Bookkeeping conventions and the micro‐macro link

Cornelis N. Gorter and Manik L. Shrestha

Review of Income and Wealth, 2004, vol. 50, issue 2, 181-201

Abstract: The formal accounting logic of the national accounts and other macroeconomic statistics is not always well understood. In addition, the relation between macro statistics and micro accounting data often is not clear. This paper starts out by summarizing the main bookkeeping conventions at the macro level. A distinction is made between vertical and horizontal double‐entry bookkeeping, which, if applied simultaneously, result in quadruple‐entry bookkeeping. Vertical bookkeeping refers to the double‐entry bookkeeping used in business practice. Horizontal bookkeeping requires that the transactions and other economic relationships between agents answer strict consistency rules regarding valuation, timing, and classification. At the micro level, this consistency is not guaranteed. The article reviews three options to reinforce the micro‐macro link (proposals by Nancy and Richard Ruggles, proposals by Harry Postner, and the intermediate accounts in France), and concludes with a few suggestions that could be used in the upcoming revisions of the international statistical manuals.

Date: 2004
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