© walter radermacher, president federal statistical office, germany statistisches bundesamt capital...

© Walter Radermacher, President Federal Statistical Office, Germany

Statistisches Bundesamt

Capital Boundaries

CES seminarMEASURING CAPITAL – BEYOND THE TRADITIONAL MEASURESSession II: Capital boundaries in the revision of the Systemof National Accounts 1993

Walter RadermacherGeneva 12 June 2007

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Papers

Capital Measurement in the Netherlands •M. de Haan, D. van den Bergen and M. van Rooijen-Horsten,

CBS-NL

The Capital Boundary in the 1993 SNA, Rev. 1 – Challenges for National Statistical Offices •P. Sollberger, Ph. Stauffer and R. Meier, SFO-CH

Capitalisation of research and development expenditure: points of view and experiences in the European Union •G. Gueye and F. Malherbe, Eurostat

An Integrated System of Capital Flow and Stock Statistics •P. Harper, ABS-AUS

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Focus of the Papers

Capitalisation of R&D

Wealth & Productivity:

Integrated Capital Measurement

NL x x

CH x

EU x

AUS x

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The dictum:“The only statistics you can trust are those you falsified yourself“

Churchill’s authorship has not been proved to this day!

A slander campaign in the propaganda war?

Possible author:Churchill’s arch-enemyJoseph Goebbels

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This is what Winston Churchill really said:

“You must look at the facts because they look at you!”

Speech in the British House of Commons, 7 May 1925

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This is ascribed to Kennedy:

Statistics are like a bikini, what they reveal is suggestive, but what they conceal is vital.

Aaron Levenstein (1901-1986), economics professor in New York, is the real author

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Goodhart‘s Law

Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes (Charles Goodhart)

or more generally:

When a measure becomes a target, it ceases to be a good measure (Keith Hoskin)

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“Good policy needs good statistics” (Tony Blair)

Quality of Statistics

Theoretical Consistency

Empirical Measurability

Political Relevance

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Capital

Economic Assets

Entities functioning as a store of value over which ownership rights are enforced by institutional

units, individually or collectively, and from which economic benefits may be derived by their

owners by holding them or using them over a period of time

public goods and infrastructure resulting from an accumulation of knowledge

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The Large Hadron Collider (LHC) - a particle accelerator at CERN near Geneva

Final works in these months to switch on in 2007 – 27 km circumference – not far away from here (literally under our feet)

Example for basic research that would be classified as freely available

Source: CERN

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LandWater

AirNature

Humanbeing

SkillsKnowledge

Abilities Creativity

BiodiversityMineral

resources

SAY

Interaction

Land Capital Labour

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Mineralexploration

Buildings and

structures

Machineryand

equipment

Cultivated assets

Entertainment, literary or

artistic originals

Computersoftware

Intangible fixed assetsTangible fixed assets

InventoriesFixed

assets

Valuables

Precious metalsAntiques

Intangiblenonproduced assets

Patented entitiesLeases

Produced assetsNonproduced assets

Tangiblenonproduced assets

LandSubsoil assets

Research and

Development

SNA

93

R E V 1

Land Capital LabourNonfinancial Assets

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What is Software?

What is R&D?

Identification problem

Human capital

Non-scientific innovations

Marketing assets (brands…)

Organisation and management

…

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Identification, Valuation, Depreciation: Difficulties

Identification and Classification of the product Valuation of the gross fixed capital formation (GFCF) of

different types of R&D - imputations like capital services of the stock of current knowledge

Estimation of mortality tables and expected service lives on an objective basis

Availability of long series of GFCF as precondition of the perpetual inventory method

Availability of deflators – price indices for never standardised R&D services

Valuation of a specific contribution of R&D to production, (based on the accumulation of knowledge)

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Future Work

Investigate via satellite accounts

Bridging R&D statistics to national accounts Imputation of yearly (and quarterly) SNA data without yearly

R&D surveys Deflators and long time series Service lives and mortality/retirement function …

Satellite accounts should be applied to examine the effects of different solutions of the identification problem (e.g. public goods)

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Measuring wealth and productivity The concept of capital services

Accumulation (investment)


Gross stockTradit.: Capacity

Potential

An integrated system of capital flow and stock statistics

Retirements

Net stock

WealthDepreciation


Productive stock

+ Return to Capital

Capital services

SNA

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Questions to the authorsNetherlands:

Delineation of knowledge capital creation by R&D and the creation of human capital and other forms of “intangibles” – conceptual level and implementation in practice?

Netherlands and Australia:

How do you see the interdependence of capital services for non-market producers and the valuation of R&D according to non-market production?Proposal for the further treatment of technical issues – a new forum, new project, new revision or what else?

Switzerland:

Reliability of the national accounts data including R&D from your first estimates for political purposes?Impact on level and growth rate of GDP?

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Questions to the authors (2)

Eurostat:

Ideas for the work of the Eurostat Task Force on the development of satellite accounts for R&D in the light of the OECD Task Force working in parallel?

Is the quality of primary statistics on R&D appropriate? Do national R&D-figures adequately reflect the shift in economy towards globalised ways of production and towards a higher importance of service industries?

Australia:

To what extent is the concept of capital services necessary for the analysis of productivity? How far does it help to show the productivity effects of “intangibles” better than now?

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Questions for the general discussionR&D – difficult to measure in any caseRough estimate or no estimate at all? Very rough estimates may mislead users

vs.Rejection of estimation may damage the macroeconomic quality of the accounts

Should national accounts data be based on statistically measurable variables, focused on observable market transactions rather than imputations?

Extension of the capital boundary Switching over to net domestic product for international comparisons?

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Quality of Statistics

„You have to have facts. Theories are not good unless you have facts to back them.“ (Wassilij Leontief)

Consistency

MeasurabilityRelevance

THANK YOU VERY MUCH FOR YOUR ATTENTION !

© walter radermacher, president federal statistical office, germany statistisches bundesamt capital...

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