ALBERT

Notes: The calculation of purchasing power parities and quantity comparisons for a given year provides interesting information about the relative importance of countries. However, it is necessary to make these estimates annually in order to enable users to apply these parities for international comparison of annual data expressed in national currency. The paper deals with the problems related to merging spatial comparisons and temporal volume and price movements for the countries of the European Community. For these countries full information was collected in 1975 and in 1980, whereas in the intermediate years some price data were collected and price indices at a detailed level have also been collected. First the theoretical problems of consistency between the spatial results and temporal indices are discussed. Because no immediate consistency can be obtained, several methods are proposed to achieve consistency, by estimating one unique set of spatial and temporal indices. The available information for the period 1975-80 has been used in order to test the numerical differences between two sets of parities and price indices over time. Besides theoretical reasons for inconsistency, it is also necessary to take into account errors in the price observations or in the price indices. The results presented in the paper should be considered as provisional and further work will be undertaken to obtain better insights into the inconsistency between these sets of data.

Notes: To know the size and development of the hidden or underground economy is important for policy making, mainly because the measures undertaken may be misdirected if they are based on biased official statistics. The hidden economy can be measured by considering indicators. The direct methods are based on voluntary surveys and on tax auditing and other compliance methods. The indirect estimation methods rely on the identification of residuals with respect to income and expenditures, as well as in the labor and money markets. The strengths and weaknesses of each of these measurement approaches are discussed and the resulting estimates of the size of the hidden economy are compared. A different approach to measurement is to look at the determinants leading to the existence and growth of the hidden economy. Finally, the method of “unobserved variables” allows the combination of the two approaches by simultaneously considering the determinants and indicators of the under- ground economy. The results show a considerable range of sizes for a given country and year. Though there is a broad range of size estimates, there is general agreement that the hidden economy's size has been growing for all countries over recent decades. Further progress in quantitative knowledge about the hidden economy requires the development of a theoretical model which analyses the interdependencies between the official private sector, the hidden economy, and the public sector.

Notes: In the course of the nearly two decades since the revised SNA was developed, the role of pensions and insurance in the developed western economies has been significantly altered. The United Nations System of National Accounts (SNA) is not fully consistent in its treatment of pension and insurance transactions. This paper examines whether, in view of the changed institutional context, a modification of the SNA treatment of this complex of flows would be desirable. It investigates the impact on household income and saving of adopting a somewhat more consistent transactor/transaction approach for all pension and insurance transactions. Four main topics are covered: (1) social security, (2) private pensions, (3) life insurance, and (4) casualty insurance. Each is considered in terms of the treatment of contributions, the treatment of benefits, and the handling of reserves and the income generated by them. The same sorts of problem arise in all four cases.

Notes: Production maximization, together with an appropriate distribution of income and wealth, can no longer be considered as the exclusive objective of socio-economic policies. Economic and social life is accompanied by numerous hardships, constraints and damages which demand to be minimized. Combining these dual aims is not easy as no single model has yet been set up taking into account all these inter-relations. However, one may try to reduce the uncertainty about the statistical material that could be required for decision-making in this new context.

Notes: The formidable expansion in the scope of the United Nations International Comparison Project has brought into evidence limitations of the methodology used in the first three phases. The author considers that there are two indispensable conditions needed to give renewed impetus to the ICP: (a) the objectives must be redefined, and (b) the methodology must be built on an entirely new basis. He considers the broad lines of such an evolution to be the following.(a) The objective of volume comparison must be kept distinct from that of purchasing power comparison, given that both the basic material and the formulae to be used at the aggregate level differ in the two cases.(b) At the basic heading level, it is proposed, for both volume and purchasing power comparisons, to replace the multilateral approach by a “minimum scale” binary and unilateral approach, and to use the EKS method. This will make possible an improvement in the accuracy of the estimates, a reduction in the overall costs, and a drastic reduction in execution time. What is more, it would be possible to regionalize the worldwide comparison, in the sense that the results of the basic heading comparisons already obtained at the regional level for regional purposes can be used as an input in the framework of the worldwide comparison. At the aggregate level, in the framework of volume comparison, it is proposed that a constant price procedure in the spatial sense should continue to be used. It is, however, proposed that the prices of the set of countries (GK) be replaced by a structure of common “equi-distant” prices (G). This would permit the elimination of the significant systematic distortions observed in the comparison between rich and poor countries in the first three phases of ICP. What is more, this gives maximum stability to results obtained for the same countries at different geographical levels. By using a set of common “equi-distant” quantities, the same advantage can be obtained in the purchasing power comparison.

