ALBERT

Notes: In this paper we deal with the question of which measures of economic well-being are adequate to identify those groups of households in the U.S. whose economic conditions justify public concern and assistance. We derive a utility based measure of economic well-being from the estimation of a complete set of consumer demand equations. The demand system is Lluch's Extended Linear Expenditure System (Lluch, 1973). Household characteristics are incorporated using the scaling method proposed by Barten (1966). Using the welfare indicator derived, we study the composition of the poorest part of the population, using data from the 1972–73 Consumer Expenditure Survey. We compare our results with those obtained using various other welfare indicators, including the official U.S. poverty line. We show that using different family composition adjustments significantly and systematically affects just who are considered to be at the bottom of the welfare distribution. We finally suggest that program designers therefore can improve their target efficiency by carefully selecting from among the acceptable indices of welfare when defining program eligibility.

Notes: This paper compares the growth accounting approaches to aggregate productivity measurement and analysis of three major researchers: E. F. Denison, D. W. Jorgenson, and J. W. Kendrick. The investigetors are compared in terms of their treatment of a number of crucial elements, including measurement of output and of capital and labor inputs (including composition or quality changes), total factor productivity growth, economies of scale, and intensity of demand (for output). Judged by the standard of the neoclassical economic theory of production-the only generally accepted basis for input aggregation-Denison departs significantly from the production theory framework in his measurement of output and capital input, Kendrick to some degree in his measure of capital input, and Jorgenson not at all. The effects of these departures are illustrated with reference to the recent productivity slowdown. The probable near-term future utility of growth accounting methods for productivity analysis is assessed, and some related econometric modeling issues are noted.

Notes: This article reviews the problems involved in updating the results of international comparisons, in terms of an analytic framework focusing upon the sources of differences between various forms of extrapolation and direct comparisons. The factors identified as important are conservation of prices of the base period and weight inconsistency. The reliability of updating is undoubtedly affected by the length of the period over which the data are extrapolated. A program of regular benchmark comparisons at approximately five-year intervals with updating for the intervening years is attractive, since it permits checking by forward and backward interpolation. Where there are large deviations, however, averaging is not an acceptable solution.

Notes: Index number accuracy is affected by formula specification and sampling error. The authors argue that an index formula should be “ideal” and “exact” (with reference to the range of economically plausible aggregator functions) to be economically justified. These indices are invariant in the homothetic case, as well as in certain non-homothetic scenarios. Empirically, based on foreign trade data for Egypt from 1885-1961, the set of economically justified indices are virtually identical, supporting the theoretical argument that “instrumental error” or “formula variance” should be a negligible factor contributing to index number error. In a discussion of sampling error, on the other hand, the authors criticize earlier work and propose an upper and lower bound. Using the same data, these limits imply that sampling error may be a serious problem for many indices.

Notes: How have government transfers altered the distribution of income, the level of work effort, and the rate of personal saving? Most scholars approach this question by comparing the current level of government transfers with the unrealistic counterfactual of a zero-transfer situation. This method overlooks the fact that nongovernment transfers existed before government transfers and the possibility that private transfers might have grown more if government transfers had grown less.This paper explores the significance of one private alternative to government transfers-namely, direct interfamily giving of cash, food, and housing. Fragmentary evidence suggests that such interfamily transfer was quantitatively more important than governmental transfer for these purposes thirty years ago, but is now only half as great. If current government transfers are conversions of, or substitutes for, interfamily transfers, then it follows that some of the benefits of government transfer “slide” over to “secondary beneficiaries,” i.e. those who would have made the private transfers. Further, it follows that the effects of government transfers are not much different from those of the private transfers which they replace.

Notes: In this article an attempt is made to generate internationally comparable income distribution data for the Federal Republic of Germany (1974), Mexico (1968) and the United Kingdom (1979). To that end, the same income concept and income unit were adopted for each country, i.e. respectively household available income and the household. Moreover, incomes from various sources were adjusted for inconsistency with National Accounts according to Altimir's methodology. The paper finds that the distribution of persons by household income per equivalent unit is probably the best way of looking at the distribution of economic welfare. It further demonstrates that the distribution of persons by household available income per capita is much closer to this ‘ideal’ distribution than the distribution of households by household available income. Finally, the paper discusses some of the problems arising from the fact that one normally works with grouped data. It is found that in the case of the three countries under study, grouping is likely to have had only a small impact on the results.

