the foreign sector. The latter, usually called productoriginating in the rest of the world, is measured by the Nation’sreceipts of factor income from abroad less its payments of factor incometo foreigners. In table 9, the foreign production account is shown as thedifference between two production accounts, one of which records outputproduced abroad by the Nation’s residents, and the other the outputproduced domestically by foreigners. In the production account foroutput produced abroad by residents, dividends and interest paid byforeigners are entered, as a use of funds, on the left side; and thesale to foreigners of factor services–that is, the services for whichfactor income is paid–is entered, as a source of funds, on the rightside.
In the production account for output produced domestically byforeigners, dividends and interest received by foreigners are entered,as a use of funds, on the left side; and the purchase from foreigners offactor services is entered, as a source of funds, on the right side. The difference between these two accounts is the foreign productionaccount, shown in the foreign column of table 8; it records the netproduct originating in the foreign sector. The interest and dividendreceipts and payments in the foreign production account have alreadyappeared in the business production and appropriation accounts and inthe household and government appropriation accounts; the sales andpurchases of factor services are entered in the foreign appropriationaccount. Foreign appropriation and saving-investment accounts.
–The foreignappropriation account records the receipts and expenditures offoreigners in their dealing with residents of the Nation. On the right side, receipts consist of sales by foreigners of goodsand of factor and nonfactor services to the Nation (imports), oftransfer 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 factorservices from residents (exports). Saving, the final entry on the left,is derived, as usual, as the difference between receipts andexpenditures. The design of the foreign saving-investment account followspreviously established procedures, with all saving by foreigners definedto be in financial form. Summary national accounts The national economic accounting system as presented so far doesnot provide a summary for the Nation as a whole.
One such summary setof accounts, described in this section, is obtained by consolidating,for the four sectors, each of the three accounts. Other configurationsthat provide national summaries are taken up in the next section. National production account.–The National production account shownin 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 thebusiness and household sectors; sales to government consist of sales bythe business and government sectors; and sales to foreigners consist ofsales by the business sector of goods and nonfactor services and salesby residents of factor services.
Sales to business of plant andequipment and change in business inventories are carried over directlyfrom the business production account to the national account. Finally,purchases from foreigners consist of purchases by the business sector ofgoods and nonfactor services and purchases by residents of factorservices. On the left side, wages and salaries consist of those paid by thebusiness, the household, and the government sectors.
Capitalconsumption allowances and indirect business taxes are carried overdirectly from the business production account. Net interest is definedas interest paid less interest received; it consists of payments ofinterest to households and government by both business and foreignersless the interest received by business and foreigners from householdsand government (other than government interest payments to foreigners).In the consolidation, interest paid by business to foreigners iscanceled by the negative entry for interest received by foreigners frombusiness; adn interest paid by foreigners to business is canceled by thenegative entry for interest received by business from foreigners.
Profits are the sum of business profits and paymentls of dividends byforeigners, less the dividends received by foreigners. The totals of the sources and of the uses are the gross nationalproduct (GNP) and the charges against gross national product,respectively. GNP measures the Nation’s output in terms of goodsand services. The charges against GNP measure the Nation’s outputin terms of income payments and other costs. National appropriation account.
–The consolidation of the sectorappropriation accounts involves several cancellations. Payments ofprofits taxes in the business sector cancel the receipts in thegovernment sector. Likewise personal taxes paid and received cancel inthe household and government sectors, and transfer payments paid andreceived also cancel in the government, household, and foreign sectors. On the right side of the national appropriation account, thederivation of the entries for wages and salaries and indirect businesstaxes has already been described. In aggregating the profitstransactions, dividends paid by business to households cancel when theaccounts for these two sectors are consolidated.