Notes: This paper explores the choices and potential biases involved in valuing one type of government expenditure, medical transfers, and in estimating its antipoverty impact. Three methodological approaches–(a measure of) government costs, (a measure of) cash-equivalent values and (a measure of) funds released–are contrasted both in concept and in practice. We assign benefits to individuals after assuming that Medicare and Medicaid provide insurance to all those who are eligible. The resulting estimates for 1968 and 1974 illustrate the efficacy of these medical transfers in reducing the number of persons in poverty. Two recent studies, one by the Congressional Budget Office, and the other by Morton Paglin, further highlight the importance of medical transfers for estimating poverty, despite the fact that we do not wholly agree with the methodologies which they employ. Our results indicate that in the aggregate, while medical care transfers have a substantial impact on poverty, the choice of a specific estimation approach has little effect on poverty estimates. However, for the elderly and possibly also for other groups (e.g. the rural poor), choice of estimation technique is quite crucial for estimating the extent of poverty.

Notes: In studies of income distribution household income is the common measure of household welfare, although household per capita income is better since it automatically “corrects” for household size. Perhaps the continued use of the former is a consequence of the belief that in practice the two give very similar results. This paper shows that in many cases those results differ substantially. Policy prescription based on household income rather than household per capita income can be very defective. The paper compares results according to the two income concepts for Malaysian data. U.S. data are then used in a comparison over time.The disparity between the two Malaysian distributions is illustrated by their cross tabulation. A quarter of the households in the lowest forty percent of the household income distribution is in the upper three quintiles of household per capita income; and 10 percent of the same lowest forty are in the highest two quintiles of the second distribution. The paper also shows that the distribution of benefits from public education-measured as the public costs of school years—is very inegalitarian if household income is used. The reverse occurs if household per capita income is used. Similar reversals occur in comparisons involving partitions by occupation and sex of head of household. Women-headed households, for example, have sub-mean household incomes but their household income per capita equals the mean. The paper also examines the differences in the age-income profiles of the two distributions. It then considers whether the much discussed secular stagnation in U.S. measures of inequality is changed if household income per capita is used rather than the usual household income measure. Use of the per capita concept results in a slight decrease in U.S. inequality between 1947 and 1972. Appendix 2 explores how long term growth in per capita incomes and the associated changes in the size composition of households may affect measurements of inequality.

Notes: Provision of “market goods” follows the decision rules of traditional microeconomics; pricing and resource allocation for such goods tend towards Pareto optimality. The provision of “collective goods,” by contrast, depends on political (or quasi-political) collective decision processes; beneficiaries often receive a share of collective goods free of charge or well below average or marginal (private or social) costs. No inherent tendency towards optimality may be presumed and separate analysis of collective goods becomes an essential part of national goals accounting.The national-income-accounts (NIA) distinction between personal consumption expenditures (PCE) and government purchases of goods and services corresponds roughly to a division between market goods bought by the consumer and a major category of “collective goods” (i.e. “public goods” provided by government). However, a significant proportion of PCE represents “collective goods” paid for by government, business, or nonprofit organizations and provided on behalf of the consumer, whereas a part of NIA government purchases represents services paid for by the consumer (i.e. “market goods”).This article develops operationally meaningful distinctions among “market goods,”“collective goods,” and “tied aid” (a mixed category with market-good and collective-good characteristics). These distinctions are determined by the nature of the decision processes–rather than by the characteristics of the beneficiary or the supplier. This classification is related to the national income accounts and major discrepancies are pinpointed. The blurring of the distinction among market goods, collective goods and tied aid is found to be most consequential in the NIA treatment of “education” and “medical care” services. NIA data for these two services are restructured for national goals accounting purposes in order to illustrate both the quantitative importance and the empirical feasibility of classifying benefits by their respective decision processes.