Notes: This paper discusses the history of the French development of satellite accounts during the late 1960s and 1970s, noting the circumstances that led to the initiation of work in this area and describing the types of problem encountered. It then goes on to draw, on the basis of the French experiment, more general conclusions and to present a proposed accounting framework. The final section considers the concept of social expenditure, but concludes that, at least for the present, it is not possible to construct a useful global concept.

Notes: The economy of Liberia is one in which, in spite of past satisfactory growth performance, a high level of income inequality persists. In 1977, for instance, a mere 2 percent of the people accounted for some 33 percent of nation-wide wage income. These people live disproportionately in Montserrado County in which the capital city is located. While each of the other counties are largely rural and poor, each has far lower intra-county inequality than wealthy Montserrado.Intersectoral location of the income-earner, average income levels and the extent of access to human capital formation opportunities are some characteristics of the economy that have been found to explain significant portions of intercounty variations in the levels of household income concentration. Income inequality is reduced with increases in the extent of agricultural activity as the share of the top income group falls and that of the bottom group rises. The reverse happens with growing urban-area activity. Higher income concentration occurs with rising per capita incomes as the top group's income share rises and the bottom income group's share falls. While this appears to be an instance of the Kuznet U-shaped hypothesis, here there are no definite signs of a possible reversal any time soon. The levels of access to educational facilities move inversely with the level of inequality, with expanding elementary facilities benefiting the poorer people at the expense of the wealthy while the reverse happens in the case of expanding secondary educational facilities.

Notes: This article describes what happens to income distribution during intensive changes in gross domestic product due to external market conditions. It deals specifically with an open market petroleum-based economy, Trinidad and Tobago, and reviews changes in national product and income levels and the income distribution pattern over the twenty year period 1957–76.The paper argues that during the period characterized by subperiods of steady growth and rapid growth in GDP (the latter associated with the petroleum price rise), income inequality increased between 1957 and 1972 and then decreased in the post petroleum-price-rise period of rapid growth 1973–76. While the effect of intensive changes in national product did trickle down to the lower income groups, income inequality in 1975–76 was greater than that existing in 1957–58. An examination of the spatial, occupational and temporal aspect of the distribution pattern points towards the elimination of structural dualism in the economy as the surest path towards greater income equality in Trinidad and Tobago.

Notes: The debate on how to deal with changes of relative prices in national accounts has, so far, remained inconclusive, especially with regard to the question of how to measure gains from changes of terms of trade. Keeping the experiences of the 1970s in mind (i.e. substantial changes of relative prices sparked off by increased oil prices), this state of affairs is not considered tenable.On this background, the paper takes up the old debate on how to deflate figures of domestic product, total as well as by industries. It tries to argue that deflated figures should be presented not only as real product figures by industries (using the double deflation method), but also as real income figures, obtained by deflating the current-prices figures of a certain year by the same general price index. When this is done according to procedures spelled out in detail, gains/losses from changes of the terms of trade in foreign trade will show up as an integral part of the framework.In the paper, special attention is given to the concept of industry terms of trade. On the basis of simplifying assumptions (which are, however, relaxed in the final part of the paper), it is shown how the ratio of real income divided by real product of a certain industry will be proportionate to the terms of trade of the industry concerned, when the latter concept is defined in the appropriate way. Furthermore, the sum of the industry gains/losses from changes of their terms of trade will be equal to the gain/loss of the economy taken as a whole from changes of the terms of trade in foreign trade.

Notes: In this paper, I investigate the validity of the Modigliani-Brumberg (M-B) model as an explanation of the variation of wealth holdings among households. The model as such, even with the inclusion of estimates of household lifetime earnings, explains only a minute portion of the variation in household wealth. Indeed, for certain groups such as non-white, rural residents, and the low educated, the coefficients of the regression model are insignificant. Moreover, when the top wealth holders are removed from the sample and when non-cash financial and business assets are eliminated from the household portfolios, the explanatory power of the M-B model increases markedly. Essentially, the validity of life-cycle wealth accumulation models must be restricted to the white, urban, educated middle classes and their accumulation of housing, durables, and cash. The rich have very different motives for saving and very different sources of saving, while the poor do not earn sufficient income over their lifetime to accumulate any non-negligible wealth.

