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The Integrated Financial and Real System of National Accounts for the United States: Does It Presage the Financial Crisis?

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  • Michael G. Palumbo
  • Jonathan A. Parker

Abstract

The initial implementation of the System of National Accounts (1993) for the United States by the Bureau of Economic Analysis and the Federal Reserve Board has two significant advantages for economists. First, the SNA are organized according to sectors of the economy defined by economic agents: firms, financial institutions, consumers, governments and the rest of the world. Second, the accounts integrate real and financial information, so that one can track not only production of, income from, and use of output, but also net lending, net borrowing, and net worth by sector. We exploit these two features in the SNA accounts to examine US economic history leading up to the financial crisis of 2007 and recession of 2008. First, the SNA data show recent increases in leverage in the household sector. We track the household shift to a net lending position through the capital and current accounts of the household sector and then the other SNA sectors. Second, in the financial businesses sector, the accounts largely miss the rise in exposure to the US housing market as well as the critical factors that significantly spread and amplified the housing-market related changes throughout the financial system and the real economy. Finally we present three ways in which SNA-type accounts could be improved to presage a similar future crisis.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14663.

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Date of creation: Jan 2009
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Publication status: published as Michael G. Palumbo & Jonathan A. Parker, 2009. "The Integrated Financial and Real System of National Accounts for the United States: Does It Presage the Financial Crisis?," American Economic Review, American Economic Association, vol. 99(2), pages 80-86, May.
Handle: RePEc:nbr:nberwo:14663

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  1. Albert M. Teplin & Charles Ian Mead & Brent R. Moulton & Rochelle Antoniewicz & Susan Hume McIntosh & Michael G. Palumbo & Genevieve Solomon, 2005. "Integrated Macroeconomic Accounts for the United States: Draft SNA-USA," BEA Papers 0051, Bureau of Economic Analysis.
  2. Albert M. Teplin & Rochelle Antoniewicz, 2006. "Integrated Macroeconomic Accounts for the United States: Draft SNA-USA," NBER Chapters, in: A New Architecture for the U.S. National Accounts, pages 471-540 National Bureau of Economic Research, Inc.
  3. Markus K. Brunnermeier, 2008. "Deciphering the Liquidity and Credit Crunch 2007-08," NBER Working Papers 14612, National Bureau of Economic Research, Inc.
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Cited by:
  1. J. Steven Landefeld & Shaunda M. Villones, 2009. "GDP and Beyond: Measuring Economic Progress and Sustainability," BEA Papers 0096, Bureau of Economic Analysis.
  2. Matthew J. Eichner & Donald L. Kohn & Michael G. Palumbo, 2010. "Financial statistics for the United States and the crisis: what did they get right, what did they miss, and how should they change?," Finance and Economics Discussion Series 2010-20, Board of Governors of the Federal Reserve System (U.S.).
  3. Segismundo Fassler & Manik L. Shrestha & Reimund Mink, 2012. "An Integrated Framework for Financial Positions and Flowson a From-Whom-To-Whom Basis," IMF Working Papers 12/57, International Monetary Fund.
  4. Jagannathan, Ravi & Kapoor, Mudit & Schaumburg, Ernst, 2013. "Causes of the great recession of 2007–2009: The financial crisis was the symptom not the disease!," Journal of Financial Intermediation, Elsevier, vol. 22(1), pages 4-29.
  5. Douglas Sutherland & Peter Hoeller, 2012. "Debt and Macroeconomic Stability: An Overview of the Literature and Some Empirics," OECD Economics Department Working Papers 1006, OECD Publishing.
  6. Bezemer, Dirk, 2009. "No one saw this coming. Understanding financial crisis through accounting models," Research Report 09002, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  7. J. Steven Landefeld & Shaunda M. Villones, 2009. "GDP and Beyond: Measuring Economic Progress and Sustainability," BEA Working Papers 0052, Bureau of Economic Analysis.

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