Financial Accounts in a System of Economic Accounts Author(s): Graeme S. Dorrance Source: Staff Papers (International Monetary Fund), Vol. 4, No. 2 (Feb., 1955), pp. 319-329 Published by: Palgrave Macmillan Journals on behalf of the International Monetary Fund Stable URL: http://www.jstor.org/stable/3865993 Accessed: 22-02-2016 20:18 UTC

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FinancialAccountsin a Systemof EconomicAccounts Graeme S. Dorrance*

CONOMIC accounts,like companyaccounts,may be of three by nationalincomestatetypes:(1) flowaccounts,represented at present whicharebestrepresented ments,(2) asset-liability accounts, and a two that are of the combination (3) by monetarystatistics, statements.l probablybest referredto as source-and-use-of-funds of to an understanding Study of thesethreetypesmay contribute The purposeofthispaperis to exploresomeofthe economic activities. between twotypes,witha viewto examining some thefirst relationships to be considered ofthethird ofthebasicproblems in theconstruction a draftofa possiblesource-and-use-of-funds statetype.In particular, mentdrawnfromthe nationalincomeand financialaccountsof an is presented, and someofits usesare indicated. economy In the draftstatement, it is suggestedthat the nationalincome finance the government accounts,the balanceofpayments statement, fora and the other financial accounts records, monetarystatistics, a be in final "national consolidated form. The term country summary as usedhereincludes nationalincome, incomestatement" thetraditional and appropriation accountsthatare presently constructed expenditure, The term"financial in a largenumberofcountries. account"includes those accountsthat describethe asset-liability positionsof certain andtherefore thesourcesandusesoffundsarising sectorsoftheeconomy andsaleofgoods,services, notfromthepurchase orrealestate,butfrom andlending, andthepurchase andsaleoffinancial borrowing obligations, It is notsuggested thatthisdraftis including moneyand quasi-money.2 the one thatwillprovemostusefulforeconomicanalysis; necessarily draft is intended to providean exampleoftheform thatsuch the rather, E

* Mr. Dorrance,of the StatisticsDivision, has been a lecturerat the London SchoolofEconomics,and a memberofthestaffoftheBank ofCanada. 1 This paper is a revisionof a paper preparedfor discussionby the Third Regional Conferenceof Statisticiansof ECAFE Countries,New Delhi, March 1954,and the FourthMeetingof Techniciansof CentralBanks of the American Continent,Washington,May 1954. The authoris indebtedto ProfessorR. S. Sayersforseveralcommentsthat have been incorporatedin this paper. The term"economicaccounts" is used in this paper to describethe accounts to as "social accounts."This changein terminology was sugreferred frequently gestedby RichardRugglesat the National Bureau of EconomicResearch,1954 Conferenceon Researchin Incomeand Wealth. 2 Time and savingsdepositsand similarobligations. 319

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INTERNATIONAL MONETARY FUND STAFF PAPERS 320 a statement take.Although otherformulations willprobably might prove thisdraftsuggests moreuseful, themanner in whichvariousstatements to provideoneset ofaccountsindicating the mightbe drawntogether in individual magnitudeof certainproblemsfacingthe authorities countries.