Notes: The United Nations (SNA) and the Canadian (CSNA) Systems of National Accounts treat interest as a factor return to capital. The difficulties arising from the use of this concept cast doubt upon the basic premise. For example if the usual method of measuring value added by the summation of primary inputs is applied to industries mainly engaged in the lending of money, the results show negative production. This has led to the necessity of imputing bank interest in order to avoid negative income originating in the banking industry. Arguments are being put forward to extend this practice to certain other financial non-bank areas as well to offset the negative product emerging with increasing frequency as a result of higher levels of interest transactions.The proposed alternative is based on the contention that interest paid and received for the borrowing and lending of money should be treated in the same manner as the purchase and sale of other services. For the production accounts, for example, this would mean that interest paid by business would be treated as an intermediate expense of the paying industry and as revenue of the receiving industry. The adoption of this approach would therefore eliminate the need for the imputation of banking services and clear up the ambiguities encountered in treating interest on the public and consumer debt, issues which are also not unrelated to the present treatment of interest.

Notes: The present investigation is the first attempt to calculate gross capital stocks for 19 industries which together cover the whole Austrian economy. A production-oriented concept of capital formed the basis of the investigation; the estimation procedure follows that of C. Almon et al. In contrast to the traditional perpetual-inventory methods, Almon's modified estimation technique combines the advantages of differentiated cumulation containing a logistical retention function with relatively moderate requirements with respect to investment data. A thorough description of this estimation technique is given in the third section of the paper, combined with a number of comparative model calculations. These demonstrate very clearly that capital stock figures calculated according to the Almon method rarely deviate from those found with the help of the traditional inventory method, which requires considerably more information and uses more complicated calculation procedures. Finally, the sectorally disaggregated capital stock estimates calculated according to the Almon method are presented with some interpretative remarks.

Notes: In this paper we describe a micro consistent data set for Canada for 1972, assembled with general equilibrium tax policy analysis in mind. We stress the methodology used and in a number of tables report its main features.In the data set the separate detail contained in input-output transactions tables, national accounts, household income and expenditure data, taxation statistics, foreign trade statistics, flow of funds and other sources is adjusted for mutual consistency. The final result is a micro consistent data set in which demands equal supplies for all products, zero profit conditions hold for industries and all agents’ demands satisfy their budget constraints.The motivation for data assembly is the currently widely used practice of calibrating “empirical” general equilibrium models so as to exactly reproduce a base year data observation as an equilibrium model solution. This procedure enables empirically based models to evaluate counterfactual equilibria in a way which corresponds to comparative static analysis in theoretical literature.More detail on the data set is available on request in appendices deleted from the published version of this paper due to space constraints.

Notes: This article deals with some aspects of the compilation of input-output tables (I.O. tables). A global view is given of the way in which I.O. tables are compiled in The Netherlands. It is indicated that in The Netherlands a number of developments are in progress that have led to an extension of the uses that are made of I.O. tables. The changing demands on I.O. tables that result from these developments can be met in future to an important degree. This has been made possible by extending and improving basic statistics and by increasing the uses made of automation facilities. Some problems remain, however, and one of these problems takes a central place in this article. This is the problem of accuracy and continuity: how can yearly I.O. tables be compiled that combine accuracy with consistency over time. Accuracy means here that the tables should be as complete as possible and in optimal accordance with all available information. Consistency over time means that estimates of details of I.O. tables compared with the same estimates for previous years reflect real economic developments. It is obvious that those two demands may conflict, particularly for years in which new information becomes available. It then must be decided whether accuracy or consistency in time deserves priority. What problems result from this decision and what are the consequences for the yearly I.O. tables? The problems arising from the conflicting demands of accuracy and continuity apply to the Netherlands in the last few years. This led to a revision of I.O. tables and national accounts for 1977. This revision resulted in an increase of estimated national income of more than 6 percent. For some components the adjustments have been much larger; this is particularly true for the services sector. More information on the 1977 revision is given in an annex.

