Definition: Balancing techniques

Category: National accounts

There are various approaches which might be used for balancing, ranging from manual adjustment, through simple Random Allocation Sampling (RAS) techniques, to complicate mathematical procedures for dealing with large matrices. The manual approach relies, essentially, on the implicit judgement of the compiler to assess which particular series might be adjusted and by how much. The computerised methods will generally use at least squares estimation approach, perhaps subject to various constraints. The more sophisticated methodology might take into account the accuracy of the variables and incorporate correlations in the adjustment process, for example between dividends and interest receipts and financial flows. Of the various techniques which have been used for balancing, one of the more recent is the approach which was undertaken, experimentally, in the United Kingdom before the use of annual input-output tables. The approach aimed to balance expenditure and income data on the one hand with financial data and the other, subject to certain constraints on aggregates.