After thiscancellation, the profits entries tha would remain on the left side ofnational appropiration account are dividends paid by business toforeigners less dividends paid by foreigners to households. Subtractingthe entries on the left from both sides of the national appropriationaccount leaves, on the right side of table 8, the proftis total shown inthe national production account. In aggregating the interesttransactions, those between the household and government sectors cancel,as do government interest payments to foreigners, leaving in thenational account interest payments by the business and foreign sectorsto households and government less interest payments by he household andgovernment sectors to business and by the household sector toforeigners–net interest as defined in the national production account.Sources of funds, therefore, consist of wages and salaries, netinterest, indirect business taxes, and profits. On the left side, the entries consist of purchases–consumerpurchases, government purchases, and foreign purchases–less purchasesfrom foreigners, and the various types of saving–undistributed businessprofits, personal saving, government surplus or deficit, and foreignsaving; all of these items are carried over directly from the sectoraccounts. The total of the sources is the net national product, whichrepresents the Nation’s output after allowing for the using up ofplant and equipmnt in the business sector; the total of the uses isconsumption and net saving. National saving-investment account.
–In the consolidation of thesector saving-investment aconts, the total of net acquisitions offinancial assets for the Nation as a whole must equal the total netincrease in liabilites; the entries, equal in size, cancel in summingthe uses. The total of the uses is gross investment, which consists ofbusiness purchases of plant and equipment and change in businessinventories. The total of the sources is gross saving, which consistsof the saving of each sector.
Branches of National Economic Accounting In the United States, the major branches of national economicaccounting are national income and product accounting, capital financeaccounting, 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 hasgained the widest prominence because it has the greatest generalusefulness.
Table 10 presents a simplified version of the U.S. nationalincome and product accounts (NIPA’s).
The first account in the NIPA system is the national income andproduct (NIP) account; it is a consolidation of the sector productionaccounts and the business appropriation account. On the left side, theinclusion of the business appropriation account in the consolidationreplaces business profits int he nationla production account by itscomponents–profits tax, dividends (net of dividends received), andundistributed profits; the total of the uses is not distrubed, andcontinues to equal charges against GNP. In the NIP account, sales toforeigners are termed “exports” and purchases from foreignersare termed “imports”; import are subtracted from exports, andthe result is entered as net exports. Again the total of the sourcesmeasures GNP. The second account, the personal income and outlay account, is thehousehold appropriation account; it is carried over directly from table8. The third account, the government receipts and expenditures account,is the government appropriation account. In this account, interestreceipts are subracted from both sides so that the interst entry on theleft side is net interest paid; therefore, total receipts, as well astotal expenditures and surplus, are less than the table 8 totals. The fourth account–the foreign transactions account–is aconsolidation of the foreign appropriation and saving-investmentaccounts.
Some entries are carried over directly from table 8–receiptsfrom foreigners (exports) on the left side and payments to foreigners(imports, transfer payments, and interest paid by government) on theright side; the entries for foreign saving cancel when the foreignappropriation and saving-investment accounts are consolidated. However,the perspective on saving is reversed from that in the foreignsaving-investment account in table 8, which highlighted foreigners’acquistion of the claims against the United States (net of U.S. claimson foreigners).
In the NIPA foreign transactions account,foreigners’ net acquisitions of financial assets and the netincrease in foreign liabilities are subtracted fromb toh sides; theresulting entry on the right side, termed “net foreigninvestment,” is equal to the net increase in liabilities offoreigners to the United States less foreigners’ net acquisition offinancial assets that are U.S. liabilities. The fifth account, the gross saving and investment accoun, is aconsolidation of the saving-investment accounts of the three domesticsectors. On the left side, the entries for undistributed profits,personal saving, government surplus, and capital consumption allowancesare carried over directly from the sector accounts.
On the right side,gross private domestic investment is the sum of business plant andequipment pruchases and the change in business inventories. In theprocess of consolidatinof the financial entries, financial assets thatrepresent claims on other domestic sectors cancel liabilities thatrepresent obligations to other domestic sectors, but claims onforeigners and liabilities to them do not. Therefore, the last item onthe left side of the gross saving and investment account is net foreigninvestment–the Nation’s net acquisitions of claims on foreignersless the net increase in its liabilities to them; it is the entry in theforeign transactions account. This overview of the NIPa system takes numerous shortcuts tosimplify the presentation. Most important, it has assumed away both thetreatment of noncorporate business and the adjustments necessary toconvert the historical prices used in business accounting forinventories and depreciation to the desired current-price valuation. Ithas also omitted the treatment of homeownership, nonprofit institutions,government enterprises, financial institutions, secondhand goods, andthe several types of nonmarket transactions that are included in theNIPA’s. These topics will be take up in a future paper. The origin of the NIPA system’s configuration of accounts ispragmatic.
