accounting matrix

It is a framework in which different types of statistical data are consistently organised bringing together economic and environmental information that come from different parts of the statistical system. The core of the framework is a set of tables containing economic data and forming a national accounting matrix as compiled in national accounts. The environmental accounts consist of tables containing data that are frequently physical units .

  • The division of government expenditures into target destination categories , part of the broader socio-political module of IFs is described later.
  • However, optimization problems also arise in procedures for preparing or massaging data to use in CGE models.
  • Although the current and capital accounts must balance, the balance often relies in the very short term on residual changes in stocks, namely reserve holdings and reactive government borrowing.
  • The split of household consumption between unskilled and skilled households is maintained as a constant in this process.
  • By convention, inflows are entries in rows, and outflows are entries in columns.

The function is used to compute an estimate of the percentage of additional income that each of the three groups consumes . There is another step before the normalization process begins, namely adjusting GDS for education, core infrastructure, and other infrastructure by an exogenous multiplier , the default value for which is 1.0.

Accounting Matrix Limited

This workbook uses data regarding federal, state, and local government sectors to compute the government expenditure and revenue flows which appear in the SAM. The workbook consists of a top-level sheet which displays the government sector portions of the SAM, and supporting sheets for federal , state and local governments . The SAM that will be described is the most complete description of transactions in 2003 in the State of California. It has been rectified to reflect the energy flows reported by EIA, by sector, and so provides the perfect base on which to construct models of the California economy. It is particularly suited to model the effects of pollution control and energy policy on California.

For government those terms involves credits and flows to and from the IMF and the World Bank For firms those terms involve foreign direct investment and portfolio flows as well as subscriptions to income summary the World Bank institutions and worker remittances . Our own cross-sectional analysis confirms a tendency for the consumption share of income to decline somewhat with increases in GDP per capita.

By convention, inflows are entries in rows, and outflows are entries in columns. Its adaptation to the SNA also allows one to state that the former describe resources, incomes, receipts or changes in liabilities, and net worth; whereas the latter describe uses, expenditures, or changes in assets. Monetary or nominal flows and the so-called income are associated with at least one of the abovementioned directions of market QuickBooks transactions. Therefore, those who have income can intervene in the market, and the level to which this is possible is associated with well-being, power, and prestige, which justifies the importance of income and the attraction for it. Associated to each market transaction are two or more flows with opposite directions, which are often denominated ‘inflows’ and ‘outflows’, which balance when the transaction is concluded.

It is that addition of delta stocks that brings the entire representation of the goods and services market in proper relationship with the financial representations of flows among agent classes. By definition it will equal investment , defined as capital formation plus inventory stock changes. Treatment of physical balances over time, not elaborated in this topic, assure that equality. Looking at the What is bookkeeping two variables side by side is a good test of the functioning of the SAM. The challenge for IFs forecasting of distribution becomes the forecasting of the Lorenz curve itself; calculation of Gini is simple once we have that curve at any time point for any population. Forecasting the Lorenz curve necessarily involves the forecasting of the differential performance of segments within the population.

Two smoothed terms (a very long-term interest rate, LongTermIntr, and a smoothed rate, SmoothedIntr) moderate the impacts of real interest rates and allow somewhat more variation in them. In other sections of this documentation we have described the computation of relative-price adjusted variables such as exports , imports , and GDP, potential and actual . In addition we have relative price adjusted versions of foreign savings and total savings . Although it is far from ideal to have only two categories of population , it is possible to represent a Lorenz Curve showing what portion of income the unskilled portion of the population obtains, specifying one point on the Lorenz curve that will fall below the diagonal . Savings terms are calculated as residuals for all agent classes, and are determined after all income and expenditure/transfer calculations.

Structure Of The Iraq Economy And Multiplier Analysis

Implicitly, in the SAM, the current account of the monetary sector is merged with service activities and commodities while its capital account is merged with the government capital account. Given this, in the merged government capital account, the cells for net government borrowing from other institutions are made up of multiple items. The cell for net borrowing by the government from the household is the sum of net direct borrowing by government from household and net increases in the claims of the household sector on the monetary sector . In MAMS , the two items in this cell are treated separately, making it possible to consider the fact “” gives rise to interest payments and a debt whereas “” is a grant to the government, providing it with “seignorage” . The cell for net borrowing by government from the rest of the world is the difference between net direct borrowing by the government from the rest of the world and the increase in foreign exchange reserves.

accounting matrix

As shown in Table 2, households’ income source is mainly compensation of factors of production (73.8%), in which labour represents the main part (47.7%). The other source of households’ income is current transfers from domestic institutions (23.3%) and from the rest of the world (2.9%). Interest in the measurement of these flows has been increasing, especially among researchers of the activity of society and by those involved in the policy normal balance decision process. Several types of statistics have focused on and registered different types of transactions; however, the national accounts have progressively made an effort to fully cover them. To this end, and also to allow comparability among countries, since 1953 an international system has been implemented to define rules and nomenclatures that can be adopted by countries or groups of countries and, in principle, better data.

There are a number of forward linkages from GDS that are important elsewhere in the model. The most important of these are linkages to multifactor productivity from human capital. Here we note only two such forward linkages, both of which are set up in the same section of code as the computation of GDS. The mechanism for protecting some or all of the bottom-up calculations involves “set asides”. The extent of set asides for education, core infrastructure and other infrastructure is determined by parameters that take on values between 0 and 1; values of 0 protect none of the bottom-up value and values of 1 protect it all. The next step in the process is to normalize the sum of all GDS terms across categories to GOVCON. This process has the potential, however, of setting GDS values for health, education, and infrastructure that are very different from the bottom-up costs.

