A consistency framework for macroeconomic analysis

Macroeconomic consistency is the requirement that budget constraints be observed for all participants in the economy. This paper presents the elements of a macroeconomic accounting framework in current prices. The framework is based on five accounts, corresponding to the following macro identities: (1) national accounts identity; (2) government identity; (3) balance of payments identity; (4) monetary identity; and (5) nonfinancial private sector identity. A basic consistency framework requires that all of these identities be simultaneously satisfied. These would be the miniumum elements of a consistency framework. The paper also indicates where further disaggregation might be useful. It presents the individual accounts first, and then integrates them through a matrix of income expenditure, saving, and asset and liability accumulation. Examples of this framework are presented for Colombia and Zimbabwe.