Definition: Economic consistency

Category: National accounts

When transactions are set-up in such a way that the legal appearance contradicts the economic reality (the real economic effect of the transactions), it is preferable to report in national accounts the economic reality.  Indirect privatisation is a good example : an indirect sale of financial assets has the same effects on the government national accounts as a direct one and therefore must be recorded as a financial transaction .In the same line of reasoning, ESA95 states that « some transactions are rearranged in order to bring out the underlying economic relationships more clearly » (possible consequences : rerouting of transactions, partitioning of units etc.).