Integrating Industry and National
Economic Accounts
Ann Lawson, Brian Moyer, Sumiye Okubo, and
Mark Planting
Industry Economics Division
Presentation for the 2004 OECD National
Accounts Expert Meeting
October 12-15, 2004
Outline
•
•
•
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BEA’s vision for integrating the accounts
Methodologies for integration
Steps for integration
Future research
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BEA Accounts
Three approaches to estimate GDP
1. Expenditures approach:
GDP = C + I + G + (X - M)
2. Income approach:
GDP = Compensation of employees
+ Gross operating surplus
+ Taxes on production and imports,
less subsidies
3. Production approach:
GDP = Gross output - Intermediate inputs
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BEA’s Vision for Integrating the Accounts
• Long-term: Full Integration (2008-2010)
– Integration of all industry accounts and
integration of industry accounts with the
national income and product accounts (NIPAs)
– Provide a third independent measure of GDP
• Short-term: Partial Integration (2004-2007)
– Integration of the Annual I-O and GDP-byindustry accounts
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Value Added Estimates Depend on Quality
of Data
I-O accounts
• Value added =
Gross output intermediate inputs
• Quality of gross
output is high, but
overall quality of
intermediate inputs
is not
GDP-by-industry accounts
• Value added =
Compensation of
employees + gross
operating surplus + taxes on
production and imports, less
subsidies
• Quality depends on source
data; gross operating
surplus is most problematic
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Partial Integration: Five Steps to Integrate
Industry Accounts
• Develop consistent level of industry detail
• Develop revised 1997 benchmark I-O
table
• Develop time series of gross output and
value added by industry
• Apply I-O framework to develop time
series of annual accounts
• Develop real (inflation adjusted) measures
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Step 1: Develop Consistent Level of
Industry Detail
Industries and Commodities in the Integrated Accounts
1997 NAICS sectors
1997 NAICS codes
All industries
Private industries
Agriculture, forestry, fishing, and hunting…………..
Mining ………………………………………………….
Utilities …………………………………………………
Construction …………………………………………..
Manufacturing …………………………………………
Wholesale trade ………………………………………
Retail trade ……………………………………………
Transportation and warehousing ……………………
Information …………………………………………….
Finance and insurance ………………………………
Real estate and rental and leasing …………………
Professional, scientific, and technical services …..
Management of companies and enterprises ………
Administrative and waste management services …
Educational services …………………………………
Health care and social assistance …………………
Arts, entertainment, and recreation ………………..
Accommodation and food services …………………
Other services, except government ………………..
Government ………………………………………….
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21
22
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31, 32, 33
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44, 45
48, 49
51
52
53
54
55
56
61
62
71
72
81
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Step 2: Develop Revised 1997 Benchmark
I-O Table
• Incorporate results of 2003 NIPA
revisions
• Set best levels and composition of value
added for each industry
– Incorporate the best estimates from
both sets of accounts
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Merging Information for Value-Added Levels
Benchmark I-O Value Added
GDP-byIndustry
Value
Added
Good Benchmark data/
good GDP-by-industry
data
e.g., Health care
Good Benchmark data/
poor GDP-by-industry
data
e.g., Mining
Poor Benchmark data/
good GDP-by-industry
data
Poor Benchmark data/
poor GDP-by-industry
data
e.g., Transportation/
Warehousing
e.g. Construction
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Evaluation Criteria: (1) Benchmark I-O
Accounts
• Share of an industry’s intermediate
inputs covered by quinquennial
economic census
• Share of an industry’s total gross output
accounted for by quinquennial census
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Evaluation Criteria: (2)
GDP-by-Industry Accounts
• Quality and size of adjustments made to
convert enterprise-based, profit-type
income to establishment basis
• Share of an industry’s value added
accounted for by proprietors’ income
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Merging Information from Benchmark I-O &
GDP-by- Industry Accounts
• Based on our criteria:
– Identify point estimate and variance of value
added for each publication-level industry in the
benchmark I-O and GDP-by-industry accounts
– Develop probability distribution of value added for
each industry in each set of accounts
– Combine the two distributions to get the “best”
estimate of value added for each industry
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Merging Information: An Example
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Step 3: Time Series of Gross Output and
Value Added by Industry
• Set levels of industry gross output and value added
to the revised 1997 benchmark I-O table
• Extrapolate gross output by industry using annual
survey data from the Bureau of the Census
• Develop time series of value added by industry by
applying GDI extrapolators to 1997 levels
• Adjust industry estimates to take into account
statistical discrepancy and extrapolation errors
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Step 4: Develop Time-Series of Balanced
Annual I-O Accounts
• Prepare annual I-O tables, given
estimates of gross output, value added,
and final demand
• Balance annual I-O tables to establish
internal consistency and consistency
with GDP-by-industry accounts
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Input-Output Use Table
Industries
Agriculture
Mining
Constructi
on
Manufactur Transporta
ing
tion
Final Uses (GDP)
Trade
Finance
Services Other
Total
Intermediate
Use
PCE
PFI
CBI
X
M
GOVT
GDP
Total
Commodity
O utput
Agriculture
Minerals
C
o
m
m
o
d
i
t
i
e
s
Value
Added
Construction
Manufacturing
Transportation
Trade
Finance
Services
Other
Noncomp. imports
Total interm
inputs
Comp
Taxes on prod.&
imports, less subs
Gross op surpl
Total
Total Industry Output
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Step 5: Develop Real Measures
• Apply double-deflation procedure to
these measures of gross output and
intermediate inputs to develop real
measures of value added
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Future Research
• Evaluate coverage, quality, and consistency
of source data from statistical agencies
• Develop additional procedures to incorporate
new data from 2002 Economic Census and
intermediate input data from expanded
annual surveys
• Develop new processes and procedures for
incorporating information from a productionbased approach to measuring GDP into the
NIPAs
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Questions?
• Sumiye.okubo@bea.gov
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