Expenditure weights

1
Expenditure weights

• Silke Stapel
• Head of PPP section
• Eurostat

2
Overview

• ICP 2004 expenditure questionnaire
• Handling of the software
• Sources for final consumption expenditure by
  households

3
Main rule 1 to be remembered

• National Accounts is an art, not a science
• (David Roberts)

4
Main rule 2 to be remembered

• We need a weight for each basic heading.

5
Main rules to be remembered

• What does this mean?
• brave estimates maybe necessary to establish
  weights for each basic heading
• heroic assumptions may have to be made
• comparison, comparison, comparison
• cross checking, cross checking, cross checking
• believe in common sense

6
ICP 2004 expenditure questionnaire

• Structure of the questionnaires (1)
• follows the ICP expenditure classification
• Maximum version as used by Eurostat/ OECD
• Minimum version for ICP
• regions may decide on intermediate levels
• regions may split certain basic headings

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ICP 2004 expenditure questionnaire

• Structure of the questionnaires (2)
• 222/ 158 Basic Headings (level 6 of the software)
• 152/ 126 Classes (level 5 of the software)
• 71/ 61 Groups (level 4 of the software)
• 31/ 26 Categories (level 3 of the software)
• 7/ 7 Main Aggregates (level 2 of the
  software)
• 1/ 1 GDP (level 1 of the software)

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Handling of the software

• Every number has to be entered only once.

9
Handling of the software

• weights at Basic Headings level to be entered
• all subsequent aggregations are calculated
• if weights only exist at aggregated level,
  formula can be overwritten by respective number
• manually entered aggregated numbers are copied to
  all levels they belong to and are used for all
  subsequent aggregations

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Sources for final consumption expenditure by HH
Reminder 1

• we want to compare price levels and volumes
• not only structure of GDP (weights), but also
  level of GDP matters
• in parallel to price collection GDP must be
  improved, particularly exhaustiveness
• consistency between prices collected and prices
  underlying GDP is important

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Sources for final consumption expenditure by HH
Reminder 2

• always cross-check different sources
• simple comparison, common sense, what do you
  believe more?
• set up simple use and supply tables (SUT) or
  input output tables (IOT)
• use product balances and commodity flow

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Sources for final consumption expenditure by HH
Reminder 3

• National Accounts is not the police
• we do not care if something is legal or illegal
• all economic activity and all expenditure should
  be covered in exhaustive accounts

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Sources for final consumption expenditure by HH
Supporting NA material from Eurostat

• Exhaustiveness project guidelines and templates
• Guidelines and analytical tables for private
  household consumption estimates
• NA questionnaire on income in kind, own account
  production and tips

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Sources for final consumption expenditure by HH
Need for co-operation (1)

• Coverage and structure of GDP can only be
  improved if there is good co-operation between
• Statistical offices
• Ministry of Finance/ Economy/ Planning
• Tax offices (VAT, income taxes)
• Police and customs
• professional and consumers organisations
• Charities

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Sources for final consumption expenditure by HH
Need for co-operation (2)

• RC should recommend countries NSI to invite
  these other bodies and explain them objectives
  and scope of the exercise
• win understanding and support
• get access to sources you did not know they exist
  or which were confidential
• RC may try to help NSI with particular
  co-operation problems

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Sources for final consumption expenditure by HH
Timing of weights exercise

• RC provide countries with the expenditure weights
  questionnaire and NA questionnaires after this
  workshop
• Countries complete questionnaires with the most
  recent information available by June 2003
• RC analyse responses and identify countries in
  need for technical assistance by September 2003
• discussion at regional workshops
• RC/ global office organise technical assistance
  from January 2004
• acceptable weights available by mid-2005

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Sources for final consumption expenditure by HH
Typical sources expenditure point of view

• household budget/ expenditure surveys (HBS)
• typical problems
• undercoverage of certain expenditure
• undercoverage of poor and very rich households

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Sources for final consumption expenditure by HH
Typical sources production point of view

• Retail trade statistics (RT)
• Production statistics (industry, agriculture)
• VAT or sales tax statistics
• Sales by utility companies and state monopolies
• Import and export statistics
• typical problems
• undercoverage of small units, thresholds
• tax aviation, double bookkeeping, underground
  economy
• smuggling

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Sources for final consumption expenditure by HH
Typical sources others

• Nutrition surveys/ health statistics
• national food balances
• FAO food balances database
• Motor vehicle registration
• statistics by professional organisations

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Sources for final consumption expenditure by HH
Food and non-alcoholic beverages

• less problematic, but watch
• own account production
• charities
• sources
• HBS
• RT, VAT,
• production statistics, imports, exports
• food balances, nutrition surveys

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Sources for final consumption expenditure by HH
Alcoholic beverages and tobacco

• very problematic
• own account production
• HBS understates considerably
• production statistics and RT underreport
• foreign trade statistics underreport (smuggling)
• additional sources
• Ministry of health (smoking and drinking habits)
• capture rates of customs/ police
• mirror foreign trade statistics

22
Sources for final consumption expenditure by HH
Narcotics

• Politically very problematic, but if important
  production/ expenditure exists, estimate should
  be made
• additional sources
• Ministry of health
• capture rates of customs/ police
• assistance organisations for drug addicts
• number of consumers of drugs by type of drug
• per head consumption
• street prices

