Forecasting and Disaggregating National Accounts

In later years, Stone and his Cambridge colleagues built on estimates of the national accounts in two ways. They built a macroeconometric model to project future national accounts. They also differentiated this model from others at the time by pursuing ‘disaggregation, which is carried much further in this than in other British macro-economic models’ (Stone quoted in Barker and Peterson 1987: xvii). The resulting (1986 version of the) model had ‘about 8000 variables compared with about 1000 variables in the next largest, the Treasury model’ (Barker and Peterson 1987: 23). Barker and Weale (1987) emphasise the crucial role in such a large model played by a ‘well-ordered system of accounting as the basis on which to link individual econometric relationships and identities’, (ibid.: 46) and give priority to a detailed explanation of the accounting framework in the ‘book of the model’ (Barker and Peterson 1987); and Weale and colleagues made a series of general contributions to statistics within the accounting framework to reconcile statistical discrepancies.^[1] This innovative disaggregation of the economy, to the industry level, lent itself to two unusual accounting extensions: accounting for environmental externalities associated with climate change; and a joint venture with financial accounting to integrate individual company accounts into the macro framework. Both developments are discussed later in this chapter.

• [1] For example, Weale (1985), Barker et al. (1984), and Sefton and Weale (1995).