Description of methods and sources for Albania - INSTAT
Description of methods and sources for Albania - INSTAT Description of methods and sources for Albania - INSTAT
IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeThe direct approach will often give better results if the component series showsimilar seasonal patterns. At the most detailed level, the irregular factor may belargely compared with the seasonal factor and therefore may make it difficult toperform a proper seasonal adjustment. In a small country such as Albania, irregularevents can have a strong impact on particular data. However, if the component seriesshow the same seasonal pattern, aggregation often reduces the impact of the irregularfactors in the component series. This is particularly relevant for Albania, where manyeconomic series are affected by seasonal fluctuations in the primary industries.“INSTAT” institute has decided to apply the direct seasonal adjustment method,because in countries like Albania it is better to work based on an aggregate level.This happens because the economy is changing at a rapid pace.To eliminate the seasonality effect, specific software “Demetra” is used, which isbased on some statistical tests like X 12 ARIMA, Tramo – seats, etc.A numerical example is given in Annex I, Tab I.2.18.2.4 Chain linking techniqueQuarterly accounts have to be both time consistent with the annual accounts (forexample the sum of quarterly values of the GDP must be equal to the annual value ofGDP) and respect the accounting identities (for example, the sum of quarterly valuesof the GDP expenditure components should be equal to the corresponding quarterlyvalue of GDP).Time consistency is a fundamentally univariate problem since it involves only onevariable, albeit at two frequencies (annual and quarterly). Accounting coherence andtime consistency combined exhibit a multivariate dimension, since they involveseveral variables linked by a contemporaneous constraint (in the case above, this isquarterly GDP which "constrains" the sum of the quarterly component values), witheach of the variables subject to their own univariate temporal constraint.In the Albanian case, at the detailed level the series are consistent in current pricesand in the base year prices. INSTAT presented differently the annual nationalaccounts and quarterly national accounts volume measures, creating some confusionsfor non-experienced users. Therefore one major improvement was developing amethodology for a chain volume series of QNA and to present the quarterly accountsin the previous year’s prices in order to be consistent with the annual accounts.When annual re-weighting is done two successive years have to be linked by usingone of the following techniques:annual overlap: the average annual prices of the previous year are used as weightsfor each of the quarters in the current year, with the linking factors being derivedfrom the annual data;166/236
IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeOne-quarter overlap: one quarter of the year (e.g. the fourth quarter) is compiled atboth the average prices of the current year and the average prices of the previousyear. The ratio between the estimates for the linking quarter provides the linkingfactor.Over-the-year: all quarters are compiled at the average prices of both the currentyear and the previous year. The year-on-year growth rates are calculated and thenlinked together.The details of these techniques are clearly illustrated in the chapter on price and volumemeasures in the IMF Quarterly National Accounts Manual. The techniques are usuallyassessed using the following criteria:Time consistency – i.e. the simple mean of the quarterly volume indices is equal tothe independently estimated annual index.Smooth transition between two successive years – i.e. no step is introduced betweenthe figure for the 4th quarter of a year and the figure for the 1st quarter of thefollowing year. The principle underlying this criterion is that the focus of theanalysis is on quarter-on-quarter changes.The annual overlap technique is the only method that automatically meets the timeconsistency criterion. For the other two techniques an additional benchmarking step isneeded.The one-quarter overlap technique provides the smoothest transition between each link(connecting the 4th quarter of one year to the 1st one of the following year). In contrast, theannual overlap may introduce a step between each link. In practice, the two approachesdiffer only in the first quarter (transition period), while the quarter-on quarter growth ratesfor quarters 2 to 4 are the same (before benchmarking).Priority should be given to the measurement of quarter-on-quarter growth rates. This is at thecore of business cycle analysis. In the light of this, at the European level, the one-quarteroverlap and the annual overlap techniques are to be preferred to the over-the-year method.The one-quarter overlap and the annual overlap