Notes: This paper provides a description of the annual Input-Output Tables for Canada. It describes the accounting framework and notes its close affinity to the one described in the United Nations report, A System of National Accounts. It demonstrates the ready derivation of GDP and Expenditure on GDP, both in current and constant prices, from the Input-Output Accounts as well as their relationship to the other subsystems of the Canadian System of National Accounts, particularly the Income and Expenditure Accounts and Real Domestic Product by Industry. Compatibility of basic accounting records of the transactors with the rectangular (commodity-industry) format of the Canadian tables is described. The need to have a consistent commodity classification and to develop a consistent valuation of all transactors in the economy is emphasized. The particular formulation of the Input-Output Impact tables is noted. The problem of deflating trade margins and the resolution of this problem is described. A strong plea is made for the economics profession to pay more attention to the problem of aggregation; all economic analysis is approached with blinkers but the aggregation problem isn't even recognized as a blind spot in most analyses.

Notes: Cooperation between the Austrian and Hungarian central statistical offices in the field of industrial productivity has a history of two decades. The first comparison, carried out in 1965, was partly experimental in objective and nature. The second full scale survey took place a decade later in 1975. This was followed by a further study of about two years duration of the level of productivity and the factors influencing it in three sectors: food, metallurgy and engineering. For this study the three sectors were broken down into 31 sub-branches and nearly 400 product groups. An important and labour-intensive element of the comparisons was harmonization of the sector and product classification system; UN recommendations were increasingly helpful for this work, and relying upon them will be expedient also in the future.In the decade under review the productivity advantage of Austrian industry increased, from about 40 percent in 1965 to an average 75 percent in 1975. The dispersion of sectoral productivity indices around the average value was significant in both years.The similarity of the 1965 and 1975 comparisons offered an exceptional opportunity to examine the reliability of extrapolation. The investigations unambiguously demonstrated that extrapolation did not give reliable results for a period as long as ten years, primarily because of structural changes in production and changes in price weights.The most important conclusion to be drawn from the investigation of the three selected branches is its extraordinary usefulness from the economic, political and methodological points of view. A further important conclusion is that the method of comparison must be selected in the light of an extensive consideration of the output and technological structure of the branches.

Notes: This paper presents an analysis of the distributive impact of government expenditures in the United States. The analysis uses a household-level microdata file drawn from the 1970 U.S. Census of Population, with additional income and tax variables drawn from the Internal Revenue Service 1969—70 Tax File.The results are presented at both federal and local levels and include analyses of the distribution of individual benefits, as well as of overall taxes and net benefits. Since a microdata file was used, distributional effects are examined with respect not only to the “traditional” variables of income class and household size, but also with regard to the number of earners in the household and the sex and race of the household head.In a further paper in a subsequent issue of this review we will present the results of a similar analysis for the United Kingdom, and compare the results for the two countries.

Notes: In an important recent book dealing with the measurement of income inequality with particular reference to poverty,1 Prof. N. Kakwani derives several poverty indices, investigates the effect of negative income tax schemes with the help of those indices and gives a numerical illustration based on Malaysian data.The aim of this note is to point out some logical flaws in his argument. Some of the ideas expressed in the part of his book we are concerned with have been disseminated for some time now2 and referred to in subsequent literature;3 yet their shortcomings do not seem to have attracted anyone's attention. The introductory section gives a concise presentation of the relevant part of Kakwani's contribution. The next two sections deal with some problems with his approach.

Notes: The conceptual framework of the system specifies that societal resources are limited by two basic factors: the amount of available human time, and the stock of wealth inherited from the past. Wealth is defined very broadly to cover not only the conventional tangible capital assets familiar to economists, but also intangible human and other capital assets, stocks of organizational capital reflected by networks of social support systems (the family, the neighbourhood), stocks of environmental assets (the sun and air), and stocks of socio-political assets (security, freedom of choice). Human time covers market work, household production, leisure, and biological maintenance.Human time and capital stocks are used within households to produce a variety of tangible and intangible outputs, and these outputs in turn are used to produce a variety of satisfactions (utilities) or to augment stocks of capital, or both.The basic sources of well-being in the system are ultimately of two types: well-being is produced as a consequence of the intrinsic benefits from all activities engaged in by individuals, which is to say that people have preferences over the way they spend their time; secondly, people derive utilities from the existence of various stocks or states of society, and these satisfactions are independent of the way in which time is used. The satisfactions associated with flows of goods are subsumed by satisfactions derived from activities associated with those goods.The system contains a set of linkages among the various parts:inputs of goods and time are used to produce tangible household output, using the familiar notions of household production functions and constrained optimization; tangible household products, which are intermediate in the system, are used in conjunction with human time to produce direct satisfactions or to augment household capital stocks; both household (micro) and societal (macro) capital stocks are linked directly to psychological well-being; household activities are linked directly to flows of satisfactions, termed process benefits in the system; household preferences and values relating to policy variables are linked to public policies of various sorts, and policies modify the constraints and opportunities relevant for household decisions.The system also has dynamic linkages. Modifications of household or public stocks produce impacts on future flows of well-being; satisfactions from activities may adapt to the existence of constraints, hence changes in constraints can modify preferences and subsequently modify activities; and household behavior has a life-cycle dimension which is inherently dynamic.

