Discrepancy between Financial Accounts and Capital Accounts

1
Discrepancy between Financial Accounts and
Capital Accounts

• Working Party on Financial Statistics
• OECD
• Paris, France
• October 14, 2008
• Susan Hume McIntosh
• Sr. Economist and Special Project Coordinator
• Federal Reserve Board
• Washington, DC 20551
• smcIntosh_at_frb.gov

2
Organizational Structure in the United States

• U.S. has decentralized statistical system
• BEA - current and capital accounts, BOP
• FRB - financial accounts, balance sheets
• Both NIPA and FFA have discrepancies
• Jointly produce integrated macroeconomic accounts
• Two versions of net lending/borrowing

3
Discrepancies in the Financial Accounts

• Discrepancies for most sectors
• Discrepancies for a few instruments
• Due to different data sources, NIPA discrepancy,
  timing of recorded transactions
• Point out errors and poor estimates for missing
  data
• Keep internal consistency of accounts since
  sector discrep. instrument discrep.

4
Sector Discrepancies
5
Instrument Discrepancies
6
Total Sector/Instrument Discrepancy
7
Total Discrepancy as a Percent of Total Financial
Assets
8
Integrated Macroeconomic Accounts for the United
States

• Produce integrated accounts based on NIPA, ITA,
  and FFA.
• Published on BEAs website for 1960-2007 annually
• Structure based on guidelines in the System of
  National Accounts 1993
• Seven sector tables
• Ongoing program to improve integration of NIPAs
  and FFA

9
What are Integrated Accounts?

• Complete sequence of accounts
• Current (production and income).
• Capital accumulation.
• Financial accumulation.
• Other changes in volume.
• Revaluation.
• Balance sheet.

10
Progression of Accounts
11
Net Lending/Borrowing

• Capital Account net saving from the current
  account less fixed investment
• Financial Account net acquisition of financial
  assets less net increase of financial liabilities
• Use capital account version in sequence of
  accounts
• Discrepancy between two versions shown in other
  changes in volume

12
Net Lending/Borrowing
13
Difference between Capital Account and Financial
Account Net Lending/Borrowing
14
Where Are We Headed?

• Both agencies have projects underway that would
  hopefully narrow the differences
• Improvements related to sharing knowledge about
  source data and improving timing of transactions
• Ongoing discussions of how new developments in
  the economy would be reflected in accounts
• Still many challenges due to limited source data
  for some sectors