Data quality

Archived Content

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please "contact us" to request a format other than those available.

National Income and Expenditure Accounts
Provincial Economic Accounts

National Income and Expenditure Accounts

Description

The Income and Expenditure Accounts are the centre of macroeconomic analysis and policy-making in Canada. They are used in a broad assortment of applications by a wide range of persons and groups in society. They are a means by which Canadians can view and assess the performance of the national economy. The accounts provide both a planning framework for governments and a report card on the results of the plans that governments carry out.

At the core of the Income and Expenditure Accounts (IEA) is the concept of gross domestic product (GDP) and its components. It is a measure of aggregate economic activity that represents the unduplicated value of production in two ways: (i) incomes arising from production and (ii) final expenditures on production. The first is the sum of factor incomes generated by productive activity–that is, incomes representing the returns to the labour and capital employed. The second is the sum of all sales to final users (consumers, governments, business on capital account, exports less imports). The two measures of GDP may not be equal to each other, giving rise to a statistical discrepancy.

The Canadian System of National Accounts (CSNA) provides a conceptually integrated framework of statistics and analysis for studying the state and behaviour of the Canadian economy. The accounts are centered on the measurement of activities associated with production of goods and services, the sales of goods and services in final markets, the supporting financial transactions, and the resulting wealth positions.

Data sources and methodology

Target population

The Canadian economy (persons and unincorporated business, corporations, governments and non-residents).

Data sources

Data are extracted from administrative files and derived from Statistics Canada surveys and/or other sources.

The IEA measure of macroeconomic activity, on a quarterly basis, as represented by income and expenditure-based GDP, relies heavily on a wealth of information. A large amount of information from various survey divisions within Statistics Canada, along with other data, is compiled, integrated and analysed as part of the complex process of arriving at GDP and its component categories and underlying sector accounts.

Major suppliers of data within Statistics Canada include: Agriculture Division, Distributive Trades Division, Income Statistics Division, Industrial Organization and Finance Division, International Trade Division, Investment and Capital Stock Division, Labour Division, Manufacturing, Construction and Energy Division, Prices Division, Public Institutions Division, Service Industries Division, Tax Data Division and Transportation Division. Numerous external and administrative sources of data are also used.

Estimation

At the heart of the System of National Accounts is the concept of 'economic production'. Gross domestic product is designed explicitly to measure the value of the nation's total production of goods and services. But, in arriving at this total, the tables also provide a statistical picture of the structure and functioning of the economy - of the composition and use of the nation's production, and of the various types of income which are generated in the process. Going a stage further, the broad income and expenditure estimates are further broken down to show how the various sectors of the economy (businesses, persons, governments and non-residents) interact in their transactions with one another to produce this output. In other words, beginning from the basic concept of production, it is possible to build up a major system of statistics which traces the flow of all income and expenditure transactions underlying the production and the distribution of the nation's total output. In the present system, both the 'national' and 'domestic' concepts are in use. The gross national product measures the earnings of all Canadian factors of production regardless of where located. The gross domestic product measures only the production originating within the geographic boundaries of Canada, whether the factors of production are owned by Canadians or non-residents.

The National Income and Expenditure Accounts measure the unduplicated value of production in two separate ways. The first simply sums all of the factor incomes (wages and salaries, and profits) generated by this productive activity–incomes representing the returns to the labour and capital employed. The second approach sums all sales which firms have made to final users–to consumers, to governments, to business on capital account, or in export markets. This approach also provides an unduplicated value of total production. Imports, of course, have to be deducted from this summation since they are implicitly included in these final sales and should not be counted as a part of Canadian production–they represent part of the production of a foreign country. Sales from one firm to another (intermediate production) are not counted since to do so would involve double counting, all intermediate production being embodied in final output sold to users. This 'sales to final users' (or 'sum of expenditures') approach yields the same value of production as the 'sum of incomes' approach. After the initial estimates income and expenditure–side GDP are produced, the discrepancy is assessed.

Real GDP is only calculated in terms of expenditure as the components of the income-based GDP cannot be split between a quantity value and a price value. Therefore, there is no indicator enabling us to remove the effect of inflation to calculate real values for the income-based GDP components. This is why only the components that are part of the GDP by expenditure are calculated in real terms.

Quality evaluation

Data are analysed for time series consistency, links to current economic events, issues arising from the source data, and with respect to coherence. As well, the discrepancy between the estimates of income and expenditure-based GDP is assessed.

It is not possible to produce an equivalent to the income or expenditure accounts except at the aggregate level. At the level of GDP, the unduplicated value of production can also be measured by taking the gross value of production of each firm and subtracting each firm's intermediate inputs in the form of its purchases from other firms (including imports) to yield the `net value added' to production by the firm. Estimates of this type are produced in the annual Input-Output Tables, as well as in the monthly industry-based estimates of GDP. Real GDP estimates can then be compared with the results of the monthly GDP by industry program. Annually, the income and expenditure data are benchmarked to the Input-Output Accounts.

Certain components of income and expenditure-based GDP can be obtained from survey divisions, but typically the data are not directly comparable. For example, the variable corporate profits is published in the Quarterly Financial Statistics release, but it differs from the income-based GDP measure due to certain national accounts concept adjustments.

Disclosure control

Statistics Canada is prohibited by law from releasing any data that would divulge information obtained under the Statistics Act that relates to any identifiable person, business or organization without the prior knowledge or the consent in writing of that person, business or organization. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Revisions and seasonal adjustment

Revisions: Data are released within 60 days after the reference period. Estimates for each quarter are revised when those for subsequent quarters of the same year are published. At the time of the first quarter of each year, revisions are made back four years. They are not normally revised again except when historical revisions are carried out, usually once per decade. Statistical revisions are carried out in order to incorporate the most recent information from quarterly and annual surveys, taxation statistics, public accounts, censuses, etc., as well as from the annual benchmarking process of the Input-Output Accounts.