Notes: Recently there has been discussion concerning the renewal of the volume measurements of public sector services. This renewal has been proposed e.g. in the recent United Nations Draft Manual on Public Sector Statistics. In the present paper we discuss some theoretical and practical problems connected with this renewal. According to some preliminary calculations concerning the Finnish educational sector, the new methodology might lead to a considerable revision of figures of output and labour productivity in the public sector. The revisions are of such a quantity that they might cause significant changes in the measurement of the volume of the total gross domestic product. This is a fact which may still require reflection before the new methodology is generally introduced, even though the revisions as such may be highly desirable from several aspects.

Notes: Structural relationships estimated from data obtained in a benchmark study of the expenditures and prices of 16 countries are used to develop a table of real gross domestic product and shares of gross domestic product devoted to private and public consumption and investment for each of over 100 countries in the years 1950 and 1960 through 1977. Price level estimates for total product and the three components are also provided.

Notes: Taxes as well as government expenditures tend to transform income distribution; the higher they are in relation to GDP, the higher their potential influence appears. It is easier to trace the incidence of taxes than that of expenditures and studies of effects of expenditures on income distribution are not frequent. Changes of fiscal legislation and deficiencies in reporting systems and statistics frequently found in developing countries complicate the task still further.An investigation of this type in a developing country has to face a poorly developed data base and take advantage of different and dispersed sources of information.This paper presents the methodology used for estimating the influence of government expenditures a n income distribution in the case of Venezuela. Although the incidence of fiscal activities on income distribution in Venezuela might not necessarily be the same as in other countries, Venezuelan sources of information are not very different from those existing in other countries of similar level of economic and statistical development and procedures used could appropriately be adapted to other countries.

Notes: For estimates of the wealth distribution Canada depends on household surveys taken at 6–7 year intervals. The latest data from this source refer to household balance sheets in the spring of 1977. A comparison with 1970 shows that there is little change in the composition of wealth held by households but that inequality of the wealth distribution has been somewhat reduced. Wealth data by age of family head is presented in order to describe more fully the wealth distribution and composition in Canada.Weaknesses in the data are discussed as well as the difficulties of making appropriate adjustments to the data at the micro record level. For policy evaluation and formulation purposes the lack of comprehensive estimates inclusive of pension wealth as well as the small sample size (12,700 usable records) have been perceived as greater obstacles to utilizing the data than the underestimate in aggregate assets and debts which affects more the higher than the middle and lower ranges of the wealth distribution.

Notes: The article refutes the contention that Brazil's development has not benefited the poor and that rapid growth has had a polarizing effect on the distribution of income. It uses the National Household Expenditure Survey of 1974–75 to try to quantify the extent of poverty and concludes that the incòme levels of the poor have been underestimated in the past. The evidence suggests also that occupational and regional variables are powerful determinants of income stratification. Wage rate statistics convey information about long-term trends in income. The article notes considerable increases in rural wages during the 1970s as well as wage improvements in the urban informal sector. Shifts in the structure of employment have probably been the most powerful cause of economic improvement in Brazil. The enormous absorption of rural-urban migrants occurred without a flooding of the lower income urban categories. Social indicators and statistics referring to ownership of household durable consumer goods corroborate income and labor market evidence to the effect that there has been considerable progress for the poor during the 1970s. The article reviews statistical evidence bearing on distribution. There is little doubt that the distribution of income in Brazil is very skewed. It is not possible, however, to come to conclusions about changes that might have occurred in the degree of inequality over time. Finally, the article includes data on the “distribution of education” and the “distribution of life expectancy” and notes improvement over time in both.This article takes advantage of the Brazilian population census of 1980 to bring up to date some of the statistical material that bears on the issues of poverty and income distribution. First, the article describes the overall context of Brazilian development since 1960. The second part analyzes the extent of poverty in the mid-1970s. The third part deals with trends in wages, employment and selected welfare indicators. The last section briefly summarizes the information relating to income distribution: what is the extent of skewedness and how has it evolved over time?

Notes: This paper outlines a conceptual basis for the measurement and analysis of levels of welfare. It reflects the thinking that has been ongoing in the World Bank's Living Standards Measurement Study. Three alternative approaches to the measurement of welfare for the purpose of ranking households are surveyed, and the data requirements and analytical techniques for each highlighted. Various issues are discussed regarding the causal analysis of welfare levels and the changes in them. It is argued that the consideration of several dynamic aspects of welfare is significant for the identification of the poor and the potentially poor and for more accurate measurement of levels of living between socioeconomic groups.