techniques tend to give similar results whenapplied to real national accounts time series that do not show an extreme pattern. However,the former outperforms the latter in situations with strong changes in relative quantities andprices (step problem). On the other hand, the one-quarter overlap technique is morecomplicated in practice since an additional benchmarking algorithm has to be run.By taking into account that the Albanian QGDP is calculated by using the indirect approach7the chaining linking could be applied by following two alternatives:temporal disaggregation is applied to annual ‘chain-linked’ estimates.temporal disaggregation is applied to annual estimates at average prices of theprevious year.With the second method no discrepancy item has to be distributed among quarters andtherefore has been chosen to chain-linking the Albanian QNA, by using the following steps:7 The indirect approach is based on the temporal disaggregation of annual aggregates on the basis of appropriate infra-annualindicators. The indicators also permit the extrapolation of the quarters for the current year.167/236
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IPA 2009 Multi-beneficiary StatisticalCooperation ProgrammeOne-quarter overlap: one quarter <strong>of</strong> the year (e.g. the fourth quarter) is compiled atboth the average prices <strong>of</strong> the current year <strong>and</strong> the average prices <strong>of</strong> the previousyear. The ratio between the estimates <strong>for</strong> the linking quarter provides the linkingfactor.Over-the-year: all quarters are compiled at the average prices <strong>of</strong> both the currentyear <strong>and</strong> the previous year. The year-on-year growth rates are calculated <strong>and</strong> thenlinked together.The details <strong>of</strong> these techniques are clearly illustrated in the chapter on price <strong>and</strong> volumemeasures in the IMF Quarterly National Accounts Manual. The techniques are usuallyassessed using the following criteria:Time consistency – i.e. the simple mean <strong>of</strong> the quarterly volume indices is equal tothe independently estimated annual index.Smooth transition between two successive years – i.e. no step is introduced betweenthe figure <strong>for</strong> the 4th quarter <strong>of</strong> a year <strong>and</strong> the figure <strong>for</strong> the 1st quarter <strong>of</strong> thefollowing year. The principle underlying this criterion is that the focus <strong>of</strong> theanalysis is on quarter-on-quarter changes.The annual overlap technique is the only method that automatically meets the timeconsistency criterion. For the other two techniques an additional benchmarking step isneeded.The one-quarter overlap technique provides the smoothest transition between each link(connecting the 4th quarter <strong>of</strong> one year to the 1st one <strong>of</strong> the following year). In contrast, theannual overlap may introduce a step between each link. In practice, the two approachesdiffer only in the first quarter (transition period), while the quarter-on quarter growth rates<strong>for</strong> quarters 2 to 4 are the same (be<strong>for</strong>e benchmarking).Priority should be given to the measurement <strong>of</strong> quarter-on-quarter growth rates. This is at thecore <strong>of</strong> business cycle analysis. In the light <strong>of</strong> this, at the European level, the one-quarteroverlap <strong>and</strong> the annual overlap techniques are to be preferred to the over-the-year method.The one-quarter overlap <strong>and</strong> the annual overlap techniques tend to give similar results whenapplied to real national accounts time series that do not show an extreme pattern. However,the <strong>for</strong>mer outper<strong>for</strong>ms the latter in situations with strong changes in relative quantities <strong>and</strong>prices (step problem). On the other h<strong>and</strong>, the one-quarter overlap technique is morecomplicated in practice since an additional benchmarking algorithm has to be run.By taking into account that the <strong>Albania</strong>n QGDP is calculated by using the indirect approach7the chaining linking could be applied by following two alternatives:temporal disaggregation is applied to annual ‘chain-linked’ estimates.temporal disaggregation is applied to annual estimates at average prices <strong>of</strong> theprevious year.With the second method no discrepancy item has to be distributed among quarters <strong>and</strong>there<strong>for</strong>e has been chosen to chain-linking the <strong>Albania</strong>n QNA, by using the following steps:7 The indirect approach is based on the temporal disaggregation <strong>of</strong> annual aggregates on the basis <strong>of</strong> appropriate infra-annualindicators. The indicators also permit the extrapolation <strong>of</strong> the quarters <strong>for</strong> the current year.167/236