ABSTRACT
The number of self-employed (ES) is treated as exogenous (see Treasury, 1979, Group 3, equation (1» and income from self-employment (SE) is included as a simple proportion of GDP at market prices (GDPM*) after deducting indirect taxes on consumption (TXC), on exports (TXX) and on imports (TXPD) and the employers' national insurance surcharge (TXNI). (The coefficient is taken, with slight amendment, from Horton, 1980, Group 5, equation (2).)
Personal sector net receipts of dividends and interest (DDIRPE) are modelled explicitly (using an aggregation of the equations found in Treasury, 1979, Group 63, and Horton, 1980, Group 4). Again as with the overseas interest and dividend flows, the method used, in the absence of a comprehensive set of appropriate stock variables, means using last periods flow plus (or minus) the new debt times the current interest rate. As has already been pointed out, this means that there is no easy way to make allowance for changes in the rate of interest ruling on outstanding debt. The personal sector is modelled as taking up a fixed proportion (Cl = 80 per cent) of the increase in public sector debt (-NAFPU) and the personal sector is supposed to receive 80 per cent of the debt interest paid by the government sector; part of their holdings of government debt ([1 = 47 per cent) are assumed to receive the short-term rate of interest (RSH)
and the remainder to receive the long-term rate (RLG). (See Treasury, 1979, Group 63, equation (18).) The personal sector receives the whole of the dividend payments by the company sector (D VPCO) and is modelled as paying a proportion (C2 = 23 per cent) of the interest on long-term capital inflow (ClL). There is no explicit treatment of the payment of interest to the company sector on bank borrowing since this is largely offset by holdings of interest bearing bank deposits.