Notes: A number of rather traditional problems relating to the estimation of the national accounts have been raised in the recent literature. This paper examines five of these problems from the point of view of a government statistician working within certain time and resource constraints. Credibility, comprehensibility, theoretical validity, cost and analytical usefulness are the criteria which should aid in deciding how to treat such matters as the extension of the boundaries of economic production, proposed changes in the categorization of both final and intermediate expenses, the treatment of “total” welfare and estimation relating to the so-called underground economy.

Notes: The question addressed in this paper is: Why can't we have a good measuring rod of the economic and social performance of our society? The answers are basically positive but lie mostly in the direction of (1) avoiding simplistic solutions such as turning the national income accounts into a measure of social welfare and (2) providing the elements of an information strategy to obtain such a measure or more accurately such a set of measures.The proposed information strategy highlights five activities: (1) the presentation and analysis of welfare outcomes, an activity which is analogous to but broader than “social indicators”; (2) social accounting which includes economic accounting, demographic accounting, and time-use accounting; (3) model building and operation which, unlike accounting, are concerned with behavioral or causal relationships used to explain and project welfare outcomes; (4) hypothesis testing to develop new insights into economic and social behavior; and finally (5) the building and maintenance of a data base required for carrying on the aforementioned four activities.

Notes: The importance of non-personal shareholders in Malaysian corporations is widely acknowledged. However, up till now, very little has been known about the nature of these shareowners, their manner of equity ownership (especially their size of holdings hence degree of share concentration), their country of incorporation and how they themselves are controlled i.e. whether Malaysian or foreign. This paper attempts to fill this gap with data compiled from official shareholders' lists of the largest ninety-eight Malaysian incorporated companies engaged in manufacturing, for a point in time 1975–75, which is towards the end of the Second Malaysia Plan period. Some of the empirical findings are then compared with those of a few selected countries.

Notes: Book review in this article:JAMES MEADE: Stagflation Vol 1: Wage Fixing. George Allen & Unwin LA.

Notes: At the first residential conference of the Institute for Fiscal Studies, which was held at St. Edmund Hall, Oxford, in September 1983, Mr Stewart Bates, QC, spoke on the implications of the decision of the House of Lords in the case of W. T. Ramsay Ltd v CIR. A report of those proceedings was held over until the decision of the House of Lords in the case of Furniss, v Dawson was known. The following report is based upon Mr Bates' address and the comments of Mr Stephen Oliver, QC, Mr John Avery Jones and Mr Adrian Shipwright who spoke at a lunchtime seminar convened by the IFS on 9 March 1984 to consider the decision in Furniss v Dawson. This report does not reflect the opinions of the IFS, which has no corporate views.

Notes: This article discusses methods of integrating the “informal sector” in the national accounts of developing countries. This sector, defined generally as composed of producers who do not keep formal accounts, is difficult to capture by usual statistical collection techniques, and therefore is often neglected. The paper develops the requirements for a direct inquiry approach to obtaining data for this sector, emphasizing the need for national, exhaustive, and periodic coverage. It then proceees to propose methods of analysis for informal sector enterprises with and without fixed locations, tailored to the specific characteristics of each trade. The final section presents some results of application of the proposed methods in Tunisia and Niger.

Notes: This paper constructs estimates of income and consumption inequality for the world (124 countries), using various measures of inequality. It then goes on to examine the possible effects of various sources of error in the estimates, and attempts to set rough limits to the size of such effects. Among the sources of error examined are purchasing power parities used for currency conversion, systematic errors in estimates of per capita incomes, differences in age structure, government tax and expenditure policy, and lifetime income effects. The paper concludes that, although the level of uncertainty in the estimates is too great to permit conclusions about, for instance, trends over time, it is clear that the level of world inequality is extreme, and that it is primarily due to differences in average incomes across countries rather than to intra-country inequality.

