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United Nations Economic Commission for AfricaUnited Nations Economic Commission for Africa

Expert Group Meeting to review the “Handbook on SUT: Compilation, Application and Good Practices”

Economic Statistics and National Accounts SectionAfrican Centre for Statistics (ACS)

United Nations Economic Commission for Africa (UNECA)

Addis Ababa, Ethiopia24-28 October 2011

Chapter 7: Balancing supply and uses

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Outline of the presentation

• Example 1 (Manual balancing)

• Example 2 (Manual balancing)

• Driving factors (of the manual balancing)

• Automatic balancing: RAS Method

• Comments

• Questions for discussions

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Example 1: garments

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Example 1: Firm figures

• The compiler decides on firm figures:– Imports and exports

– Taxes and subsidies

– Government and NPISH consumption expenditure

– Gross fixed capital formation

– Changes in inventories

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Example 1: Data sources

• The compiler analyses data sources to identify weaknesses :– For households expenditures, the coverage of the survey can be

criticized: “Decision to reduce it of 4%”

– For domestic production, the survey was made three years ago and the coverage can be criticized (because of the type of enterprises producing this type of products): “ Domestic production becomes a balancing item”

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Example 1: Balanced table

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Example 2: Advertising services

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Example 2: Analysis

• VAT are paid by HH: Estimation of HH expenditures is possible– HH expenditure = (Tax amount / % VAT) + Tax

amount

• Government does not usually purchase this type of products: – Enterprises must have purchased these products as

intermediate consumption

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Example 2: Balanced table

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Driving factors

• Identification of consistent figures to define pivots

• Identification of the weaknesses of the data sources: adjustments needed

• Experts opinion and good knowledge of the economy are important

• Type of products under analysis will help also

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Chapter 7: Automatic balancing

• Example of balancing through the usage of the RAS method

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RAS Method: assumptions

• There exist an input-output table estimated from full-data for a past year.

• Row and column sums for the input-output table of the present year are available.– The content of the matrix is empty.

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RAS method: objectives

• Objective: finding a set of multipliers to adjust the columns and the rows so that the sum of the cells of the adjusted matrix will be equal to the required rows and columns.

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RAS Method: mathematical background

• A(1) =

• A (1) =

Coefficient matrix of the benchmark

year

Matrix of multipliers: substitution

effects

Matrix of multipliers: fabrication

effects

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RAS method: example (1/5)

• Benchmark year matrix

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RAS method: example (2/5)

• Year 1Coefficient matrix of the

benchmark year

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RAS method: example (3/5)

• First iteration

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RAS method: example (4/5)

• Adjustment resulting from the 1st iteration

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RAS method: example (5/5)

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Comments

• Presentation of the RAS method is not easily accessible• For the manual balancing, it would be good to list the

key factors which do give orientations to the SUT compilers

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Questions for discussions

• What are the missing elements in the list of key factors used for manual balancing?

• What are the advantages, the disadvantages resulting from the usage of the RAS method?

• What is the bias resulting from the usage of the RAS method?

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United Nations Economic Commission for AfricaUnited Nations Economic Commission for Africa

Thank you

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