Notes: Two ways of estimating the value of housework are currently used. One is the opportunity cost approach, which sets the value of work done at home equal to the income the person could earn in the labor market. The other is the market cost approach, which uses the cost of hiring someone to do the housework to determine its value. In this study we use data on earnings of female clerical workers with various patterns of labor force participation to obtain estimates of the opportunity cost of hometime for such women. We find that potential market earnings do not provide an acceptable estimate of the value of housework, and suggest that using the wages of general household workers is a better approach.

Notes: By expenditure on education, health, housing and other public services, governments provide many goods and services which are alternatives to, or additional to, household expenditure on consumption. In most Western national accounts, the two forms of consumption are rigidly separated. Yet the combination of the two–the concept of total household consumption–has obvious importance for the measurement and comparison of living standards and for the formulation and analysis of policy. This concept is recommended as an additional aggregate in the revised SNA. It is displayed in the UN International Comparison Project (ICP). It is used as a major aggregate (“total consumption of the population”), although hitherto generally excluding nonmaterial services, in the Material Product System. Yet it is rarely shown explicitly in Western national accounts. One reason is the slow progress in the analysis by purpose of government expenditure.This paper shows how far figures of total household consumption, and of its division between collective and private consumption, can in fact be derived, for the advanced countries, from the data provided to the UN Yearbook of National Accounts, supplemented b y the ICP. The results show first the wide national variations in the relation between the two forms of consumption but, secondly, the gaps in information on this crucially important topic. The relation between direct government expenditure for collective consumption and transfer payments to households (“social income”) is also examined. High and low levels of these two forms of State support to consumption reinforce each other almost as often as they offset each other. But, again, the data provided by national accounting statistics are very incomplete.This paper was prepared for the 16th General Conference of the IARIW, August 1979.

Notes: In an earlier paper, we presented estimates of capital gains for a number of categories of assets owned by Belgian households. The purpose of the present paper is to see how the distribution of disposable income between socio-economic groups is modified when one adopts a “broadened” definition of income which includes capital gains corrected for losses of purchasing power.The main result of the study is that at current prices, the adoption of a broadened definition of income strongly increases disparities between socio-economic groups. However, when one takes into account losses in purchasing power, conclusions differ according to the period analyzed. For the years 1953–68, it appears that the distribution of broadened disposable income is more unequal than the distribution of disposable income. For the years 1969–77 when inflation was high, the adoption of a broadened definition of income has reduced disparities, with the important exception of old age pensioners.

Notes: International financial relationships should be interpreted in the context of a comprehensive conceptual framework; this paper advocates the use of concepts developed to measure and analyze balance of payments flows. Broad-based, empirical estimates of the international wealth of most countries of the western world are presented on the basis of cumulating balance of payments flows over a lengthy period. Among the more interesting aspects of the results are: the importance of intra-industrial country capital flows in a global context; the propensity of debtors to regard a larger share of their aggregate external debt as long term than do their creditors; the overwhelming importance of banks located in the industrial countries in global external asset and liability positions, and the preponderance of short-term positions taken by those banks; and the tendency for balance of payments records to report more direct investment assets than liabilities. The paper also contains some observations, based on the cumulations of balance of payments capital flows, concerning the nature and size of certain deficiencies in alternative sources–particularly the World Bank's Debtor Reporting System, and the Bank for International Settlements' banking data–of information on outstanding external debt positions.

