National accounts have been recast since the 1980s to present the financial and real estate sectors as “productive”.
UNSNA is UN SNA, the United Nations System of National Accounts. Like NIPA. Except "NIPA" is pleasing to the ear, and "UNSNA" sounds like something you'd wipe off with a kleenex.In a recent post JW Mason happened to mention problems of measurement in the financial sector. So of course I clicked the link.
Brings up a download page at IDEAS for Financial Output as Economic Input: Resolving the Inconsistent Treatment of Financial Services in the National Accounts by Jacob Assa. 28-page PDF. I like.
Excerpts from page 4:
Financial intermediation has long been problematic to measure. Christophers (2011) describes the history of the so-called ‘banking problem’ - the fact that, without imputations, the value-added of the financial sector (that is, output minus intermediate consumption) would be negligible or even negative (since if its costs are deducted from fee-based revenues alone, the former would often exceed the latter). At a first stage in the history of this question (SNA 53 and before), all financial intermediation activities were excluded from calculations of national output based on the value-added approach, since they were considered to be mere transfers of funds (similar to social security payments) and hence unproductive.
An intermediate approach followed with the SNA 68, where the output of the financial sector was considered to be an input to a notional (i.e. imaginary) industry which has no output. In spite of the bizarre nature of this approach, “ascribing a negative income to an imaginary industry sector...has probably been the most used for financial intermediation services in the entire history of Western national accounting” (Christophers 130).
A useful example is the Gross Value Added (GVA) of the UK financial sector in 2003, which would be £39.8 billion under SNA 1968 (4.1% of total GVA). The imputed banking service charge (IBSC), however, was a negative £45.9 billion. Under SNA 1953 the financial sector would have thus shown a negative £6.1 billion value added. “Adopting SNA 1968 had, in effect, made UK finance productive” (Christophers 130, emphasis in original).[He shows a table, which I have omitted.]
Finally, with the 1993 SNA, financial intermediation became an explicitly productive activity, for which value added is imputed based on the net interest received by financial institutions (the FISIM approach).
The latest revision, SNA 2008, extends the boundaries of SNA 1993 to include ever more exotic financial ‘products’.
The "Christophers" reference is
Christophers, B. (2011). Making finance productive, Economy and Society, Volume 40 Number 1, February: 112-140.
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