Expenditure weights Silke Stapel Head of PPP section Eurostat

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

Main “rule” 1 to be remembered National Accounts is an art, not a science (David Roberts)

Main “rule” 2 to be remembered We need a weight for each basic heading.

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

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

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)

Handling of the software Every number has to be entered only once.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sources for final consumption expenditure by HH Recreation items and equipment, personal effects less problematic sources: HBS RT, VAT, production statistics, imports, exports

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

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

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

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

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.

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

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

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

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