Notes: The unsolved problems of measurement of international transactions may have consequences which are serious both for policymakers and for those undertaking research. Emphasis is placed on the need for users of data to understand and take into account the limitations and qualifications attached to them.The causes of deterioration in the quality of estimates of international transactions likely lie in their changing pattern. After a brief discussion of the basic sources and methods used, the paper selects for comment possible measurement problems related to inflation, taxation, illegal transactions, and affluence.A description follows of the improvement to data which has been achieved through exchanges and comparisons between trading partner countries. Efforts to use econometric analysis to point to error sources have, however, proved less rewarding.The paper concludes with a section on the linkage of flow and stock estimates.

Notes: Although the functional and institutional distributions of income are integrally connected to individual living standards and other development policy objectives, these dimensions are rarely given prominence or even accommodated within standard national accounting frameworks. This paper summarizes research on the estimation of a social accounting matrix (SAM) for Malaysia for 1970 in which the distribution of income between different factors and socio-economic groups is identified. It is the latest of a series of case studies involving some of the authors and is, perhaps, the most detailed of its kind. The study departs from the United Nations SNA guidelines at various points. The SNA basically proposes a commodity balance approach to national income accounting. In giving equal emphasis to income/outlay accounts as to the production accounts, the present study has brought together data from two major primary sources: a household expenditure survey and a production survey. Their combination poses several problems which are discussed in the paper. It leads to an integrated picture, in matrix form, of the interrelationships between income distribution and production structure in the Malaysian economy.Both the factor and household accounts in our SAM are disaggregated according to race and the geographic distinction between Peninsular and East Malaysia, with an urban/rural split within Peninsula Malaysia. The Peninsula labor force is further disaggregated by education level, while its households are then subdivided according to the employment status of main income earners. Arguments for and against these choices are presented.Some other aspects of the study can be noted. First, the distinction drawn between East and Peninsular Malaysia is desirable not only because of the inherent interest of the regions but also because of large differences in data availability and hence in estimation methods. Secondly, to complete our SAM it was necessary to estimate inter-household transfers, being the institutional analogue of inter-industry commodity flow. And finally an attempt has been made to impute the labor component of unincorporated business income. These, then, are the major problems which had to be overcome in our attempt to quantify the generation, distribution, and redistribution of income within Malaysia in a SAM framework.

Notes: This paper reports upon the first official application of the estate multiplier method of estimating the wealth distribution to French data. It is based upon a sample of estate duty returns filed during the period September-December 1977. The sampling rate was 5 percent for estates under one million francs, and 100 percent for estates over this level, giving a total of 5031 records. The data available did not permit a breakdown by type of asset. It did, however, permit classification of estates by age, sex, and occupation of decedent. Experiments were conducted using five different sets of mortality multipliers. The set of mortality multipliers judged most appropriate leads to an estimate of aggregate net wealth that is 77 percent of that given in the national balance sheet of the national accounts. Comparison of the distributions of wealth derived in these estimates suggest that the figures are consistent with those found in other countries.

Notes: This paper describes the construction of a disaggregated system of 262 national accounts for the U.K. economy in 1975. The objective is to remove the discrepancies between income, expenditure, production and financial estimates which occur in practice. This is done with the aid of a generalized least squares algorithm for adjusting national accounts with subjective estimates of reliability of the various account items. The balanced system of accounts provides the cross-section data base needed for the estimation of a consistent multisectoral dynamic model of the U.K. economy and yields the classification converters and input-output tables necessary for such a model.

Notes: On the basis of rough estimates from the expenditure as well as from the income side, it is suggested that the national product per head of the Roman Empire at the death of Augustus (AD 14) was somewhat below 400 sesterces (31 g gold) yielding an aggregate national product of fully HS 20 billion for a population of 55 million and that these figures were approximately valid from the late first century BC to the mid-second century AD. The share of government expenditures in national product was very low, probably not above five percent, and that of gross capital expenditures even lower, probably not in excess of two percent. An attempt is also made to appraise the concentration of personal income and it is estimated that the 600 senatorial families, representing approximately the top 0.04 per m of the population, received about 0.6 percent of total personal income while the share of the top three percent of income recipients was in the order of 20–25 percent of total personal incomes. The second part of the article compares these estimates as well as a few indicators of the standard of living and of welfare in the early Roman Empire with the corresponding figures for a few countries before the industrial revolution and for mid-20th century less developed countries.