ofFinancialSource-andBasic Structure Use-of-Funds Statement ofthisdraft,it is proposedthatan economybe In theconstruction sevensectorsand that economicaccounts dividedinto the following the transactions betweenand withinthosesectors: shouldsummarize Sector3, PublicCorporaSector1, Household;Sector2, Enterprises; Sector5, CentralGovernment; tions;Sector4, Local Governments; Sector7, The MonetarySystem. Sector6, Foreigners; in the report Whilethesesectorsare similarto thoserecommended to theUnitedNationsbya groupofnationalincomeexperts,3 submitted are suggested here:(1) thata separatesectorbe estabtwovariations and (2) thatgovernment lishedfortheMonetarySystem,4 enterprises sectorbe divided as defined plusthegovernment by theU.N. experts5 If only and Local Governments. intotwosectors,CentralGovernment the monetary nationalincomeaccountsare considered, systemis not thedevelopment ofadditionalforms important. If,however, especially themonetary are considered, ofsocialaccounting systemimmediately becauseof the relativesize of its acassumesenormousimportance forwhichthemoneand becausethepurposes tivitiesin assettransfers fromthoseofanyothersector.6 holdsassetsareso different tarysystem be combined with The U.N. expertsproposedthatlocal governments be combined and with that thecentral government agencies government, It is proposedherethatthe divisionofaccountsintosectors business. motivations theactivitiesof the be based on thedifferent influencing ofeachsector.If thisis acceptedas theproperbasisfordetermembers ofappropriate economic statistics should thecomposition sectors, mining the accountsofeach groupthatis uniquelymotimeasureseparately is motivated vated.It is clearthatthe centralgovernment differently is thatpart The centralgovernment fromotherpartsoftheeconomy.

3StatisticalOffice oftheUnitedNations,A SystemofNationalIncomeAccounts and SupportingTables: Reportpreparedby a groupof nationalincomeexperts bytheSecretary-General (Studiesin Methods,No. 2, New York, 1953). appointed 4 Those institutionsthat performthe bankingfunctionsof creatingdeposit moneyand issuingcurrency,includingthose institutionsthat are engagedpriinstitutions(e.g., centralbanks). marilyin the controlof money-creating 5 All public enterprisesthat are financially integratedwith generalgovernown do their reserves mentand not keep apartfromworkingbalances. 6 This view is shared by the U.N. experts(Statistical Officeof the United Nations,op. cit.,p. 39).

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FINANCIAL ACCOUNTS IN SYSTEM OF ECONOMIC ACCOUNTS

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ofthe economythat is able to assumeresponsibility forthe maintenance of a satisfactorylevel of economicactivity.Thereforeit can, for example, be expected to increaseits expendituresat a time when those parts which are motivated by considerationsof profitor loss reduce theirexpenditures. This consideration eitherdoes not apply or appliesto only a limiteddegreeto the decisionsof local governments.The consolidation of central and local governmentfinancialaccounts would combinethose data that economicaccountsshould separate.Similarly, governmententerprisesas definedby the U.N. expertsforma group whosemotivationis subjectto decisionby the government, and the consolidationof theiraccountswiththose of privateenterprises also would combinethosedata whichthe economicaccountsshould separate.7 It is proposed that, for each sector of the economy,all monetary transactionsbe analyzedin the formoutlinedin StatementA, The Basic Structureof the Financial Source-and-Use-of-Funds Statementfor a Sector. This statementopens with some of the entriesforeach sector fromthe usual national income and expenditurestatement,and concludeswiththe savingsand the directinvestmentby each sector.Direct investmentis heredefinedas the purchaseof real assets. The difference betweenthe savingsand investmentof a sector measuresthe financing thatit providesforothersectors,or thefinancing thatit mustdrawfrom othersectors.This financingis analyzed in termsof borrowingand the acquisition of claims,includingdirectlendingby sectors,to providea statementof the financialtransactionsbetweenand withinsectorsthat lead to changesin the net asset positionof each sector.Eitherthe borrowingsof each sectoror the lendingof each sectormay be analyzedto show changesin the inter-sector relationswithinan economy.Since the borrowingby (or transferof financialobligationsfrom)one sectorfrom each othersectoris equal to the lending(or the acquisitionofclaims) by each oftheseothersectorsto the borrowingsector,it is obviousthat for sale ofclaimsentry(includingdirectborrowing)there everyinter-sector will be a corresponding inter-sector acquisitionof claims entry.Consequently,onlythe transferor the acquisitionentriesneed be analyzedin the acquisitionof assets has been analyzed detail. In this formulation, in the beliefthat changesin asset holdingsare likelyto be moresignificant than changesin debt positions. The statementof the basic structurefor the accounts of a sector identifiesthe symbolsused to describethe transactionswithinand betweensectorsthat mightbe includedin a systemof financialaccounts. 7 The sectors suggested here are consistent with those used by the U.K. Central Statistical Office in the presentation of its national income and expenditure accounts, except that a separate sector has been included forthe monetary system. See Central Statistical Office,National Income and Expenditure, 1946-53 (London,

1954).