Notes: In this study, new estimates are presented of the size distribution of household wealth in the U.S. in 1969. Compared to previous studies, its major advance is the inclusion of all marketable or discretionary household assets and liabilities and their alignment with national balance sheet totals. Household disposable wealth (HDW) is defined as the sum of all marketable or fungible assets held by households less liabilities. The Gini coefficient for HDW is 0.72, the share held by the richest one percent of households is 31 percent, and the share held by the top five percent is 49 percent. There is, however, a large variation in the concentration of different household assets. The Gini coefficient is 0.30 for household durables and inventories, 0.69 for equity in owner-occupied housing, 0.94 for bonds and securities, and 0.98 for corporate stock. HDW is then divided into two mutually exclusive components. The first, called “life-cycle wealth,” is defined as the sum of equity in owner-occupied housing, durables, household inventory, demand deposits and currency, and the cash value of life insurance and pensions less consumer debt. This form of wealth tends to be accumulated over the life-cycle for either consumption, liquidity, or retirement purposes. The second, called “capital wealth,” is the sum of time and savings deposits, bonds and securities, corporate stock, business and investment real estate equity, and trust fund equity. Life-cycle wealth is substantially less concentrated than capital wealth. The Gini coefficient for it is 0.59, while that for capital wealth is 0.88. Moreover, among the lower wealth groups, over 80 percent of household wealth takes the form of life-cycle wealth, whereas among the top wealth groups the proportion is under 20 percent. The results suggest substantially different savings motivations between the two groups.

Notes: This paper presents a method of estimating U.S. family net wealth across the entire population, utilizing capitalization of several income items available from income tax microdata. Other forms of wealth, and debt, are indirectly estimated using relationships gleaned from estate tax data. Concentration in the distribution of wealth, and assets such as corporate stock, are measured with Gini coefficients and Lorenz curve analysis and compared to similar estimates of concentration in the distribution of income. Comparisons of the results with previous estimates for the United States are made in the latter section of the paper.

Notes: This paper utilizes Household Expenditure Survey and Consumer Price Index data supplemented by private survey data in an attempt to compare the purchasing power parities of the pound sterling and the Australian dollar for a range of population sub-groups in the United Kingdom and Australia. In spite of the close political, economic, social and cultural ties that exist between these two countries, there have been no attempts to measure differences in living costs and real expenditures. Further, Australia has not been a party to the International Comparisons project of the Statistical Office of the United Nations. This study derives purchasing power parities which explicitly account for variations in expenditure patterns of different population sub-groups. For example, a household living in London intending to move to Sydney will find it useful to have a comparison of cost-of-living between households living in these two cities which takes into account explicitly the general expenditure patterns in these two cities. Due to the nature of the data, it was necessary to employ a new index number method derived by one of the authors.

Notes: “As compared with Hicksian, Harrodian measures of the concept of total factor productivity which rigorously take into account the reproducibility of commodity capital inputs and the technological interdependence of modern production economies are advocated. A number of recent measures of total factor productivity are shown to be variants of the Harrodian approach, and certain problems of aggregation associated with the Hicksian measures are shown to be resolved by the Harrodian measures. An examination of the concepts of technical progress and vertically integrated sectors advanced by Professor Luigi L. Pasinetti and their relation to the Harrodian measures of total factor productivity is made.”

Notes: The growth of the public sector in the post-war period and the consequences of this development for economic growth is a strongly disputed subject of economic theory and policy. In this paper the development trends of state activities in the case of the Federal Republic of Germany are presented. The structure of public expenditures as well as the tax structure are taken into consideration and possible impacts on real economic growth are analysed. The negative correlations between some kinds of public expenditures (or taxes) and the growth rate of real GNP should not be taken in proof of the growth-retarding effects which might ensue from increasing state activities. It seems to be more likely that state activities have induced shifts of resources from the formal into the informal economy. Politicians should be aware that some measures of economic policy conventionally proposed will strengthen the movement into the informal economy, thus intensifying the current problems within the public budgets as well as in the social security system.

Notes: This paper uses five valuation methods to derive aggregate and per person estimates of the value of household work in the United States. Two general questions are posed: (1) what is the relationship between the aggregate estimates and the valuation method used, and (2) how do per person estimates vary by sex and earnings?The main observations of the paper are as follows: First, the aggregate value of household work is sizable regardless of the valuation method used. Second, aggregate estimates are extremely sensitive to the method of valuation. For example, the highest estimate is $475 billion greater than the lowest estimate. Third, contrary to earlier findings, opportunity cost valuation methods generally produce significantly higher estimates than market cost valuation methods. Fourth, per person estimates vary significantly by sex and level of earnings across valuation methods. Generally, market cost estimates.

