A New Method for the Simultaneous Balancing of the Economic Accounting Systems at Current and Constant Prices

The balancing of a system of national accounts is usually carried out by balancing first the flows at current prices and then those at constant prices. However, this procedure in two distinct steps makes it impossible to control the consistency of the system of deflators. The most appropriate way to obtain a consistent system of flows at both current and constant prices is to balance them simultaneously. The main complexity in balancing accounting systems simultaneously at current and constant prices is the nonlinearity of the balancing systems. This work introduces a new simultaneous balancing method to balance huge sets of national accounting data simultaneously at current and constant prices through the definition of a procedure based on the predictor-corrector method. The latter is the distinctive element of the proposed balancing method. The main features of the balancing method introduced in this work are its very high flexibility compared to the other methods in literature, and its useful capability to allow the control of the consistency of the system of deflators. An application to the Italian economic data has been worked out, and it has yielded significant results.