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Measuring National Product

Published online by Cambridge University Press:  26 March 2020

W. A. H. Godley  and
C. Gillion
W. A. H. Godley
Affiliation:
National Institute
C. Gillion
Affiliation:
National Institute
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Extract

The term national product is used in this note, for convenience, as shorthand for gross domestic product at constant factor cost. Where the word ‘output’ is used, it refers to the estimate of the national product from output data.

Type
Articles
Information
National Institute Economic Review , Volume 27 , February 1964 , pp. 61 - 67
Copyright
Copyright © 1964 National Institute of Economic and Social Research

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References

(1) The annual National Income and Expenditure series of the Central Statistical Office are referred to as Blue Books throughout this note.

(2) The expenditure figures are derived from estimates of each kind of final expenditure on goods and services (such as consumers' expenditure, public authorities' current expenditure, and so on). The income figures come from estimates of the income received by ‘factors of production’ for economic activity (such as wages and salaries, profits, etc.). Both income and expenditure estimates are given in the Blue Book at current prices; and the expenditure estimates are also given there at constant prices. A constant price figure derived from income data is not expressly given in the Blue Book, but can be calculated by using the deflator obtained from the constant and current expenditure series. The estimates from output data aim in general at obtaining estimates of the quantities of production in individual industries, or of the ‘volume’ of services rendered, and combining them according to their net output in a base year.

(1) National Income Statistics : Sources and Methods, HMSO, 1956. For a general summary of the kinds of data used, and for some of the reasons for the discrepancies between them, see Chapter III. The notes to successive Blue Books since 1956 bring this publication up-to-date.

(1) As measured by the standard deviation between the three estimates of the year-to-year change.

(1) Revisions to the figures may be made when there is no change in the basic data; this can happen when the base years are changed for the output estimates and for the deflator which is used to derive the constant price expenditure and income estimates from current price figures. The base years both for output and for the deflator were changed from 1948 to 1954 in the 1959 Blue Book and from 1954 to 1958 in the 1962 Blue Book. However, this re-basing does not seem to have led to unusually large revisions, except for the 1959 Blue Book's estimates of previous output changes. These were bigger than usual, and this may be the result of the change in weighting.

(2) This outcome was, however, considerably affected by relatively large revisions to the estimated change from 1950-51. If this change is excluded (that is, taking the period 1951-1961) the average revision to expenditure was +0.4 and to output —0.1.

(3) One consequence of the upward revision of estimates of consumers' expenditure has been to reduce the estimates of personal savings; this was discussed in the National Institute Economic Review, no. 24, May 1963, page 11, table 6.

(4) There is further a rather puzzling downward revision to the adjustment to factor cost. Since consumers' expenditure has been revised upwards, it might have been expected that the adjustment to factor cost would have been revised upwards as well.

(1) The size of the first three sets of revisions to the initial estimates for each of the years from 1955 to 1959 was com pared with the size of the revisions, also over three years, to the initial estimates for the years from 1950 to 1954.

(1) The method by which this was done, together with other detailed notes on the calculation, are given in footnotes to table 3.

(2) The expenditure figures were adjusted for dock strikes and certain other disturbances : see note to table 3.