It is fitting that the 1993 revision of the System of National Accounts by the United Nations began explicitly to move the SNA into the world of SAMs. Each global modeling team developed its own global data based on an ad hoc collection of input-output tables and other satellite accounts such as national income and product accounts, tariff and world trade databases, amongst other things. These disparate global databases had different base years, different country and sector coverage and different institutional details.

Nyc Accountant

Energy volumes associated with fossil fuels combustion are now part of the standard release GTAP database, permitting calculation of the resulting greenhouse gas emissions. GEMPACK allows for models to be distributed as stand-alone executable images (e.g. GTAP.EXE) which may be run without any license. ledger account GAMS comes with powerful algorithms for explicitly modeling complementarities. GEMPACK also has explicit capabilities for handling these, which work well for most problems arising naturally in policy models, but the algorithms used by GEMPACK make this a less natural vehicle for such problems.

accounting matrix

Note that these capital account related flows have associated stocks of importance in understanding their own long-term behavior and that of the larger financial system including the current account. The SAM structure described here has been embedded within a long-term global model. The economic module of IFs has many of the characteristics of a typical CGE, but the representation of stocks and related agent-class driven behavior in a consciously long-term structure introduces a quite different approach to dynamics. Instead of elasticities or multipliers on various terms in the SAM, IFs seeks to build agent-class behavior that often is algorithmic rather than automatic.


Modigliani sketched the pattern of life-cycle savings and consumption and many others have followed (e.g. Lee and Miller 1992, Zhang and Zhang 2005, Zhang and Zhang 2009, Lee and Mason 2011). Consumption as a portion of income tends to be lowest during the peak working years and higher for the young and the old and/or retired. Once the two terms are available, the PID adjuster routine , described elsewhere is called by IFs to convert the difference terms, modified by exogenous parameters, into a multiplier on the cumulatively-computed revenue multiplier term used in equations above. (This function historically used the parameters elgrevdebt1 and elgrevdebt2 , but those are currently hard-coded in the equation below as 0.15 and 0.30).

Domestic Distribution Of Household Income

The agent class that is least developed within IFs as a class with behavioral relationships, and that instead relies on aggregated relationships is the firm . Even if the basic behavior of the firm is simplified, its accounts must still balance. Firm savings is equal to firm income minus net transfers to households and government.

We use that function to calculate the average household consumption propensity . The second term in the computation of consumption adjusts the preliminary computation by household with the change of this propensity over time. The third term adjusts this consumption term based on change over time in the ratio of government to household pension transfers to the total permanent income, assuming that pensions are mostly consumed. IFs computes in the first year a firm investment ratio as a general estimate of the portion of firm income after taxes that is used for gross capital formation. The residual after capital formation is the portion that is passed back to households as dividends and interest.

As for the Ad channel, we observe that sector 2 has zero entropy, as it pays only to one sector, and for the same reason has maximum mutual information, while sector 1 has maximum entropy, and minimum mutual information, as it makes equal payments to all three sectors . Computable general equilibrium modeling requires a consistent and coherent benchmark data set, most of which is generally organized in the form of a Social income summary . These data generally come from quite diverse sources and correspond to different periods of time.

At the level of production accounts, the factors of production account show the aggregate or primary income generated in 2015, which is also designated as compensation of the factors of production, namely of labour and capital, which was in the sum of 162,306 million Euros. Reading in rows, this amount was respectively composed of 155,958 and 6347 million Euros, received from domestic activities2 and from the rest of the world3. Reading in columns, this amount was composed of 149,923 and 12,382 million Euros, paid to domestic institutions4 and to the rest of the world, respectively. The abovementioned organisation of the activity of society also involves transfers, which are also flows, but with different characteristics from those associated with market transactions. Taxes, remittances, property income, social security system, and so on, are all the examples of these flows, which are nonreturn flows in a strict sense, but which balance at a macroeconomic level.

In turn, the Government uses almost equal shares of its aggregate income in final consumption (48.7%) and current transfers to households (47.1%), in which social benefits are included. Both for households and for Government, all the other items identified as destinations of income have accounting matrix a residual or non-existent meaning. Thus, households are the only institutional sector that receives compensation of labour, which represents 29% of the total aggregate income. In the latter case, current transfers from households represent 15.8%, and from the Government, 12.4%.

Taxes on production and imports, net of subsidies also have a significant share of 37.3%, which helps to compensate the negative share of compensation of factors of production due to the high amount of interests to pay. IFs computes the current account balance from the elements indicated above, except that pension liabilities abroad are not represented.

Having said this, looking to the future, it would be advisable for the Government of Iraq to update both the input–output matrix of the country and the present SAM in order to improve the empirical base for the analysis of the expected effects of economic policies and exogenous shocks to the economy. With regard to the use or destination of aggregate income, households use much more than a half of the same in final consumption and just under a quarter in current transfers to the Government, in which the taxes on income are included. Final consumption and current transfers to the households, in which social benefits are included, are the destination of almost all the aggregate Government income, each of which by almost a half. First, the origin of these changes is not indifferent, either for the target they are intended to achieve, or for the rest of the economy. Second, changes in income directed to specify groups should not neglect the corresponding multiplier effects for which the structure of the use of that income should be considered. From Table 3, it can be seen that final consumption is the main (69.1%) destination of households’ income, followed by current transfers to the Government (21.7%), in which taxes on income are included.