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By R. Allen

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Sample text

Both estimates are subject to error: can an estimate be arrived at for the error in each? The answer is: no. Since this doesn 't work, can the relative errors be assessed so that one total can be taken as nearer to the 'correct' figure than the other? The answer is again: no. A compromise is needed; that adopted is described on p. 108 of the 1979 Blue Book: Two estimates ofthe gross domestic product are built up from largely independent data on income and final expenditure. The residual error - the difference between the two independent estimates - is presented as though it were an item (positive or negative) ofincome.

Notice that the personal sector includes all the activities of the selfemployed. It is not possible in practice to separate, in the accounts of unincorporated enterprises, the owner's personal from his business transactions. On the other hand, the corporate sector includes all financial institutions whether they are incorporated or not. Building societies, for example, are included though not incorporated. Private non-profitmaking bodies such as charities and universities are allocated to the personal sector since there is nowhere else for them to go; certainly they would not fit into the profit-making activities of the corpora te sector.

1 since it has the advantage of showing all personal taxation, both direct and indirect, together in one tabulation. One adjustment needs to be made before a balance is struck. Personal transfers to abroad are met partly by transfers to the personal sector from abroad (not in personal income) and partly out ofincome. It follows that the excess oftransfers to abroad over those from abroad is an additional entry on the expenditure side. The balance in the account appears on the expenditure side and it is to be interpreted as saving by the personal sector.

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