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Changes in the calculation methods of quarterly national accounts

In May 2010 a new information system will be introduced in quarterly national accounts, which enables utilisation of improved calculation methods from before. Data based on the new calculation methods will be released on 9 June 2010.

In Finland quarterly national accounts are prepared using a so-called indirect calculation method. This means that data are not compiled by summing from source data and by adding to the thus obtained raw data various corrections, as is done in most statistics. Instead, data are compiled from source data indicators and the levels of annual national accounts by means of mathematical and statistical calculation methods. The indirect calculation method is used for the compilation of quarterly accounts in most countries, because sufficiently exhaustive source data by quarter are not available on the whole national economy.

Changes in methods

The main calculation phases for the calculation process of quarterly national accounts are in chronological order: formation of source data indicators, benchmarking, extrapolation, deflation, chain-linking and seasonal adjustment.

Of these, the methods for benchmarking, extrapolation and deflation change along with the new information system.

The key changes are as follows:

• benchmarking to the levels of annual national accounts is now done directly to the indicator time series of source data, when previously benchmarking was done to the quarterly accounts time series formed by extrapolation
• the extrapolation method is changed to annual benchmark-to-indicator ratio, while previously the benchmark-to-indicator ratio of the corresponding quarter of the previous year was used
• industry-specific deflators/price estimates of value added are now formed by weighting product-level price data, while before mainly one price index for each sector/industry combination was used.

In this context, benchmark-to-indicator refers to the ratio of the value of national accounts to the value of the source data indicator.

Aiming towards higher quality time series

When the indicator series are benchmarked directly to the levels of annual national accounts and the extrapolation method is changed to be based on the annual benchmark-to-indicator ratio, the time series of the quarterly national accounts follow more closely the quarterly development of the source data indicators used in the calculation.

On account of the new benchmarking and extrapolation methods, the turning points in the economy can be located more accurately and reliably than before in the current year as well as in previous years.

The new method for forming deflators is uniform with annual national accounts and thus it produces price estimates that are closer to the prices of annual accounts. Consequently, the volume estimates of the value added of quarterly accounts and of gross domestic product are also more accurate and closer to the volume data of annual accounts.

The method changes will cause small revisions to the time series data of quarterly national accounts starting from 1990.

Inquiries: Pasi Koikkalainen +358 9 1734 3332

Further information about the methods of quarterly national accounts can be found:

Bloem, A., R.J. Dippelsman and N.Mæhle: Quarterly National Accounts Manual - Concepts, data sources and compilation. IMF, 2001. http://www.imf.org/external/pubs/ft/qna/2000/Textbook

Handbook on Quarterly National Accounts. Eurostat, 1999.

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Last updated 26.5.2010