Notes: Expanded measures of government product normally include imputations for the services of government capital. This article discusses several approaches to measuring the value of the services of government capital and focuses on the conceptual and empirical difficultes associated with making such imputations. In addition, four sets of alternative estimates for 1948–79 are presented.

Notes: The estimation procedure for purchasing power parities is generally divided into two parts, one for calculating transitive PPP's within basic headings and a second beyond this most detailed level up to gross domestic product. This paper only concerns the first step. It provides a description of the work carried out by the European Communities in 1980 within the United Nations International Comparison Project (ICP) framework. The estimated PPI's for basic headings are put forward together with the procedures for product selection and specification, the classification used for these purposes and the impact on the estimation of transitive PPP's. Instead of the country-product dummy (CPD) method used in the ICP, a revised Elteto-Köves-Szulc (EKS) procedure is proposed in which the estimation method and product selection constitute one integrated procedure.

Notes: A set of international comparisons is developed for 124 countries over the three post World War II decades, 1950-80. A Data Table is presented which gives, for most countries and most years, real product estimates for three different national income concepts and for the major subaggregates consumption, investment, and government. Detailed comparative price level estimates are provided as well.

Notes: The Wealth-Income Ratio of households, although less known than the capital-product ratio, has not been ignored by economic analysis. But most of the studies concerning this ratio put the stress on one unique cause of variation: the saving ratio of households. Doing so, they neglect other important factors such as the behaviour of households in incurring debt, and the influence of inflation on the variation of nominal income and on capital gains. This paper first provides a simple formula expressing the Wealth-Income Ratio as a function of all these factors. Then it shows, using data from France and United States, that this relationship is a useful tool for analysing the observed evolution of the ratio. Finally, it comes back to the famous question of the “constancy” of the Wealth-Income Ratio in the long run.

Notes: The paper by Gerardi covers considerable ground, touching on a wide variety of issues in the area of international comparisons of product and purchasing power. Since our views on most of these subjects have been expounded in one or another of the International Comparison Project volumes and we will concentrate mainly on the central issue raised by Gerardi of the selection of an aggregation process that must somehow take account of the tastes of all the people who are the subject of an international comparison inquiry. In addition, we comment on some other points including the notion of special purpose PPPs. Finally, we make a brief statement about where we think future research will be most useful in improving international comparisons.

Notes: Just as intertemporal price indices have two functions, to measure price changes and to deflate current values to constant values, this is true also for interspatial price indices, purchasing power parities (PPPs). In practice these two functions of PPPs, for conversion and for comparing price levels, are not always distinguished, and this may have some disadvantages since in a number of cases the differences between the two PPPs might be considerable. The authors review the differences in content of the two types of PPPs, and make some suggestions for making the distinction more explicitly.

Notes: This paper explores the possibility of using the Classification of the Functions of Government published recently by the United Nations (COFOG) in order to segregate intermediate from final use of government production in the national accounts. It is argued that the notorious difficulties of doing that can be traced to two reasons, one the multiplicity of theoretical concepts, and the other the lack of sufficient detail at the statistical level. The first can be removed by clarifying that on the production account of an economy only production and not welfare is to be measured. The second seems to be overcome by the three-digit detail of COFOG. It is shown that many of these categories are now sufficiently homogeneous for a panel of experts to agree in assigning them to either intermediate or final use, although for a number of categories this is still difficult. The question is whether consensus in the major categories is large enough to consider the remaining controversial ones as border cases, normal in any classification and solved in the last instance not by argument but by convention. Some preliminary figures for the intermediate part of government production are given.

Notes: In the United States, the life-cycle relationship between initial Social Security contributions and subsequent benefits causes the effect of Social Security on income distribution to be overestimated in a single-period analytical framework. By separating the annuity from the redistributive aspects of Social Security we provide a life-cycle framework for measuring its net effect on redistribution. To this point in its history, we find all income classes have received positive net life-cycle income transfers and, in an absolute sense, upper-income groups have done at least as well as lower-income groups. This suggests a reason for the near-universal support of Social Security by past generations, as well as the controversy which now surrounds it. As it becomes apparent to younger cohorts of taxpayers that many of them will be net losers, it is inevitable that Social Security will be subject to the same controversy as other welfare programs which attempt to redistribute income.