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322

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STATEMENT A. THE BASIC STRUCTURE OF THE FINANCIAL SOURCE-AND-USE-OF-FUNDS STATEMENT FOR A SECTOR'

Plus

Yp Ei

Equals Minus Plus Equals Minus

Td Gd Y' Ci

Minus Plus Equals Minus Equals Plus Minus Minus Minus Minus Minus Minus Minus Equals

Ti G\ Si Ii Fi Bi Li L"2 L'3 L'4 L"5 Li6 L'7 Qi M'

Yf

Grossnationalproductproduced2 Factor paymentstransfers received(exceptforthe Foreign Sector,P: Importsof goods and services3) Factor income Direct taxes paid Direct subsidiesreceived Net disposableincome Consumptionexpenditure(exceptforthe ForeignSector,R: Exportsof goods and services3) Indirecttaxes paid Indirectsubsidiesreceived Savings Investment Available financialresources(financing) Borrowings Acquisitionof claims on households Acquisitionof claims on enterprises Acquisitionof claims on public corporations Acquisitionof claims on local governments Acquisitionof claims on centralgovernment Acquisitionof claims on foreigners Acquisitionof claims on banks4 Increasein quasi-moneyholdingsplus Increasein moneyholdings

1Identifiedhereas sectori.

2 At factor cost.

3These entriesdiffer slightlyfromthe total goods and servicespaymentsand receiptsas definedin the Balance of PaymentsManual (Table I, items 1-8) of the InternationalMonetaryFund. It is suggestedherethat investmentincome (Table I, item 6), other direct factor payments (Table IX, items 1, 2, 3, 4, 5, 9,

10, 11, 12, and partsof 14), and the tax and subsidycomponentsof all itemsbe allocated. separately 4 Otherthan moneyand quasi-money.

The superscriptsto the symbolsare of two different types: only one numberin the superscriptindicatesthat the symboldescribesthe total transactionsof this type forthe sector;two numbersin the superscript indicate a transactionbetween sectors or within a sector. The first the sectormakinga paymentto the numberin the superscriptidentifies sector indicated by the second numberin the superscript.Thus L'1 identifiesthe changes in centralgovernmentdebt holdingsof housethissymbolwoulddescribethe holds.In a systemofdirecttransactions, moneypaymentsbetweenhouseholds(Sector1) and centralgovernment (Sector 5). The financialsystem,however,has many triangulartransactions. Thus, this symbolwould include the purchaseof government withan offsetting debt fromenterprises entrydescribingchangesin the governmentdebt holdingsof enterprises(L25). In fact, it representsa

