Improving the SNA: Alternative measures of output, input, income, and productivity

The current System of National Accounts (SNA) Gross Domestic Product (GDP) concept does not measure the income generated by the production sector since it includes depreciation and excludes capital gains and losses on assets used in the production sector. The paper suggests an accounting framework t...

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Bibliographic Details
Published in:The Review of income and wealth 2024-12, Vol.70 (4), p.1142-1189
Main Authors: Diewert, W. Erwin, Nomura, Koji, Shimizu, Chihiro
Format: Article
Language:English
Subjects:
Capital gains
Depreciation
exact index numbers
GDP
GDP functions
Gross Domestic Product
gross versus net output
Income
land input
Land use
Measures
nonparametric estimation of technology
Production
Productivity
Real income
Terms of trade
total factor productivity growth
Trade
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Summary:The current System of National Accounts (SNA) Gross Domestic Product (GDP) concept does not measure the income generated by the production sector since it includes depreciation and excludes capital gains and losses on assets used in the production sector. The paper suggests an accounting framework that measures the income generated by the production sector of an economy and implements this measure using the Augmented Productivity Database (APDB) developed by Asian Productivity Organization and Keio University for China over the years 1970–2020. Real gross and real net income generated by the Chinese production sector are decomposed into explanatory factors including TFP growth using the framework suggested by Jorgenson and Diewert and Morrison. TFP growth is further decomposed into technical progress and inefficiency components using the nonparametric approach developed by Diewert and Fox. The APDB has estimates for the price and quantity of agricultural, industrial, commercial, and residential land used in China. The paper argues that changes in land use should be treated in the same manner as inventory change and added to the alternative output measures. It turns out that Jorgensonian user costs for land are frequently negative. The problems associated with negative user costs are discussed in the paper.
ISSN:0034-6586
1475-4991
DOI:10.1111/roiw.12677