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

  • Michael G. Palumbo
  • Jonathan A. Parker

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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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
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Rochelle Antoniewicz & Susan Hume McIntosh & Charles Ian Mead & Karin Moses & Brent Moulton & Michael Palumbo & Genevieve Solomon & Albert M. Teplin, 2004. "Integrated macroeconomic accounts for the United States: draft SNA-USA," Finance and Economics Discussion Series 2004-54, Board of Governors of the Federal Reserve System (U.S.).
  2. Markus K. Brunnermeier, 2008. "Deciphering the Liquidity and Credit Crunch 2007-08," NBER Working Papers 14612, National Bureau of Economic Research, Inc.
  3. 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.
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