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Inflation and Profits — The SVA and Depreciation Adjustments in the National Accounts *
Author(s) -
HAIG BRYAN
Publication year - 1982
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1982.tb00386.x
Subject(s) - economics , valuation (finance) , national accounts , stock (firearms) , depreciation (economics) , consumption of fixed capital , national income and product accounts , financial economics , econometrics , macroeconomics , accounting , microeconomics , profit (economics) , mechanical engineering , capital formation , financial capital , engineering
This paper argues that the figures of profits contained in the national accounts are inappropriate in assessing the performance of industry. The error lies in deducting amounts for stock valuation adjustment from recorded profits. There is a discussion of the arguments usually proposed by national accountants for the deduction and it is concluded that these arguments are invalid. A suggestion is made that the amount of the stock valuation adjustment should be regarded as reflecting the delay in passing on costs of production, and this should be recorded in the national accounts as a timing difference between estimates of national expenditure (which exclude the stock valuation adjustment) and national product (where profits include the stock valuation adjustment).