Vos: Accounting for the World Economy

Vos, Rob. (1988). "Accounting for the World Economy". Review of Income and Wealth, 35(4).

This paper proposes a World Accounting Matrix (WAM) for exploring the inadequacies of current accounting methods. There should technically be a 0 balance for international trade, but this is clearly not the case. The WAM is here to help solve that problem. WAM, “…shows how internal savings and investment balances, trade and factor payments and external financial transactions can be presented in an integrated matrix system, registering all entries on a source-user basis and allowing for a consistent treatment of stock and flow variables within the same data system. It will be argued that such a system of accounts allows for the integration of different data systems and a permanent cross-checking on statistical inconsistent ices. This would lead to a substantial improvement in the reliability of the data on the world economy” (391).

The WAM structure is then outlined as well as an example given for 1980.