Notes: Income generating functions are statistical tools used to explain income inequality and other economic outcomes and behavior. These functions are often associated with a strict human capital framework, but they need not be. Instead, they may be viewed as a reduced form equation summarizing the relationship between income and various personal and locational characteristics. Following this latter interpretation, we develop the regression and analysis of variance approaches to income generating functions and estimate them empirically using micro-economic data from one low income country, Colombia. Proceeding to increasingly parsimonious specifications of income generating functions, insights are gained into the structure of incomes in Colombia.

Notes: This paper deals with the influence of differing methods of deflation on the international terms of trade of the Federal Republic of Germany. The question to be discussed is what indices seem best suited for the deflation of exports and imports in national accounts. It will be shown that the use of alternative price indices for deflating exports and imports leads to considerable differences of the results at constant prices and so in terms of trade. In addition, terms of trade are presented by groups of countries.

Notes: Income inequality is examined using the Panel Study of Income Dynamics and a consistent decomposition analysis. I only use inequality measures that satisfy the Principle of Transfers, have the property that a ceteris paribus increase in inequality within any subgroup increases overall inequality, and are independent of the scale of income and population. Decompositions are carried out by family size and by age of head for several definitions of income and income recipient. Whilst changing the time unit over which income is measured has a substantial impact on inequality, the effect of removing the between-age-group component of inequality is relatively slight.

Notes: This paper discusses Austria's experiences in connection with the 1980 round of the UN International Comparison Project, in which comparisons were first made within regions and the regions then linked. Austria played a dual role, as (a) the linking country between Group I (the European Community) and Group II (selected middle and eastern European countries), and (b) the base country for Group II. The paper consists of two principal parts. The first part reports, at the 3-digit commodity level, on the success achieved in finding comparable items, both within Group II and between Austria and Group I. The second part discusses a number of methodological problems that were encountered in carrying out the comparison. Chief among these was the treatment of social services that are marketed in some countries and provided free of charge or at nominal prices in others. Other questions touched upon include the treatment of output for own consumption, rents, drugs and medicines, and tourist expenditures.

Notes: Lack of a conceptual basis for measuring human capital investment in health has hampered efforts to expand national accounting systems to include human capital investment. This paper presents a conceptual basis for developing estimates of this health investment, an estimation methodology consistent with the conceptual basis, and preliminary estimates for the United States for 1952-78.While much work remains to be done before comprehensive estimates of investment in health are achieved, it is clear that previous estimates based on answers to the question, “What improves health?” have included some inappropriate expenditures while excluding others that should be included.The conceptual basis presented here leads to a methodology for separating health care costs (not the costs of illness) into maintenance and gross investment. Gross investment can be further separated into net investment and the sum of damages and depreciation but empirical implementation of this step is not attempted here.

Notes: This paper describes the construction of an accounting matrix for the world economy in 1977, cast along similar lines to SNA National Accounts, but one in which trade flows replace inter-industry flows as intermediate demand. The matrix distinguishes ten regions. Institutional accounts are presented for three of these, the European Community, North America and Japan. This matrix is used to provide the basis of a linear model in which average propensities to import and consume are replaced by estimated marginal propensities. Use is made of standard estimates of the income effects of terms of trade changes in order to distinguish substitution from income effects in the model, and a means is suggested for separating the full as well as the impact effects of a terms of trade change into income and substitution effects. The estimated import equations are used to derive estimates of regional growth rates compatible with external balance in each region. Multiplier matrices are calculated from the model showing regional interdependence of the world economy reflecting the pattern of trade which is identified in the marginal propensities to import.The effects of various aid policies are calculated using the model. It is shown that the cost of aid to any region is radically altered by taking into account the feedback effects of changes in demand. A policy of tied aid pursued by EEC, North America and Japan can actually lead to an improvement in Japan's balance of payments position. Finally the effects of movements in relative prices are illustrated by means of two examples.

Notes: In this paper a definition of poverty in terms of welfare is given. A method is developed to derive poverty lines from an individual welfare function of income. The model is extended to analyse the effect of several socio-economic characteristics on the level of the poverty line. An empirical application of the method is given based on data from a survey in eight European countries in 1979. Differences in the poverty lines both between countries and between socio-economic groups within each country are considered. Finally the number of people below these poverty lines is estimated for all countries in the group.