Seasonal adjustment: Almost all series of the quarterly IEA are seasonally-adjusted. Seasonal adjustment is generally made at the lowest level of aggregation, and seasonally-adjusted aggregates are obtained by summation. Statistics Canada's X-11 ARIMA is used to seasonally adjust series.

Data accuracy

The accounts are designed as a double-entry system in which the income- and expenditure-based GDP totals should, in principle, be identical. In fact, a difference virtually always arises between them due to errors in the source data, imperfect estimation techniques, differing seasonal adjustment methods and discrepancies in the time at which the incomes and expenditures are recorded.

The size of the discrepancy, which stems from the estimation procedure, is one gauge of the system's overall reliability. However, it is a partial and quite insufficient gauge. Another quality measure is how well real expenditure-side GDP compares to the real GDP by industry measure.

No direct measures of the margin of error in the estimates can be calculated. The quality of the estimates can be inferred from analysis of revisions and from a subjective assessment of the data sources and methodology used in the preparation of the estimates.

Documentation

Information on developments in the National Income and Expenditure Accounts are available in Latest developments in the Canadian economic accounts . The side bar menu of that electronic publication includes: chronology of events, conceptual changes, classifications changes, and data revisions.

Provincial Economic Accounts

Description

The Provincial Economic Accounts program produces annual estimates of selected aggregates of the Income and Expenditure Accounts by province and territory: gross domestic product, final domestic demand, personal income and government sector accounts.

The data are used in macroeconomic analysis and forecasting, for policy analysis and for econometric modelling and hypothesis testing by federal and provincial government officials, business people, academic economists and international organizations.

Provincial and territorial accounts - The System of National Economic Accounts disseminates a wide variety of data at the provincial and territorial level on topics such as the environment, government finance, gross domestic product and its components, GDP by industry, tourism and labour productivity.

Data sources and methodology

Target population

The Canadian economy (persons and unincorporated business, corporations, governments and non-residents).

Data sources

Data are extracted from administrative files and derived from other Statistics Canada surveys and/or other sources.

The Provincial Economic Accounts (PEA) provide a measure of macroeconomic activity on an annual basis, as represented by income and expenditure-based GDP, and rely heavily on a wealth of information from various areas of Statistics Canada. A large amount of information from various survey divisions within the bureau, along with other data, is compiled, integrated and analysed as part of the complex process of arriving at provincial GDP's and their component categories and underlying sector accounts.

Estimation

The Provincial Economic Accounts measure the unduplicated value of production in two separate ways. The first simply sums all of the factor incomes (wages and salaries, and profits) generated by this productive activity–incomes representing the returns to the labour and capital employed. The second approach sums all sales which firms have made to final users–to consumers, to governments, to business on capital account, or in export markets. This approach also provides an unduplicated value of total production. Imports, of course, have to be deducted from this summation since they are implicitly included in these final sales and should not be counted as a part of indigenous production–they represent part of the exogenous production. Sales from one firm to another (intermediate production) are not counted since to do so would involve double counting, all intermediate production being embodied in final output sold to users. This 'sales to final users' (or sum of expenditures) approach yields the same value of production as the 'sum of incomes' approach. After the initial estimates income and expenditure–side GDP are produced, the discrepancy is assessed.

Quality evaluation

Data are analysed for time series consistency, links to current economic events, issues arising from the source data, and with respect with coherence. As well, the discrepancy between the estimates of income and expenditure-side GDP is assessed.

It is not possible to produce an equivalent to Provincial Economic Accounts, as measured in terms of income and expenditures except at the aggregate level. At the level of GDP, the unduplicated value of production can also be measured by taking the gross value of production of each firm and subtracting each firm's intermediate inputs in the form of its purchases from other firms (including imports) to yield the 'net value added' to production by the firm. Estimates of this type are produced in the provincial Input-Output Tables, as well as in the industry-based estimates of GDP by province. Real GDP estimates can then be compared with the results of the provincial GDP by industry program. Annually, the provincial income and expenditure data are benchmarked to the Input-Output Accounts.

Certain components of income and expenditure-based GDP can be obtained in survey divisions, but typically the data are not directly comparable. For example, the variable 'corporate profits' is published in the Quarterly Financial Statistics release, but it differs from the income-based GDP measure due to certain national accounts' concept adjustments. Also, the national estimates have to be allocated by province and by territory to reflect where the activity took place rather than where the head office is located.

Disclosure control

Revisions and seasonal adjustment

Revisions: Preliminary estimates are released in the spring following the end of the reference period, and revised in the fall of the same year. This latter release also comprises revisions to the three previous years. Estimates are not normally revised again except when historical revisions are carried out, usually once per decade. Statistical revisions are carried out in order to incorporate the most recent information from surveys, taxation statistics, public accounts, censuses, etc., as well as from the annual benchmarking process of the Input-Output Accounts.

Seasonal adjustment: Where quarterly Provincial Economic Accounts data are available, seasonal adjustment is generally made at the lowest level of aggregation, and seasonally-adjusted aggregates are obtained by summation. Statistics Canada's X-11 ARIMA is used to seasonally adjust series.

Data accuracy

Documentation

Information on developments in the Provincial Economic Accounts are available in Latest developments in the Canadian economic accounts. The side bar menu of that electronic publication includes: chronology of events, conceptual changes, classifications changes, and data revisions.