Notes: Using data from the 1973 National Survey of Family Growth, the present study analyzes, for blacks and whites separately, the impact of female market activity on the inequality of the income distribution among households. The family life cycle is divided into three stages, according to the presence and age of children: (1) the interval between marriage and the birth of the first child, (2) the child-rearing interval, and (3) a final period which begins when all the children have reached school age. Using the coefficient of variation as an indicator of inequality, the empirical results show that in period 1, the contribution of white working wives has a large equalizing impact, while that of their black counterparts results in a slight increase in dispersion. In the child-rearing and post child-rearing stages, the labor supply of mothers decreases family income inequality by a small amount for both black and white households. A decomposition of the squared coefficient of variation of family income is presented to aid in the interpretation of these findings.

Notes: The findings of this paper may be summarized in a few paragraphs which, of course, omit all qualifications of the statistical data used.1. The best single measure of economic growth from the stock (rather than the flow) aspect now available is deflated durable reproducible tangible wealth per head,1excluding military tangible assets, subsoil assets, and civilian semi-durable and perishable assets.2. The average rate of growth of real R.T.W. per head for the entire period from 1805 to 1950 is 2 percent, with a range of about 1.8 to 2.2 percent. These figures should be regarded as minima because they do not make allowance for the probable overstatement of the effective rise in the price level involved in the process of deflation and because of the omission or understatement of some types of durable assets such as soil improvement.3. The rate of growth increased from approximately 2.2 percent in the first half of the nineteenth century to 2.5 percent in the second half. The highest decadal rate for periods of about ten years was apparently reached in the‘eighties with approximately 3.8 percent. From this peak it declined to approximately 1.6 percent for the period 1890 to 1922, but rallied to 2 percent in the‘twenties. From 1930 to 1945 R.T.W. per head not only failed to grow but declined slightly, an unprecendented phenomenon due to the Great Depression and to World War II.4. Since World War II the rate of growth of real R.T.W. per head has averaged fully 4 percent. This is higher than any decadal rate known; and probably higher too than that prevailing during any previous period of prosperity. The increase of 22 percent in the five years 1946–50 seems to be as high as that in any previous period of equal length. While part of this rapid increase may be regarded as making up for deficiencies in the ratio of R.T.W. to national product created in the preceding fifteen years; and while it is uncertain how long the recent rapid rise will continue, even if we disregard restrictions on civilian capital formation under the impact of rearmament, it may be that the downward trend in the rate of growth of R.T.W. per head in evidence since the late nineteenth century has been arrested.5. During the one hundred and fifty years for which data are available and which encompass virtually the entire economic history of the United States, the structure of R.T.W. has shown considerable changes, but also a degree of stability which may be regarded as astonishing in view of the extraordinary extension of the economic area of the United States and the radical changes in the nature of its economy. In particular, the proportion of R.T.W. represented by reproducible durable assets for consumers' direct use and for use in production has changed but little.6. Residential buildings and consumers' durable goods accounted for approximately two-fifths of total domestic R.T.W. (in current prices) throughout the period, although the ratio has shown a slight tendency to rise since the middle of the nineteenth century. Within consumers' R.T.W. residential buildings have lost slightly in importance at the expense of movable durable goods. The share of government (including non-profit institutions but excluding military assets) has risen from an insignificant fraction to approximately one-eighth of total R.T.W.’The proportion of R.T.W. represented by private enterprise (including farms) has declined moderately. Within total business R.T.W. changes, however, have been very substantial. The two outstanding trends are the relative decline of R.T.W. of agriculture (excluding farmers' residences and consumers' durables), and the increase in the share of non-farm business structures and equipment, particularly prior to 1880. Non-farm business inventories, on the other hand, seem to have maintained approximately the same proportion to total domestic R.T.W. throughout the period.7. Until World War I part of domestic R.T.W. must be regarded as being the property of foreign owners. The proportion of foreign investments to R.T.W. of the United States, however, declined rapidly throughout the nineteenth century from a proportion of over one-eighth at its start to only a few percent after World War I.Investments abroad have never been substantial compared to R.T.W. They have been almost insignificant throughout the nineteenth century. Even at their peak in 1929 they represented only 7 percent of domestic R.T.W., a proportion not yet regained by 1950.