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FINANCIALACCOUNTSIN SYSTEM OF ECONOMICACCOUNTS 323

transferof money,associated with the purchaseand sale of securities fromor by households,that would accrue to the centralgovernment sales or purchasesof governmentsecurities unless therewere offsetting by othersectors.In the absence of householdtransactionsin securities, ofmoney transfers thesewould have had to be matchedby government to or fromthese othersectors. between similar but different The subscriptsdifferentiate types of transfer.The symbolsare used to indicatethe similaritybetweentransactions and the subscripts,the dissimilarity. Thus, all incometransfers are identifiedby the symbolY, whileincomeproduced,factorincome, and disposableincomeare identifiedby the subscriptsp, f,and n. Taxes and subsidiesare identifiedby the symbolsT and G, whiledirect paymentsare identifiedby the subscriptd, and indirectpaymentsby the subscripti. For the purposesof this paper, there appear to be no serious conceptual problemsinvolvedin the definitionof the entriesin this set of accounts,providedmutuallyconsistentmeasurementsare used forall is definedto include For instance,investment thetransactionsidentified. to real of and the capital improvements equipment.It only acquisition can be measuredeithergrossor net (i.e., includingor excludingallowances for depreciationand obsolescence),provideda consistentdefiniand consequentlyofsavingsis adopted. The savings tionofconsumption of the governmentare definedas the government'ssurplus.Here the magnitudeof the total will be determinedby the accountingdecisions made regardingthe allocation of governmentexpenditurefor the acquisition of permanentresourcesto consumptionor to investment accounts.Any allocations,however,will have equal effecton the size of the calculated totals for the government'ssurplus (savings) and its investment.The savingsof the foreignsectorare definedas the sum of the net paymentsby the countryon both goods and servicesand donations accounts. The investmentsof the foreignsector are definedas includingonly the purchase of real capital in the country.The other itemsin the foreigncapital account are includedin the financialtransactions between foreignersand domestic residents.Changes in the holdingsofmoneyand quasi-moneyare consideredto be of community's in the asset-liabilitypositionof each sectorthat it is such significance desirableto indicatethemseparately;therefore theyare separatedfrom otherclaims on the monetarysystemheld by the nonbankingsectors.8 It may be arguedthat othersimilarchangesin asset holdingsshould be 8 It should be noted that quasi-moneycan take the formof liabilitiesof institutionsoutside the monetarysystem.Buildingsocietiesand similarcorporations should be includedin the enterprisesector,even thoughsome of their liabilitiescan be classed as "quasi-money."

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INTERNATIONAL MONETARY FUND STAFF PAPERS

shownseparately;forinstance,changesin short-term debt government holdingsmightbe treatedon the same basis as quasi-money.9 Whiletheremay be no seriousconceptualproblemsinvolved,thereare manystatisticalproblemsto be facedin the developmentof a complete systemoffinancialeconomicaccounts.Some ofthesestatisticalproblems are verycloseto therealmofconceptualproblems.One ofthebestknown is the determinationof the institutionsthat should be includedin the bankingsectorand the liabilitiesthat shouldbe consideredto be money, quasi-money,or otherliabilitiesofthebankingsystem.For membersofa community,money,howeverdefined,does not distinguishitselfby a sharplinefromotherassets and, correspondingly, monetaryinstitutions do not alwaysdistinguishthemselvesin a conveniently sharpway. There is, in fact,a whole range of assets havingmore or less of the monetary quality,and thereis a whole range of institutionsthat are, in varying economicaccounts,it is degree,monetaryinstitutions.In constructing ofthe monetarysectorand necessary,particularlyin the determination oftheitemsthat shouldbe includedas moneyor quasi-money,to impose arbitrarydistinctions.In using accounts constructedon the lines suggested here, the arbitrarydistinctionsthat have been imposed must always be bornein mind.The exact positionof arbitrarydividinglines must be remembered, as well as the fact that the sharp differentiation impliedin many of the categoriesused forstatisticalpurposesmay not in fact be foundin real life.The necessityforimposingthese arbitrary distinctionsdoes not, however,make it futileto constructa systemof accountsalong the linessuggested.No matterwhat decisionsare taken, a systemof accountscan be conceivedthat will be mutuallyconsistent and thatwilldemonstratethemeansby whichthe community's financial requirementshave been met. Provided that the arbitrarydistinctions which have been made are not forgotten,the repercussionsof the financialflowsthat were associated with the community'seconomic activitiescan be analyzed. The conceptualproblemsto be facedare problemsrelatingto basic conAs indicatedon pages 328-29,considercepts,ratherthan to definition. able workhas alreadybeen done in this field,largelyby individualinstitutionsworkingindependently. All the statementsproducedby these in formand content.The problemthat mustbe faced institutions differ by each compileris: "What is the best formfora systemof financial accounts?"The draftsystemsuggestedhereis intendedonlyto provide a formalstatementof a systemthat mightbe consideredforadaptationby compilersand analystsoffinancialdata. Theremay be seriousaccountingproblemsto be facedin the adoption of mutuallyconsistentdefinitions throughoutthis systemof accounts. 9 See the treatment in Netherlands Bank, Report for 1956 (Amsterdam, 1954).