Notes: The Kingdom of Nepal is one of the least developed and least known countries. In order to understand the sometimes non-conventional estimating procedure used, a background section is included, describing the physical, socio-economic and institutional framework. In the second part of the paper some illustrative examples of the approaches used are given, the full description being published in four volumes, National Accounts of Nepal, National Planning Commission, Kathmandu. The last part of the paper considers the usefulness of national accounts based upon the market economy, and in general, the problem of applicability of international concepts to a developing country. What is the significance of international concepts to a developing country? What is the significance of national value aggregates in a country in which the unit of national currency does not serve as a nation-wide standard of value? Can a common denominator be found if the scale of values and the whole outlook of different groups are so different? What do people value, and does the rural population in localized economies put a monetary price on the value? Has the concept of labour force or employment, as used in industrial societies, any meaning in a society where all those capable, including small children, of contributing to daily survival do so? The conceptual problems have not yet been solved. National accounts are a useful first step in providing planners with symbols for telling a complex story in simple terms and as a kind of statistical reconnaissance, but as development planning is moving more and more in the direction of planning from below and into regional and rural development projects, household surveys are becoming essential planning and evaluation tools. Based upon twenty-five years of field experience, the author reflects upon problems and possible solutions, discussing managerial, training, substantive and statistical aspects.

Notes: This paper describes the composition of the public sector in the United Kingdom and traces the development and contribution to the economy of the three main sub-sectors-central government, local government and public corporations—over the past thirty years. Relevant data for output, employment, fixed capital formation and national wealth set the public sector into perspective with the economy as a whole and illustrate how its share of human and other resources has changed over the years. While all four measures show the public sector share of the total to have been around 30 percent in 1980, historically the changes have moved very differently. The slow, but fairly steady, increase in the share of employment and output contrasts with very marked changes in the other two measures. Although public sector fixed investment nearly doubled in real terms between 1950 and 1980 its share of total investment declined from 48 to 31 percent, a much smaller share being taken by dwellings, electricity supply and the railways. In terms of the share of national wealth the public sector moved from a state of indebtedness to the rest of the economy in the fifties and sixties to a position of holding nearly one third of the value of tangible and financial assets in the late seventies.A small part of the paper considers the international dimension, but because few other countries use the concept of a public sector, this section examines only the relationship between total tax revenue and GDP in a number of countries and employment in general government.The problems of determining the boundary of the public and private sectors occurs most frequently at the interface between public corporations and private enterprises; the rules for deciding classification are set out in so far as they can be specified.The last sections of the paper put the statistics into their policy context and consider the value of public sector aggregates. The conclusion is that a general case cannot be made to justify assembling public sector aggregates for all countries; the need will be determined by the economic policies being pursued in a particular country. Although the United Kingdom gives considerable prominence to a public sector financial aggregate, the Public Sector Borrowing Requirement, the functions of the public corporations and the rest of the public sector are so disparate that consolidated accounts for the public sector are no longer prepared.

Notes: Has the underground economy caused the increase in United States GNP in recent years to be understated relative to earlier periods? The ratio of employment to population provides powerful evidence that it has not. This ratio’ was as high in the middle 1970s as in previous periods and in 1978–80 rose to its highest level of the postwar era, suggesting that employment growth has not been understated. Employment series based on both establishment reports and household surveys yield exceptionally high ratios in recent years. This article provides a step-by-step explanation of why employment data are pertinent to the question raised about GNP.This explanation may be summarized as follows. GNP measured as the sum of final products is not understated unless GNP measured as the sum of national income and other charges against GNP is also understated. Appreciable understatement of the growth of charges against GNP as a result of growth of the underground economy is highly unlikely in the absence of understatement of the growth of wages and salaries, because of the way the estimates are made. Understatement of the growth of wages and salaries without understatement of the growth of employment based on establishment reports is highly unlikely because of the way data are collected.The article explains briefly the relationship between income tax evasion and errors in measuring the various components of charges against GNP. It also explains how illegal activities are meant to be handled in GNP measurement.

