4.2 The National Accounting Matrix (NAM)
4.2.3 An overview of a NAM for the Netherlands
Table 4.1 shows an aggregate NAM for the Netherlands in 1997. Each entry in the table is denominated in million guilders. Each account in the table provides the aggregate for the total economy. More detail can be provided according to the classifications indicated between brackets,i.e.product groups, industries, institutional sectors and financial assets. Cells containing balancing items are shown in grey.
Table 4.1
An aggregate NAM (in million guilders), 1997
ACCOUNT Goods and Production Generation of Allocation of
(classification) services (industries) of income primary income
(product- (value (sectors)
groups) added
categories)
1 2 3 4
Goods and services Trade and Intermediate
(product groups) transport consumption
1 margins
– 706 672
Production Output at
(industries) basic prices
2
1 364 227
Generation of income Net value added at VAT not handed
(value added categories) basic prices over to the
3 government
547 733 1 354
Allocation of primary income Taxes less Net national Property
(sectors) subsidies generated income
on products income at
4 basic prices
71 538 548 803 236 095
Secondary distribution of income Net national
(sectors) 5 income at market
prices
633 843 Use of disposable income
(sectors) 6
Capital Consumption of
(sectors) 7 fixed capital
109 822 Financial
(financial assets) 8
Rest of the world, current Imports (cif) Compensation of Property income
and taxes less employees and to r.o.w.
9 subsidies on other taxes less
products to subsidies on
r.o.w production to r.o.w.
411 322 217 65 183
Rest of the world, capital
10
TOTAL 1 847 087 1 364 227 550 374 935 121
* Including statistical differences.
Source: Statistics Netherlands (2000).
The first account in table 4.1 shows the supply (column 1) and use (row 1) of goods and services in the economy. Products sales and product purchases, measured at purchasers’ prices, are equal by definition and this is reflected by equal row and column totals (total product supply and use equals 1,847,087 million guilders). The total supply of goods and services in the economy consists of domestic output (cell 2,1) and imports (9,1). The underlying sub-matrices of both cells represent together the (transformed) supply table, i.e. the total commodity supply by domestic industries and the rest of the world. The total use of goods and services consists of intermediate consumption, final consumption, gross fixed capital formation, changes in inventories and exports. Output is recorded in basic prices while all uses are recorded in purchasers’ prices. Differences between total supply in basic prices and total use in purchasers’ prices are made up by trade and transport margins (1,1) and taxes less subsidies on products (4,1). Cell (1,1) is empty by definition since the
Secondary Use of Capital Financial Rest of the Rest of the TOTAL
distribution of disposable (sectors) (financial assets) world, world,
income income current capital
(sectors) (sectors)
5 6 7 8 9 10
Final Gross capital Exports (fob)
consumption formation and
inventory changes
532 009 158 514 449 892 1 847 087
1 364 227 Compensation
of employees from r.o.w.
1 287 550 374
VAT on land Property
income
1 297 77 388 935 121
Current Current transfers
transfers from r.o.w.
627 508 8 031 1 269 382
Net disposable income
627 605 627 605
Net saving Net incurrence of Capital
liabilities* transfers
from r.o.w.
95 595 406 740 2 427 614 584
Net acquisition of Net lending
financial assets of the r.o.w.
449 180 –42 440 406 740
Current transfers ro r.o.w.
14 270 490 992
Capital transfers Current external
to r.o.w. balance
5 593 –45 606 –40 013
1 269 382 627 604 614 584 406 740 490 992 –40 013
underlying sub-matrix shows the reallocation of trade and transport margins from their producers (–) to the products to which these margins are related (+).
Account 2 represents the production account at the level of industry branches. The account defines the balancing item net value added (3,2) as the difference between domestic output on the one hand and intermediate consumption plus consumption of fixed capital on the other hand. Net value added is presented in the income generation account, classified by value added categories i.e. compensation of employees, net operating surplus and other taxes less subsidies on production.
Consumption of fixed capital is directly presented in the row of the capital account (7,2).
Account 3 is also used for the recording of compensation of employees paid to (9,3), and received from (3,9), the rest of the word. Cell (9,3) also includes other taxes less subsidies on production paid to the rest of the world. As a consequence, the generation of income account is closed by a balancing item that is, strictly speaking, not found in the standard system of national accounts: ‘net national generated income’. This balancing item contains total income earned by resident institutional units as a result of being engaged in production (cf.SNA-1993, §20.55). Net national generated income is the intermediate balancing item that emerges logically from the reconciliation of the supply-use tables and institutional sector accounts in a NAM or SAM.
The allocation of primary income account (4) opens with net generated income and subsequently records all property income transfers between institutional sectors (4,4) including property income received from (4,9), and paid to (9,4), the rest of the world. Property income consists of interest, distributed income of corporations (e.g.
dividends) and rents. Net generated income at basic prices plus taxes less subsidies on production plus property income received minus property income paid results in ‘net national income at market prices’.
The secondary distribution of income account (5) adds to national income at market prices the balance of income transfers received and paid. This account also records income transfers paid to (9,5), and received from (5,9), the rest of the world. This subsequently results in the balancing item ‘net disposable income’ (6,5). Income transfers exist of taxes on income and wealth, social contributions and benefits and other current transfers. The use of disposable income account (6) subsequently defines ‘net saving’ (7,6) as the difference between disposable income and final consumption (1,6).
The financial accounts (8) in the NAM, classified according to financial asset types, determines ‘net lending of the rest of the world’ to the domestic economy. Net lending is the balance between the net acquisition of financial assets minus the net incurrence of liabilities. In the case of the Netherlands, this balancing item is negative, indicating a net borrowing of all Dutch residents to the rest of the world.
The rest of the world account in the NAM consists of a current (9) and a capital account (10). Both accounts omit a further breakdown. This account is used in the NAM to show, for of the (other) accounts (1-8), the transactions of resident entities
with the rest of the world,e.g.commodity transactions, wages, property income, income transfers, capital transfers. The current rest of the world account balances all current receipts (row 9) with current outlays (column 9). The negative sign of the
‘current external balance’ indicates a deficit from the perspective of the rest of the world and a surplus from the perspective of the Netherlands. Finally, the rest of the world capital account records, in addition to the current account surplus, the capital transfers going to (10,7), and received from (7,10), the rest of the world. These may for example exist of capital taxes and investment grants. The resulting balancing item that emerges in conjunction with the financial account, is ‘net lending to the rest of the world’.