The Reconciliation of Values, Volumes and Prices in the National Accounts
The problem of reconciling constant and current price national income accounts is considered. It is necessary to take account of the fact that both additive and multiplicative restrictions exist between volume and value estimates and the related deflators. Covariances, implied by the sources from which the data are constructed, must also be considered. The accounts can then be balanced. Although a linear approximation is used to take account of the multiplicative restrictions, this approximation is found to be perfectly adequate.