Trade and Financial Flows in a World Accounting Framework: A Balanced WAM for 1990.

How accurately do we measure the external deficit of the United States or the surplus of Japan? If checked at the global level, statistics on international trade and finance show large discrepancies. Such global statistical discrepancies hamper the analysis and understanding of world economic developments. An accounting framework--labelled World Accounting Matrix (WAM)--is proposed to cross-check the statistical consistency of commodity flows, international payments and internal balances across countries. The framework is applied to data for 1990. To obtain global consistency, substantial adjustments had to be made to the estimates of the external balances of the United States and Japan. The implications for global modeling work are potentially vast. Copyright 1995 by The International Association for Research in Income and Wealth.