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Atpresent, arebasedontheprinciple nationalincomeaccountsgenerally shouldbe recorded enunciatedby the U.N. expertsthattransactions whena sumofmoney,ortheequivalent, becomesdue "at themoment and assignablein respectof obligations to, goodssold or servicesrenorperson.Themagnitudes deredby,an enterprise, institution appearing in the systemmusttherefore in principle be considered not as actual paymentsand receiptsbut as flowsof payablesand receivables."'0 In otherwords,nationalincomeaccounts areaccrualaccounts.Financial thoserecording are records accounts,and particularly moneyholdings, ofchangesin assetand liabilityholdings and consequently usuallyare recordsof completedpayments,includingpaymentsmade by the of acceptabledebt obligations."It wouldbe desirableif all transfer economicaccountscould be put on a consistentbasis (or bases). Hereit is suggested as oneis interested in changesin assetthat,insofar thebasisto be adoptedshouldbe thatofcompleted liabilitypositions, Someworkhasbeendonealreadyonthisbasisinthedeveloppayments. mentof currenttransactions accountssimilarto nationalincomeaccounts.Furtherworkin thisdirection wouldbe valuable.

Form of a CombinedStatementof FinancialSource-andUse-of-Funds Accounts A statement offinancial source-and-use-of-funds accounts,combining the accountsof all sectorsas outlinedin the basic structure forthe in accordance accountsofa sector,maybe drafted withthesuggestions B. In thisstatement, areprovided forintragivenin Statement symbols for sectortransactions, the and except government, foreign, banking sectors.It is assumedthatconsolidated accountswillnormally be preand bankingsectors;consequently, forthese paredforthegovernment An entryforfinancial sectorstherecan be no intra-sector transentries. actions betweenforeigners would be meaninglessin the national statement. It wouldbe reasonable topresent a statement allintra-sector excluding accounts.Theirinclusion accountsoutlining envisagesa set offinancial thetotalchangesina community's assetsandliabilities, and outstanding theirexclusion wouldpresent a picture limited to changesinthefinancial relationsbetweensectors.Whilethelatterformofstatement wouldbe useful,and mayin factproveto be the onlyone obtainableformost theformpresented hereappearsto be moreuseful. countries, 10StatisticalOffice ofthe United op. cit.,p. 13. n For example,theyare likelytoNations, recordchangesin outstandingtimepayment contracts,but not changesin outstandingconsumerchargeaccountdebt. See, for instance,"1953SurveyofConsumerFinances,Part IV: Net WorthofConsumers, Early 1953,"FederalReserveBulletin,September1953,pp. 940-47.

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STATEMENT B. COMBINED

STATEMENT OF FINANCIAL SOURCE-AND-USE-OF-F

Households 1

Gross national product produced...

Y1

Factor payments transfers received.. +. ................. +E1

Factor income ..................... Direct taxes paid .................

Direct subsidiesreceived.......... Net disposable income ............. Consumption expenditure..........

Y -C

Indirecttaxes paid ................ Indirectsubsidiesreceived.........

- -T| +GI

Savings ........................S. Investments, .....................

- I1

S12

.....

F1

+B' ........................ Borrowing Acquisitionof claims on: Households.................... -L11 -L1 .................... Enterprises Public corporations ............ -L. -L2 3 Local governments ............ -L14 ........... -L15 Centralgovernment ................. - L1 Foreigners Banks ......................

Increasein quasi-moneyholdings... Increasein monetaryholdings ....

Y2

E2+

-L17

Q M1

Y4

E3

+E4

+E5 -T5 +Gd Tud

Y -C6

+G2

3 +G 7ud

Y C2

YY2 -C3

-C4

Yf

-Td

"dd~

+G

--

Y

Yp

Y Yf -T~ d d +G4 7

Y4

-T -Td ' X i-G1 Tut

Financing . .............

