Looking Beyond the Core Accounts:Research at the U.S. Bureau of

Economic Analysis

Barbara M. Fraumeni

Chief EconomistBureau of Economic Analysis

U.S. Department of Commerce

 Fourth Ottawa Productivity Workshop

Statistics Canada

Ottawa, Canada

February 18, 2005

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Beyond the Core

• Satellite Accounts

• Supplemental Official Estimates

• Research Estimates

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Satellite Accounts (SA’s)

• Experimental

• Providing more detail

• Hopefully consistent and integrable with the core accounts

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What SA’s Does BEA Currently Produce?(In a Research Paper or as an Official Product)

• Travel & tourism - quarterly

(news release, Dec. 20, 2004 and Kuhbach, Planting, & Strassner, Survey of Current Business (SCB), Sept. 2004)

• R&D (Fraumeni & Okubo 2004 & forthcoming and BEA/National Science Foundation (NSF) R&D Satellite Account ongoing project)

• Ownership-based current account (SCB, Jan. 2003)

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What SA’s Has BEA Done in the Past?(In a Research Paper or as an Official Product)

• Transportation (Fang, Han, Okubo, & Lawson, SCB, May 2000)

• Environmental (SCB, April 1994 and National Research Council (NRC) panel book Nature’s Numbers, 1999)

• Household production

(Landefeld & McCulla 1997)• R&D

(Carson, Grimm, and Moylan, SCB, Nov. 1994)• Ocean 1972

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What SA’s Could BEA Do?(In a Paper or as an Official Product)

• Opportunity for a new project– American Time Use Survey, U.S. Bureau of Labor

Statistics, micro data available Jan. 2005– NRC panel book Beyond the Market: Designing

Nonmarket Accounts for the United States, Jan. 2005

• Nonmarket– Household Production (3rd Party Rule) – Education– Health– Government– Nonprofits

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Supplemental Official Estimates

• Nonprofit Institutions Serving Households

– National Income and Product Accounts (NIPA)Table 7.20 (SCB, Nov. 1994 )

– Mead, McCully, & Reinsdorf, SCBSCB, April 2003, April 2003

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Research Estimates

• Real Output of Government:

Elementary & Secondary Schools (Fraumeni, Reinsdorf, Robinson, & Williams, 2003)

• Personal Saving (Reinsdorf, SCB, Sept. 2004)• Volunteer (Pho, 2004)• Consumer durables (Katz, 1982)• Government

(Martin, Landefeld, & Peskin, 1982)

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Real Output of Government: Elementary & Secondary Schools

• Experimental estimates - Decision whether or not to incorporate into NIPA’s several years in the future– Quality-adjusted volume indicators– Outcome-based approaches– Private school information

• Quality-adjusters in current volume indicator research– Class size– Teacher experience

• Atkinson Review - UK

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BEA/NSF R&D Satellite AccountProject

• Timeline– Started June 2004– Preliminary official R&DSA by end of Sept.

2006– Final official R&DSA by end of Sept. 2007

• Hopefully to be produced annually in future years

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R&D Satellite Account

• Expands the scope of the national economic accounts and rearranges the accounts

• Capitalizes R&D by changing the treatment of R&D from current spending to investment because it contributes to future output

• Updates R&D capital stock estimates presented in the Carson, Grimm, and Moylan paper (1994)

• Presents R&D estimates that are consistent with the national accounts

• Research paper uses rates of return estimates from other studies to estimate benefits from R&D

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R&D Satellite Account Research Results for 1961-2002

• The estimated contribution of returns to R&D to GDP growth is 11%.

• The adjusted national savings rate is 2 percentage points higher than the current measure (current measure rate is 19%).

• Capitalizing R&D – Increases current dollar GDP by 2 percentage

points: • R&D funded and performed by business• Private returns to R&D performed by nonprofits & general

government.

– Increases the real GDP rate of growth by only .1 percentage point.

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R&D Satellite Account

• Expenditures for R&D performed and funded by business are added to investment (previously these were intermediate inputs).

• R&D expenditures by nonprofits institutions and general government are transferred from consumption to investment.

• Services of nonprofit institutions and general government R&D capital and other types of general government capital are increased.

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R&D Satellite Account Ongoing and Future Research

• Frascati Manual to System of National Accounts link • Incorporation of 1994 methodology• Adding an international component• Estimating rates of return• Improving consistency of data series through time• Eliminating double-counting• Researching lags, depreciation rates, & deflator• Taxes• Other