National Accounting in Different Economic Sectors

2. National Expenditure (NE)= Consumption (C) + Investment (I)

If we differ between magnitudes in gross terms and net terms, we must consider that: Gross Magnitude = Net Magnitude + Depreciation (D). That's the reason why we consider Gross Investment (GI) = Net Investment (NI) + Depreciation (D)

3. National Income (Y) = Disposable Income ( Y^d ) + Saving from firms (Sf) = Consumption (C) + Saving from domestic economies (Sed) + Saving from firms (Sf)

With these previous relationships we can construct the main relationship that every close economy without public sector must meet to track successfully its National Accounting:

1) Y = C + Sed + Sf

2) NNE = NNP = Y = C + NI

C + Sed + Sf = C + NI → Sed + Sf = NI → Saving from Private Sector (Sed + Sf) = NI → Net Saving (NS) = NI

1. National Product (NP) = ∑ Added Value (AV), where the AV = (Sales – Purchases) + (Final Stock – Initial Stock) = (Sales – Purchases) + Stock Variation (SV).

2. National Expenditure (NE) = Consumption (C) + Investment (I) + Public Expenditure (PE)

We must include, as we have developed a framework for Public Sector, the difference between a magnitude computed at factor cost (fc) or a market price (mp):

Magnitude at factor cost = Magnitude at market price – Indirect Taxes (Ti) + Grants (Sb)

3. National Income (Y) = Disposable Income ( Y ) + Saving from firms (Sf) + Direct Taxes (Td) + Income from Public Sector (R) – Current Transfers (H)

With these previous relationships we can construct the main relationship that every close economy with public sector must meet to track successfully its National Accounting:

1) Y = Net National Product at factor cost (NNPfc) = C + Sed + Sf + Td + R – H NNPfc = NNPmp – Ti + Sb → NNPmp = Y + Ti – Sb = C + Sed + Sf + Td + R – H + Ti - Sb

2) NNEmp = NNPmp = C + NI + PE

C + Sed + Sf + Td + R – H + Ti – Sb = C + NI + PE → Sed + Sf + Td + R – H + Ti – Sb – PE = NI → (Sed + Sf) + [ (Td + Ti + R) – (PE + Sb + H)] = NI → Saving from Private Sector + Saving from Public Sector = NI → NS = NI

1. National Product (NP) = ∑ Added Value (AV), where the AV = (Sales – Purchases) + (Final Stock – Initial Stock) = (Sales – Purchases) + Stock Variation (SV).

In this kind of economy, we include the difference between National Magnitudes and International ones:

Magnitude at International Magnitude = Magnitude at National Magnitude + Income of National factors working out of the country – NonNational factors working in the country = Magnitude at National Magnitude + (rfne – rfen)

2. National Expenditure (NE) = Consumption (C) + Investment (I) + Public Expenditure (PE) + Exports (X) – Imports (V) = C + I + PE + (X-V)

3. National Income (Y) = Disposable Income ( Y ) + Saving from firms (Sf) + Direct Taxes (Td) + Income from Public Sector (R) – Current Transfers (H)

International Income (IY) = Disposable Income ( Y ) + Saving from firms (Sf) + Direct Taxes (Td) + Income from Public Sector (R) – Current Transfers (H) + International Current Transfers (Z)

4. Net Loan (S0) = (X – V) + (rfne – rfen) + Z + Capital Transfers (F)

With these previous relationships we can construct the main relationship that every open economy must meet to track successfully its National Accounting:

1) IY = NIPmp = NIEmp = C + Sed + Sf + Td + Ti + R – H – Z

2) Net International Product at market price (NIPmp) = Net International Expenditure at market price (NIEmp) = NNE + (rfne – rfen) = C + NI + PE + (X – V) + (rfne – rfen)

C + Sed + Sf + Td + Ti + R – H – Z = C + NI + PE + (X – V) + (rfne – rfen) →

Sed + Sf + Td + Ti + R – H – PE = NI + (X - V) + (rfne – rfen) + Z →

NS = NI + (X - V) + (rfne – rfen) + Z → NS + F = NI + (X - V) + (rfne – rfen) + Z + F → NS + F = NI + S0