THE DEVELOPMENT OF THE NATIONWIDE ECONOMETRIC MODEL

Abstract

1. The System of National Accounts (SNA) There are a huge number of economic quantities which are observed year by year (or quarter by quarter) in the national economy. They themselves are all economic facts and if they are available in time series, they are historical evidences of economic phenomena. It appears to be a formidable and almost impossible task to collect the observed quantities to minute detail and put all of them on record. In the empirical field of economics, however, this vast task has already been done, and it is the formation of the System of National Accounts (SNA). The SNA consists of six accounts: the Production Account, Income and Outlay Account, Capital Finance Account, External Transactions Account, Closing Balance-sheet Account, and Input-output Account. It is the system which records historically the observed values of all the economic quantities of the national economy in a systematic and exhaustive way. In this section, the aim is first to explain the principle and method of the SNA by taking the Production Account as an example. Then, brief summary of other accounts are discussed in turn. The principle of the SNA is that (1) all the economic quantities are assumed to be the results of the economic behavior of the economic agents, (2) the quantitative performances of the econom icbehavior of all the individual agents for a given period are recorded in a given format and (3) the economic activity of the whole economy for a given period is recorded by aggregating such individual records exhaustively. This principle is applied to all the six accounts. In addition, the agents are huge in number and widely varied in character. Thus all the indi vidualagents are classified into five categories: (1) nonfinancial incorporated enterprises (or