The information presented was selected because of itsimportance for economic analysis. The NIP account preserves the detialof the buisness detail on sector production accounts because productionoutside the business sector is limited. The household appropriationaccount and the government appropriation account are shown separatelybecause the behavior of these factors is important in economic analysis.The first account presents information on the income, expenditures, andsaving of consumers; and the second provides a government budgetintegrated with the rest of the national economic accounts. Because ofthe interest that attaches to foreigh transactions, a separate foreignaccount is presented, but no important information is lost by theconsolidation of the foreign appropriation and saving-investmentaccounts. In order to present a simple and easily undertsood system cneteredon an unduplicated measure of prodcution, the NIPA’s do not showsome information that is useful in more specialized analyses. Thisinformation can be found in other sets of acounts that complement theNIPA’s: The capital finance accounts and the input-output accounts. Capital finance accounting The need for more information on saving and investment than thatpresented in the NIPA system is filled by capital finance accounting.
Capital finance accounts present the information in the secotsaving-investment accounts in such a way as to illuminate the process bywhich financial institutions and financial markets transform theeconomy’s savings into investment. By presenting considerablygreater detai on both sectors and types of financial assets andliabilities than that shown in the saving-investment accounts in table8, 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 thesaving-investment accounts shown in table 8 in setting up capitalfinance accounts; these modification reintroduce the kinds of detialsupressed in deriving the saving-investment account of the business firmin tables 6 and 7. The illustration is based on the business sectoraccount; similar modifications are made in the accounts of othersectors.
(1) The change in liabilities is added to each side of thesaving-investment account to convert the left side to investment andfunds supplied and the right side to saving and funds raised. 2) Theentries for net acquisition of financial assets and net increase inliabilities are disaggregated to show four types of financilsinstruments corresponding to the financial assets and liabilities shownin tables 1 and 3: Deposits, the major constituent of cash positions;loans; securities, including both stocks and bonds, as well as anyshort-term interest-bearing assets included in business cash positions;and trade credit–accounts receivable and payable. (3) The sector isdeconsolidated to show separate accounts for nonfinancial business andfor financial institutions. In table 12, data from the mofified saving-investment accounts forall sectors are arranged to show their transactions in each type offinancial instrument. The left side of the account of an instrumentrecords the funds supplied by the lending sectors; the right siderecords the funds raised in this form by the borrowing sectors. Thetotals of the fund supplied and raised are equal. Table 12 shows the nonfinancial sectors acquiring depositbalnces–a use of funds for lender–and financial institutions incurring deposit liabilities-a source of funds for borrowers.
For loans andsecurities, each sector is shown as both lender and borrower, acquiringclaims on other sectors by supplying funds–a use–and issuingliabilites 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 onlywhen the accounts in tables 11 and 12 are brought together in a matrixsuch as that in table 13. This presentation is fashioned after thematrix summary of the flow of funds accounts (FFA’s) of the UnitedStates, prepared by the Board of Governors of the Federal ReserveSystem. In table 13, the sector saving-investment accounts are placedside by side. Each of the first five pairs of columns of the matrixconstitutes one of the sector-investment accounts shown in tables 8 and11. (The foreign account reflects the perspective of foreigners, as intable 8.
) The last pair of columns in table 13 shows the totals ofsaving and investment for the domestic sectors. It differs from thesaving-investment account in the NIPA’s in that net acquisitions offinancial assets and net increase in liabilites are entered separatelyon opposite sides of the account. The rows in the top portion of the matrix record nonfinancialtransactions–gross saving, by sector, and the business sector’splant and equipment purchases and change in inventories. The rows inthe bottom portion record financial transactions, by secto; each ofthese rows constitutes an account foro one of the financial instrumetnsshown in table 12. The rows in the top portion of the matrix record nonfinancialtransactions–gross saving, by sector, and the business sector’splant and equipment purchases and change in inventories.