23
Sources for final consumption expenditure by HH
Clothing and footwear

• less problematic, but watch
• own account production
• charities
• sources
• HBS
• RT, VAT,
• production statistics, imports, exports

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Sources for final consumption expenditure by HH
Actual rents for housing

• often problematic
• unrepresentative rental markets
• state regulated rental markets
• subsidies, social transfers in cash and kind
• infrequent sources with often small sample size
• sources
• rent, real-estate agency surveys
• census, micro-census
• administrative information

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Sources for final consumption expenditure by HH
Imputed rents for housing (1)

• Stratification or user cost?
• Stratification assume for owner-occupied
  dwelling same rent as for similar rented dwelling
• sufficiently big rental market must exist
• rents used must be representative
• leads to rents approach in PPP

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Sources for final consumption expenditure by HH
Imputed rents for housing (2)

• User cost Establish GVA (as for other non-market
  production) by sum of the cost
• criteria for stratification not fulfilled because
  of high owner-occupation
• good estimate of capital stock necessary as
  consumption of fixed capital is vital part of the
  user cost method
• see Eurostat project guidelines and templates
• leads to quantity approach in PPP

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Sources for final consumption expenditure by HH
Water, Gas, electricity, other fuel

• Problematic because of income in kind and social
  transfers in cash and kind
• sources
• HBS
• RT
• sales by utility companies and state monopolies
• imports and exports
• administrative sources on free of charge (or at
  reduced prices) provision to households

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Sources for final consumption expenditure by HH
Furnishings, household equipment etc

• less problematic, but watch
• own account production for furniture
• sources
• HBS
• RT, VAT,
• production statistics, imports, exports

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Sources for final consumption expenditure by HH
Health

• problematic because of
• different social security systems
• mixture of state and private systems
• subsidies, social transfers in cash and kind
• sources
• social security, ministry of health
• hospital statistics
• HBS
• production statistics, imports, exports
• statistics on pharmaceutical bulk and retail
  trade

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Sources for final consumption expenditure by HH
Purchases of vehicles

• problematic because of
• second hand cars, smuggling of stolen cars
• discounts
• sources
• HBS
• RT, VAT
• production statistics, imports, exports
• car registration information
• information from car dealer organisations and
  automobile clubs on discounts

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Sources for final consumption expenditure by HH
Operation of personal transport equipment

• fuel
• HBS
• RT, VAT, mineral oil tax
• production statistics, exports, imports
• maintenance and repair
• HBS
• service statistics
• information from automobile clubs
• watch do it yourself, helping neighbors, black
  market for making stolen cars not
  recognizable

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Sources for final consumption expenditure by HH
Transport services

• problematic because of
• mixture of state and private systems
• subsidies, social transfers in cash and kind
• sources
• ministry of transport, service statistics
• HBS
• sales by state monopolies
• administrative sources on free of charge (or at
  reduced prices) provision to households
• internet

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Sources for final consumption expenditure by HH
Communication

• problematic because of
• mixture of state and private systems
• mixture of services and goods
• sources
• ministry of communication, service statistics
• HBS
• sales by state monopolies
• internet

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Sources for final consumption expenditure by HH
Recreation items and equipment, personal effects

• less problematic
• sources
• HBS
• RT, VAT,
• production statistics, imports, exports

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Sources for final consumption expenditure by HH
Recreational and culture services

• less problematic, but watch
• subsidies, social transfers in cash and kind
• sources
• ministry of culture, sport, tourism
• culture statistics
• tourism statistics
• HBS
• internet

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Sources for final consumption expenditure by HH
Education

• problematic because of
• mixture of state and private systems
• subsidies
• social transfers in cash and kind
• sources
• ministry of education, service statistics
• education statistics
• HBS

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Sources for final consumption expenditure by HH
Restaurants and hotels, personal care

• problematic because of
• tips
• consistency of prices in PPP and NA
• sources
• service statistics
• tourism statistics
• HBS

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Sources for final consumption expenditure by HH
Prostitution

• Politically very problematic, but if important
  production/ expenditure exists, estimate should
  be made
• problematic borderline to legal services like
  massage and sauna clubs
• sources
• Ministry of health
• police
• assistance organisations for prostitutes
• number of persons providing and consuming
  services
• prices, intermediate consumption

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Sources for final consumption expenditure by HH
Social protection

• content
• payments of households for assistance and
  supports services provided to persons who are
  elderly, disabled, survivors, homeless etc.
• sources
• HBS
• organisations providing such services
• respective ministries of health, social affairs
  etc.

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Sources for final consumption expenditure by HH
Insurance

• Reminder
• we are only looking at the service charge
• Sources
• insurance supervising bodies
• ministry of finance/ economy
• consumer organisations
• insurance dealers
• insurance company business accounts

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Sources for final consumption expenditure by HH
FISIM/ Other financial services

• FISIM calculations by the statistical offices
  based on information from
• ministry of finance/ economy
• national central banks
• banking and finance supervising bodies
• Other financial services (banks charges)
• banking supervising bodies
• national central banks
• consumer organisations
• financial dealers

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Sources for final consumption expenditure by HH
Net purchases abroad

• Purchases by residents abroad
• HBS
• tourist surveys
• national bank (money exchange)
• Purchases by non-residents on economic territory
  of the country
• tourist surveys
• national bank (money exchange)
• special survey among retail traders

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Sources for final consumption expenditure by HH
Thank you for your patience