ABSTRACT
In a recent paper (Stone (1984)) I gave the results of an attempt at balancing a simple version of the British national accounts for the years 1969 through 1979. By this I mean adjusting the entries so that the accounts balance without the introduction of residual errors, unidentified items and other balancing entries. The technique I used is the old one of adjusting conditioned observations by the method of least squares and involves the simple task of formulating a matrix of independent constraints and the more difficult task of estimating the elements in a variance matrix of the initial entries in the accounts. The idea of adjusting the national accounts in this way was proposed in Stone, Champernowne and Meade (1942) but for a variety of reasons, discussed in Stone (1975), was never put to practical use until the last few years. Recently Byron (1978) presented an alternative formulation which makes it possible to balance very large accounting matrices without incurring prohibitive costs; and more recently still, further work in this direction has been done by my friend and colleague F. van der Ploeg (Ploeg (1982)), to whom I am indebted for carrying out the calculations in the present paper.