EnterPublic Local Gov- Central prises Corporations ernmentsGovernment For 2 4 5 3

-T

T +G-

--T +-G

T

+P

Yf

-T

+G

TX

Y

-R

-T~ +G

+ -

S3 -I3

S4 -I4

S6 - I5

F2

F3

F4

F6

B2

+B3

+B4

+B

+B

-L21 L22 ---L33

-L31 -L32

-L41 -L42 -L43 -L44 -L46 - L46

-L51 -L52 -L53 --L54 - L56

-L -L -L -L

-I2

-L4

-L25 -L26

-L3-4 -L36

-L 27

- L36 -L37

-L47

Q2 M2

Q3 M3

M4

Q4

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-L57

Q5 M5

L

FINANCIAL ACCOUNTS IN SYSTEM OF ECONOMIC ACCOUNTS

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When the balance on currentinternationalaccount is included in savingsor investment,total communitysavingsmustequal investment and the total of financingforthe economymust be zero. However,the savingsof any sectorneed not be equal to its investment.If the savings of a sectorare in excessof its investment,the sectorwill have available financialresourcesthat must be used to purchase claims on or repay debts to othersectors,or to increaseits holdingsof moneyand quasimoney. It is largelythroughthe purchasesof claims on othersectors in one sectoris transbetweensavingsand investment thatanydifference ferredto other sectors. Conversely,if a sector's investmentin real resourcesis in excess of its savings,it will have eitherto draw on the financialresourcesof othersectorsby borrowingfromor transferring claims to them,or to decreaseits holdingsof moneyand quasi-money. fromany one sectormust,however,equal its lending, Total borrowing and the acquisitionof claimson any sectormustequal its total borrowing. This does not mean that thereis a directrelationbetweenthe acquisitionof claimson a sectorby anothersectorand borrowingbetween the two sectors.However,if,as a resultofborrowingand the transferof claims betweensectors,the total claims on a sectorincrease,then the sectorconcernedmusthave borrowedan equal amount.

ofFinancialAccounts Applications If a statementalong the lines of this model were computedforany thatwouldbe usefulto the country,it wouldprovidecertaininformation if of authorities,particularly questions inflation,deflation,etc., were underconsideration. Thus,ifin anyperiodtheoperationsoftheeconomic systemon income,savings, and investmentaccounts produce certain financialrequirements,these requirementswill be met, but in meeting them the asset-liabilitypositionof the communitywill be altered. If theenterprise in real resourceslargerthanit sectormakesinvestments can financeout ofits ownsavings,it willhave negativefinancing. If this fromothernonbanking negativefinancingcannotbe offsetby borrowing sectors,or the disposal of claims on othersectors,the enterprisesector will have to decreaseits holdingsof moneyand quasi-moneyor borrow fromthe bankingsystem,eitherdirectlythroughbank loans or by the sale of claims to banks. This excess of investmentover savings in the sectormay lead to an increasein theincomesofthe household enterprise sector. In the firstinstance,this increasewill raise the savings of the householdsector,and thesesavingsmay in largepart be reflectedin an increasein the moneyholdingsof householdsor in financingpart of the of the enterprisesector.At laterdates, however, financingrequirements thisincreasein moneyholdingsofhouseholdsmay lead to an increasein

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theirconsumptionand a tendencyforthe moneyvalue of the national incometo expand. If underthesecircumstances productionin real terms cannot be increased,commodityand factorprices will tend to rise.12 Statementsbased on the model outlinedhere mightalso be used to estimate the probable effectsof contemplatedchanges in policy. If certainforecastscould be made of the probablevolume of savingsand investmentby individualsectors,and assumptionscould be made ofthe likely changes in assets that the communitywould accept, then the necessarychanges in the accounts of the bankingsystemthat would satisfythese developmentscould be computed.If it werepossibleto assess the repercussions ofthese monetarychangeson the restofthe ecothe orignomic system,and consequentlythe possibilityof fulfilling inal decisions,a fairlycompleteforecastcould be made ofthe probable or deflationary pressuresthat mightbe presentin theforthinflationary comingperiod. *

