Re: [OPE-L] Imputed interest

Alan Freeman (a.freeman@greenwich.ac.uk)
Fri, 23 Jan 1998 17:40:05 +0000

Reading Iwao's 22 January post I think I too made a mistake, in my
reading of his 20 January post.

I had thought that the category of 'imputed interest' corresponded to
the UK category of 'Adjustment for Financial Services' that appears in
some version of the accounts, for example the I/O.

However, reading his further description I think that 'imputed interest'
as he reports it in the Japanese accounts, must be something else.
Maybe it is what the UK accounts call 'imputed charge for capital
consumption'? This is an imputed charge made to agents that own assets
which do not enter into GDP through depreciation in the normal way.

The 'charge for financial services' in the UK accounts arises from an
actual, not a fictitious payment. It is an attempt to represent a
non-trading income (payment of interest) as if it were a payment for
a commodity.

I am not familiar with the 'imputed interest' aspect of the 1968 SNA
proposal and I didn't find it under that name in the UK accounts. Can Iwao
say any more about how it is calculated and what the motivation is? I
think this is an interesting point.

As regards SNA changes my experience is that most countries are very
selective about when, or whether, to implement them. Moreover, when
they do adopt them, they generally do not publish backdated versions of
the accounts to make them compatible, nor, finally, do they publish the
formula that they use to do the transformation to the new system. They
used to tell you how it was done when you ring up but now they charge
for it.

I think this is one of the principal actual difficulties in preparing
compatible national accounts and that is why I think it is an important
thing to do. At present, much research comes out making all manner of
comparisons between countries with data that is not even prepared according
to a uniform bourgeois standard, let alone any other standard. We can
overcome this only if the person that prepares accounts for each
specific country is familiar with the accounting peculiarities of that
country.

Alan

Iwao Kitamura wrote:
>
> I made a mistake in the last post of mine.
> I forgot the newest SNA(1993) recommendation. (How many countries
> already adopt this version? not Japan, at least)
> The newest version of SNA(1993) turned back the treatment of inputed
> interest similar to the old 1953 SNA. They allocate inputed interest to
> lenders and depositors, thus a part of it is counted as intermediate input and
> the rest as final demand that equals to value added.

<snip>

> Iwao