1 AEG New York, 23 -25 April 2012 Issues related to military expenditures and the definition of...
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Transcript of 1 AEG New York, 23 -25 April 2012 Issues related to military expenditures and the definition of...
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Issues related to military expenditures and the definition of catastrophes in the measurement
of non-life insurance
AEG AEG New York, 23 -25 April New York, 23 -25 April 20122012
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Consumption of fixed capital on military expenditures
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SNA 1993 and SNA 2008
SNA 1993: Expenditure on military weapons systems to be recorded as intermediate consumption
SNA 2008: Expenditure on military weapons systems to be recorded as fixed capital formation (used continuously in the production of defence services, even if their peacetime use is simply to provide deterrence)
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Conceptual issue
How to account for losses due to the use of weapons systems during wartime and other military operations, as other changes in the volume of assets or as part of depreciation?
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Measurement issue
What service lives and what depreciation profiles to be used in the calculation of consumption of fixed capital and capital stock?
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BEA depreciation rates/service lives
Asset type Geometric depreciation rate
(percent)
Service life (years)
Aircraft:
Air frames 7 to 11 15 to 25
Engines 28 6
Strategic missiles N.A. (straight line) 20
Ships 6 to 7 25 to 30
Tanks and armored personnel carriers
8 20
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Definition of catastrophes in the measurement of non-life
insurance
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SNA 1993 and SNA 2008
SNA 1993: – Output of non-life insurance: premiums + premium
supplements (investment income attributed to policy holders) – claims
– Claims to be recorded as current transfers SNA 2008:
– Output of non-life insurance: adjusted premiums + adjusted premium supplements – adjusted claims (three approaches may be applied: expectations approach, accounting approach, cost approach)
– Exceptionally large claims due to major catastrophes may be recorded as capital transfers
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Conceptual issue
How to delineate claims to be recorded as capital transfers from those to be recorded as income transfers?– Should a major catastrophe be defined at the national
level?– What about international consistency in the recording of
cross-border transactions?– Alternative: ask the insurance industry to provide data
on claims related to major catastrophes