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ACCOUNTING FOR THE WORLD ECONOMY
Author(s) -
Vos Rob
Publication year - 1989
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1989.tb00600.x
Subject(s) - economics , balance of payments , current account , world economy , national accounts , social accounting matrix , debt , investment (military) , macroeconomics , payment , international economics , finance , exchange rate , computable general equilibrium , politics , political science , law
The analysis of international trade, finance and adjustment is hampered by major statistical inadequacies. In theory current account balances of all economies that make up the world economy should add to zero. However, available balance‐of‐payments data and other major statistical sources show a huge discrepancy. A major source of the discrepancy is found in the inadequate recording of international financial assets and liabilities and related factor income payments. In this paper the author proposes a global economic accounting framework, labelled as the World Accounting Matrix (WAM), which integrates world investment‐savings balances, trade flows, factor payments and international flow of funds into one consistent data system on a source‐use basis. Data discrepancies can thus be traced and adjusted more systematically. The WAM will provide a new tool for studies on international trade, debt and adjustment and present the accounting framework and the consistent data basis for models of the world economy.