Notes: The United Nations' newly completed study of purchasing power parities covering 34 countries varied in region, income level, and form of economic organization shows the systematic differences between the usual view of the structure of the world economy arising out of international comparisons based upon foreign exchange rate conversions and the structure one sees when actual prices are available.The real per capita GDP of developing countries is understated relative to developed countries when exchange rates are used in converting countries' national income accounts to a common currency, with the degree of understatement for any two countries being inversely related to the per capita income difference between them. The reason for this is that relative prices in the non-traded goods sector are lower relative to traded goods prices in low income countries. The systematic pattern observed in the 1975 data of the 34 countries has been extrapolated over time and space to get estimates of GDP for other years and countries.In the absence of detailed price data, the real shares of final expenditures devoted to particular components of the total can only be estimated as the proportion of own currency total expenditure devoted to the components. The observed differences in the pattern of prices of poor countries relative to rich for different components makes this clearly wrong for international comparisons, and in systematic ways. For example, (i) the relative price of services compared with commodities in poor countries is lower than in rich; so the apparent tendency of the share of services to rise as a country's income rises disappears when real quantities are considered; similarly, (ii) the relative price of capital goods is greater in poor countries compared with rich ones, so the difference in investment ratios out of GDP between rich and poor countries is understated.

Notes: The change in goods and services available in a national economy brought about by the shifting of external price relationships is referred to as the terms of trade effects. This paper reviews the various methods which have been devised since the war to define and quantify such effects on the Gross National Product. The statistical annex shows that, as far as OECD countries are concerned, the differences between the various measures are not significant. Whereas the effects from terms of trade represented, on average, less than one half of one percent of the GNP of OECD countries during the 1960's the percentage has increased substantially since 1973, due most importantly to the increase in the oil price; by 1977 (on a 1970 price basis), it had reached 5 percent of GNP in Japan and up to 6 percent in Italy. On the other hand, the extreme case of Saudi Arabia where various formulas generate effects amounting to between one half and the whole of GNP, indicates that the measurement of terms of trade effects by various methods may give different results.

Notes: The concern with income distribution has always mainly existed because of a concern with individuals' economic welfare. In recent years, the question has arisen whether the distribution of annual income—the distribution most often studied—is the best proxy for the distribution of economic welfare. Other measures, such as lifetime income, have been proposed instead.The paper starts with a discussion of how to define and measure the distribution of lifetime income. By using a simulation model, which partly consists of estimated functions and partly of tax functions taken directly from tax laws, distributions of lifetime income, variously defined, are then constructed. These distributions are compared with each other, and with distributions of annual income. The simulations indicate that the distribution of lifetime income is considerably less unequal than the distribution of annual income. Whether inheritances are included or not seems to be of no importance for the inequality of lifetime income. If, on the other hand, we include the value of leisure time in lifetime income, inequality increases by about 10–15 percent. Distributions of income after tax have Gini coefficients which are approximately 25 percent less than the Ginis for the before-tax distributions. We thus find that the picture of inequality we get is very much dependent on which income concept we use.

Notes: The following note is a very concise summary of a paper2 that was presented at the 17th General Conference of the International Association for Research in Income and Wealth at Montvillargenne, August, 1981. As such it may be considered a new paper, although it contains practically all the conceptual issues of the original paper. As in the original paper its intention is only to place these issues before a wider audience, while specific solutions will have to wait for a more detailed treatment. All issues concern certain conceptual dilemmas, arising in particular in the use of national accounts when available concepts do not coincide with those for which data are sought. A decision to change the existing basic concepts would however require not only the support of the scholars in this field but also the co-operation of the users of national accounts. Due to extreme summarizing, certain statements are now fairly compact—compared with the original paper. It is nevertheless hoped that the basic problems still shine through. The following note gives instances in which the traditional national accounts, as established according to existing rules and statistics, may not suffice for actual data requirements, yielding differences in growth rates of several percentage points.

Notes: Empirical research using the opportunity cost approach to estimating the value of non-market work of women tends to focus on the value of actual or potential output produced at home and expected or actual earnings, and assume that a rational decision involves choosing the higher one. Evidence derived from data on young married women suggests that full-time homemakers frequently are unable to provide estimates either of their potential earnings or of the lowest wage they would accept to enter the labor market, and that such estimates as they do provide are not soundly based. We also found that using wages of women in the labor market to estimate the value of the home time of full-time homemakers involves upward bias. We conclude that there are good reasons for caution in using the opportunity cost approach.

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.