A review of the national income accounting approaches in Lebanon. (c1998)

Abstract

National income is the value of the country's productive activity defined as the Gross National Product (GNP) or Gross Domestic Product (GDP). It is considered a very important concept because its increase, which is economic growth, is not only a measure of the national increase in wealth, but is also a measure of the increase in the freedom of choice in the economy. Due to the importance of this concept and the existence of several methods to measure the Lebanese national aggregates in the absence of updated official statistics, this paper will examine, compare and evaluate the various available approaches. The Central Statistics Department is the only official organization using an input-output model while the Council for Development and Reconstruction is the sole provider of a macroeconomic long term forecast. The Horizon 2000 CDR national accounts are a function of, mainly, public finance accounts based on highly optimistic and unrealistic assumptions. The third model is that of Banque Audi, which presented its first macroeconomic aggregates in the early nineties when, no other source was publishing such data. Its model is formed of exogenous and endogenous parameters that are computed according to the flow of income of the different agents in the economy, based on the interaction between the money market and the real market. On the other hand, due to the lack of reliable and accurate data, the Central Bank of Lebanon and Banque Audi resorted to barometric indicators to detect the direction of economic trends. The Central Bank's index of coincident indicators is weighted according to the degree of correlation. Banque Audi' s sectoral index is constituted of sectoral indicators weighted according to GDP structure adjusted by some personal opinion. Finally, all discussed models can not be considered macroeconometric models because though the macroeconomic approach exists the reliability and availability of data and the econometric methodology are still rudimentary. Nevertheless, the difficulty of obtaining data and the degree of its importance in calculating national income can determine the priorities to be followed in improving the GDP & GNP estimation in Lebanon.