The rows inthe bottom portion record financial transactions, by sector; each ofthese rows constitutes an account for one of the financial instrumentsshown in table 12. The middle rows of the matrix are in italics to indicate that theentries in them are not included in the totals of the columns. The rowsshow two ways of measuring net financial investment. One is calculatedfrom the nonfinancial transactions as gross saving less grossnonfinancial investment; that is, Net financial investment=grosssaving–gross nonfinancial investment. The other is calculated from the financial transactions as netacquisition of financial assets less net increase in liabilities; thatis, Net financial investment=net acquisition of financial assets–netincrease in liabilities. Net financial investment measures asector’s excess of lending to other sectors over its borrowing fromthem. In this illustrtion, the household sector is a net lender of $15billion, with a preference for holding assets in liquid form. Thenonfinancial business sector is a net borrower of $5 billion, with apreference for loans as a source of funds.
Financial institutionsintermediate between them, providing the household sector the assetsthat it prefers–a deposit liability of financial institutions–andproviding the nonfinancial business sector with the type of credit itdesires. Balance sheet accounting is an extension of capital financeaccounting. Balance sheet accounts, which are analogous to the balancesheet of the business firm introduced earlier, show the total stocks ofassets and liabilities for the sectors and for the Nation. Revaluation accounts are needed to record the capital gains nand losses) in order toreconcile the saving-investment accounts with total changes in thebalance sheet accounts ovr the accounting period, because thesaving-investment accounts show only part of the changes in thesectors’ assets and liabilities. The capital finance accounts described in this introduction differin 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 oftransactions; further, the FAA’s do not follow the convention thatall nonfinancial investment is made by the business sector. Othertopics involved in the construction of the FAA’s are combinationversus consolidation of accounts, valuation, and timing. These andother topics are covered in the descriptions of the FAA’s listed inthe “Suggestions for Further Reading.” Input-output accounting Information on the flows of goods and services that make up theproduction relationships among industries is missing from the NIPAsystem, but is provided by input-output (I-O) accounting. I-Oaccounting can be viewed asadeconsolidation, along detailed industry lines, of the nationalproduction account of table 8, with a separate production accountpresented for each industry.
Both the NIPA’s and the I-O accountspresent GNP in terms of final product flows (final demand, in I-Oterminology) and in terms of charges against GNP (value added, in I-Oterminology). The distinctive feature of the I-O accounts is thepresentation of detailed information for each industry on theconsumption of purchased materials and services that canceled inarriving at an unduplicated measure of production for the businesssector in table 8 and in the NIPA’s. This detailed information ispresented in a matrix–an I-O table. In the I-O table, each column records the gross output of anindustry 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, inI-O terminology), the consumption of the commodity by producingindustries, and the final demand for the commodity, where final demandconsists of sales of the commodity to final users, the change ininventories of the commodity held by both the producing and consumingindustries, less imports of the commodity; that is, Gross commodityoutpu=consumption by producing industries +sales to final users +changein inventories -imports. To illustrate the derivation of the I-O account, table 14 presentsproduction accounts for the three hypothetical industries–designated A,B, and C–that make up the business sector. Unlike the productionaccounts derived in table 4, these accounts in table 14 recordproduction on a gross basis; that is, consumption has not beensubtracted from both sides. For the three nonbusiness sectors, table 14presents 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 fromforeigners of factor services; charges against gross output consistentirely of value added. In practice, each nonbusiness sector is shownseparately 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 notproduced by an other industry; thus, industry a produces commodity A,industry B, commodity B, and so on. (The more complex case of secondaryproducts, where industries produce commodities that are also produced byother industries, is taken up later.
) (2) The commodities produced byindustries A and B are goods, which are inventorable; the commodityproduced by industry C is a service, which is not inventoried. (3)Firms in each industry purchase inputs from other firms in the sameindustry. (4) Industry A consumes an imported commodity in addition todomestically produced commodities. The import is designated asnoncomparable, signifying that no domestic counterpart exists. Thetreatment of comparable imports is taken up later.
Table 15 illustrates the construction of the I-O table from theinformation contained in table 14. The first four columns on the leftside of the matrix record the consumption of purchased materials andservices, as well as value added, by the producing industries. For eachindustry, consumption is derived from the left side of theindustry’s production account in table 14 as the purchase of thecommodity less the change in raw material inventory. Value added isalso taken from the left side of the industry production account.