*

*

The ideas in this paper originatedin large part froma privatelycirculated paper by J. Lips, D. B. J. Schouten,and H. W. J. Bosman. Similar ideas are included in articles by J. Tinbergenand D. B. J. Schouten,"Die Anwendungdes Nationalbudgetszur Beurteilungder (Hamburg),April 1954, pp. 199-206, Wahrungslage,"Wirtschaftsdienst and H. W. J. Bosman, "Enkele BeschouwingenOver het Monetair Overzicht,"MaandschriftEconomie (Tilburg), March 1954 (reprinted Nos. 32 and 30, The by the Central Planning Bureau, Overdrukken, Hague, 1954). A formulationof financialaccounts similarto that presentedhereis to be foundin CentralPlanningBureau, CentralEconomic Plan, 1954 (The Hague, March 1954), Table IV.4, "Monetary Analysis." The tables in NetherlandsBank, Reportfor the Year 1953 (Amsterdam,1954),ChapterII, are based on ideas similarto thosein this is to be foundin Rapportsdu Servicedes paper.An analogousformulation Etudes Economiqueset Financieres sur les ComptesProvisoiresde la Nation de l'Ann6e 1953 et sur le BudgetEconomiquede l'Annge 1954 ..., Annex I, Rapportdu Groupede l'Equilibrede la Commissiondu du Commissariat Generaldu Plan (Paris, 1954). The Annual Financement Reportsof the Bank of Italy containa table, "The Flow of Savings and 12 For furtherelucidation of the ideas contained in this paragraph, see Graeme S. Dorrance, "Problems in the Field of Financial Statistics," Statistical Officeof the United Nations, Report and Proceedings of United Nations International Seminar on Statistical Organization,13 October--6 November,1952 (New York, 1953), pp. 100-101.

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the Money Supply," that providesan analysisof the nationalfinancing accounts along somewhatsimilarlines even if it is directedtoward a ratherdifferent end. Similarconceptsare also used in MorrisA. CopeA in theUnitedStates (New York, National land, Studyof Moneyflows Bureau of Economic Research, 1952), in a forthcoming compilationof U.S. moneyflows statisticsto be publishedby the Board of Governors of the Federal Reserve System, and in Henry K. Heuser, "Recent Financial Changes in Western Germany," Federal ReserveBulletin, October 1954, pp. 1041-50. Insofar as the formulationsin this paper shouldbe made involvethe use ofnationalbalance sheetdata, reference to J. R. Hicks, The Social Framework(Oxford,ClarendonPress, 1942 and 1952), ChapterX, forthe United Kingdom; to Conferenceon Researchin Incomeand Wealth,Studiesin Incomeand Wealth(New York, National Bureau of Economic Research), Vol. XII, particularlyto the paper by Raymond W. Goldsmith,"Measuring National Wealth in a Systemof Social Accounting";and to the workof H. Rijken van Olst, enEconometrische B. Korn,and C. A. Oomensin Statistische Onderzoekingen,CentralBureau of Statistics(Utrecht),Vol. II, No. 3, September Bettreffende het Nationale 1947, ("Uitkomstenvan Enige Berekeningen Vermogenin Nederlandin 1938"), Vol. IV, No. 1, March 1949 ("Het Nationale Vermogenvan Nederland en Zijn Verdeling,Eind 1947"), and Vol. V, No. 3, Third Quarter 1950 ("Het Verband Tussen de Nationale Balans en Het Stelsel der Nationale Jaarrekeningen"). Afterthis paper had been written,a similaranalysis of financialaccountswas publishedin H. C. Edey and A. T. Peacock, NationalIncome and Social Accounting(London, Hutchison'sUniversityLibrary,1954). Furtherreferences are to be foundin MiltonGilbertand RichardStone, RecentDevelopments in National Income and Social Accounting(Cambridge,Universityof CambridgeReprintSeries,No. 80, 1954).

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