Canada's National Economic Accounts: Key Concepts - The Framework - Transcript
Canada's National Economic Accounts Key Concepts – The Framework
Welcome to the Statistics Canada Training Institute. Today, we will explore Canada's National Economic Accounts. This lecture will focus on the overall framework that constitutes Canada's National Economic Accounts. We will discuss why a framework is needed and which framework Statistics Canada uses to report on the structure and evolution of Canada's economy.
You got up this morning, took a shower, ate breakfast, made the children's lunch, shovelled the driveway, caught the bus to work, made a few calls, stopped for a coffee and arrived just in time for your 9 a.m. meeting.
Most activities are "the economy," and it is complex with approximately:
- 35,000,000 Canadians in 11,000,000 families.
- 4,000,000 enterprises, from smallest to largest.
- 5,000 public administrations.
- Thousands of non-profit organizations.
- A complex network exchanging billions of dollars' worth of goods and services, and assets in the trillions of dollars.
Most of the things we do each day need to be included in our measure of the economy.
Measuring the economy is a complex task. How can we transform the millions and millions of daily transactions in a meaningful way? It is simply not good enough that Statistics Canada reports that the economy is doing better this quarter than last quarter. Governments, businesses and Canadians expect a precise measure. They want to know if the economy grew by 0.2% or 0.5% because believe it or not, in economic terms that is a big difference.
Where do we start and how do we meet Canadians expectations for precise measure?
Thankfully, the economists at Statistics Canada have economic accounting frameworks, which allow them to transform all of the millions and millions of transactions that occur each day into meaningful information. Much the same way an accountant transforms all of the transactions of a business into an income statement and balance sheet, the economists at Statistics Canada transform economic transactions into statements about national income, expenditure and wealth.
Canada is not alone in its desire to provide governments, businesses and its citizens with timely information about the performance of the national economy. Most countries throughout the world provide aggregate measures of economic performance. Because of this, all countries have united to develop an international national economic accounting manual called: the System of National Accounts 2008, or, the National Accounting Framework.
The 2008 SNA answers the questions: What is "the economy" and how is it "doing" by defining the…
- Concepts and Definitions
- Accounting Rules
- Accounts and their sequence; and,
- Classification Systems
…required to make sense of the millions and millions of transactions that take place each day.
The next few slides attempt to provide you with answers to everything you ever wanted to know about macroeconomic accounting frameworks.
So, let's start with the most basic question: Why is it called National Accounts?
- A more appropriate name is probably National Economic Accounts. Simply put, the National Economic Accounts are a series of accounts that record and present aggregate (national or country-level) economic activity. Each account provides a unique perspective on the national economy, whether it relates to production, income, investment, financing or wealth.
Are there provincial and territorial national accounts?
- Yes, Canada is one of the only countries in the world that produces a set of regional economic accounts. We refer to them as the Provincial and Territorial Economic Accounts. They are constructed using the same framework as the National Economic Accounts.
Why is it referred to as a system?
- It is referred to as a system because it represents a set of interrelated accounts. Each account tells its own story, and each story is connected together to provide Canadians with a complete picture of the economy.
Who wrote the System of National Accounts?
- The 2008 System of National Accounts is an international macroeconomic accounting standard. The accounting standard is approved by the United Nations as the official worldwide standard. All countries are expected to follow the standard, ensuring that key macroeconomic measures are compatible across countries.
- The 2008 SNA is currently governed by the United Nations, the Organisation for Economic Development, the International Monetary Fund, the World Bank, and Eurostat.
What role did Canada play in the development of the System of National Accounts?
- Canada is a member of the 2008 SNA expert advisory group. The role of the advisory expert group is to provide expert advice on the interpretation and updates to the 2008 SNA.
- The first iteration of the system of national accounts was written in 1953 under the responsibility of the American economist Richard Stone. Canadians George Luxton and Agatha Chapman, who worked at the Dominion Bureau of Statistics, were key contributors.
How often is the System of National Accounts updated?
- The SNA was first published in 1953. There have been three major updates since that time. One in 1968, one in 1993, and the most recent in 2008.
Why is the System of National Accounts updated?
- The economy is continuously evolving. The accounting standard used to describe the structure and evolution of the economy must also evolve.
So, what are the key takeaways from this lesson?
- Canada's National Economic Accounts are produced according to the International Macroeconomic Accounting Manual—the 2008 System of National Accounts.
- The 2008 SNA outlines the concepts, classifications, and methods required to transform the millions of economic transactions that occur each day into useful information for Canadians.
- The framework is periodically updated, as are Canada's National Economic Accounts, to ensure they remain relevant for Canadians.
For comments and questions, please contact STATCAN.infostats-infostats.STATCAN@canada.ca.
For more information, consult the following publications and manuals:
- Latest Development in the Canadian Economic Accounts
- User Guide: Canadian System of Macroeconomic Accounts
- Methodological Guide: Canadian System of Macroeconomic Accounts