Thenonbusiness sectors have value added as their only input. Three columns, further to the right, record the components of finaldemand. Sales to final users are obtained from the right side of theproduction accounts in table 14.
To obtain the inventory entries, it isnecessary to rearrange the information on inventory change shown intable 14 to show the change in the inventories of each commoditywherever held; theis rearrangement is shown in table 16. The entriesfor the noncomparable import are taken from the production account ofindustry A; the sum of the entries for consumption and inventory changeis offset by the entry in the import column so that the row total–grosscommodity output–is zero, appropriately reflecting the fact that thecommodity is not part of domestic output. The output of the nonbusinesssectors consists of sales to final users less imports. The matrix presented in table 15 is called a use table and showsthe consumption of each commodity and the composition of the inputs toeach industry. If a commodity were produced by two industries, the rowtotals of gross commodity output and the column totals of gross industryoutput would no longer correspond. For example, if $5 billion ofcommodity A were produced by industry B instead of industry A, the gorssindustry output of industry A would be $122 biullion instead of $127billion 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 whicheach row shows the commodity composition of an industry’s outputand each column, the industrial origin of the supply of a commodity.
The treatment of a comparable import in terms of the example is asfollows. If, instead of being a noncomparable import, the import usedby industry A was comparable to commodityB, industry A’s entries intable 14 for the consumption and inventory change of commodity B wouldinclude the import, and the entries for noncomparable imports would bezero. Likewise, in table 15, the disposition of the import would beincluded in the row of commodity B. In effect, the second and fourthrows would be added together.
The U.S. I-O tables are in producer’s prices. Trade marginsand transportation costs incurred in the distribution of good are notincluded in the row entries for these commodities, but are shown asseparate inputs to each using industry and as separate sales to finalusers. The treatment of transportation and trade can be illustrated intable 15 by designating industry C as trade and transportation services.
With this designation, the row entries for commodity C represent thetrade and transportation costs associated with moving goods from theproducer to the purchaser, and the row entries for commodities A, B, andnoncomparable imports are valued at producer’s prices. A third way of measuring GNP may be derived from the I-O table. Itis termed “GNP originating,” or value added, by industry.
Inthis derivation, which is illustrated in table 17, the GNP originatingin each industry is established by subtracting consumption of materialsand services from gross output and then summing over all industries toobtain total GNP. GNP originating in each industry also may beestablished by the equivalent procedure of summing income payments andother costs. This discussion of the I-O accounts has omitted a number of topicsinvolved in the construction of the make and use tables and derivative I-O tables in which the flows are transformed into the directrequirements and total requirements that each industry places on eachother industry in order to produce a unit of output. These topics arecovered in the references listed in “Suggestions for FurtherReading.” Suggestions for Further Reading The U.S. national income and products accounts are described in thefollowing: (1) Carol S. Carson and George Jaszi, “The NationalIncome 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 latersupplements and revisions, in U.S.
Department of Commerce, Bureau ofEconomic Analysis, Readings in Concepts and Methods of National IncomeStatistics (Springfield, VA: NTIS, 1976), NTIS Accession No. PR-248-690;(3) Studies in Income and Wealth, vol. 22, a Critique of the UnitedStates 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 ofthe United States National Income and Product Accounts: Development ofan 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 EconomicResearch, 1983). The U.
S. flow of funds accounts are discussed in Board of Governorsof the Federal Reserve System, Introduction to Flow of Funds(Washington, DC: Board of Governors of the Federal Reserve System, June1980) 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, Definitionsand Conventions of the 1972 Input-Output Study, BEA Staff Paper SP80-034by 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 referencestherein. Recent descriptions of alternative sets of national economicaccounts 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 “IntegratedEconomic Accounts: Reply,” SURVEY OF CURRENT BUSINESS 62 (November 1982): 36-53; and (2) Robert Eisner, “The Total Incomes Systems ofAccounts,” SURVEY OF CURRENT BUSINESS 65 (January 1985): 24-48. The United Nations Systems of National Accounts is an internationalstandard for national economic accounting systems. It is specified inDepartment of Economic and Social Affairs, Statistical Office of theUnited Nations, Studies in Methods, Series F No. 2, Rev, 3, A System ofNational Accounts, (New York: United Nations, 1968).