Balancing the National Accounts: The Adjustment of Initial Estimates — A Neglected Stage in Measurement

  • Richard Stone


Builders of econometric models encounter at the outset a problem of measurement. In spite of the best endeavours of statisticians, national accounts contain statistical discrepancies, residual errors, unidentified items and other balancing entries, evidence of the difficulties arising from the fact that the information available is in some degree incomplete, inconsistent and unreliable. These difficulties are not peculiar to economics: they have long been recognised in the physical sciences, and methods of combining and adjusting measurements have been devised. Thus, about a hundred years ago, Merriman (1884; 8th edn, 1911, p. 1) wrote: ‘The absolutely true values of the observed quantities cannot in general be found, but instead must be accepted and used values, derived from the combination and adjustment of the measurements, which are the most probable, and hence the best’. The same author’s critical bibliography of writings on the method of least squares (Merriman, 1877) enables us to trace the literature on the adjustment of conditioned observations much further back.


Initial Estimate Variance Matrix National Account General Government Social Account Matrix 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Byron, Ray P. (1978). ‘The Estimation of Large Social Account Matrices’, Journal of the Royal Statistical Society, Series A, 141, 359–67.CrossRefGoogle Scholar
  2. Merriman, Mansfield (1877) ‘A List of Writings Relating to the Method of Least Squares’, Transactions of the Connecticut Academy, IV, 151–232.Google Scholar
  3. Merriman, Mansfield (1884) A Textbook on the Method of Least Squares, 1st edn (8th edn, New York: Wiley, 1911).Google Scholar
  4. Ploeg, Frederick van der (1982) ‘Reliability and the Adjustment of Sequences of Large Economic Accounting Matrices’ (with discussion), Journal of the Royal Statistical Society, Series A, 145, 169–94.CrossRefGoogle Scholar
  5. Stone, Richard (1975) ‘Direct and Indirect Consequences in the Adjustment of Observations’, in P. J. Bjerve (ed.) Nasjonalregnskap, Modeller og Analyse (Oslo: Statistisk Sentralbyra).Google Scholar
  6. Stone, Richard, Champernowne, D. G. and J. E. Meade (1942) ‘The Precision of National Income Estimates’, The Review of Economic Studies, IX, 111–25.CrossRefGoogle Scholar
  7. UK, CSO (Central Statistical Office) (1952-) National Income and Expenditure (London: HMSO).Google Scholar
  8. UK, CSO (Central Statistical Office) (1968) National Accounts Statistics: Sources and Methods (London: HMSO).Google Scholar
  9. UK, CSO (Central Statistical Office) (1975-) Economic Trends Annual Supplement, 1981 edn (London: HMSO).Google Scholar

Copyright information

© A. Ingham and A. M. Ulph 1984

Authors and Affiliations

  • Richard Stone

There are no affiliations available

Personalised recommendations