Institutional Units and Sectors

2

Th is chapter defi nes and describes the concepts of resi-
dence, institutional units, and sectors, and then uses
those concepts to delineate the general government and
public sectors, and to discuss practical applications of
sector classifi cation principles.

Introduction.

2.1 In principle, GFS should cover all entities
that materially aff ect fi scal policies. Normally, fi s-
cal policies are carried out by entities, established by
political processes, wholly devoted to the economic
functions of government (see paragraph 2.38), such
as government ministries or municipal councils.
Th e term “government” is oft en used as a collec-
tive noun for various combinations of entities in a
country involved in the functions of government,
or reference is made to the various individual gov-
ernments of a country. For example, a country may
have one central government; several state, provin-
cial, or regional governments; and many local gov-
ernments. Nonprofi t institutions under government
control may also exist. In addition to those entities,
government-owned or controlled enterprises that
engage in some commercial activities may be instru-
ments of fi scal policy (see paragraphs 2.104–2.105).
Th ese government-owned enterprises, such as the
central bank, post offi ce, or railroad, which are oft en
referred to as public corporations, state-owned en-
terprises, or parastatals in a legal sense, may be part
of the general government or public sector, and sta-
tistics should be compiled for all of them.

2.2 Determining the coverage of the entities in-
cluded in GFS requires determining economic terri-
tory, using the residence criteria (see paragraph 2.6),
before considering two questions. First, what is the
statistical unit for which it is feasible and meaningful
to collect statistics? Second, which of those statistical
units should be included in GFS?

2.3 Th e statistical unit employed in the insti-

tutional sector classifi cation in GFS is the institu-

tional unit, the same unit that is the foundation of

the 2008 SNA and other macroeconomic datasets.^1

Th is chapter therefore defi nes (see paragraph 2.22),

and describes, types of institutional units (see para-

graph 2.26).

2.4 Regarding the coverage of GFS, two principal

constructs are used in macroeconomic datasets. First,

the general government sector, which is primarily

engaged in nonmarket activities, is defi ned (see para-

graph 2.58). Second, the public sector is defi ned to

also capture the market activities and the quasi-fi scal

operations of public corporations (see paragraph

2.63) such as the central bank and other public cor-

porations. Quasi-fi scal operations are government

operations carried out by institutional units other

than general government units. Th ese quasi-fi scal

operations have the same fi scal policy impact on the

economy as those of government units (see paragraph

2.38). A number of subsectors of the general govern-

ment and public sectors are also defi ned because of

their analytical usefulness.

2.5 Th e remainder of this chapter defi nes the con-

cept of residence to delineate an economy, and de-

scribes institutional units and the types of institutional

units that exist in macroeconomic statistics before

defi ning the institutional sectors. Th e chapter applies

these concepts to delineate the general government

sector and the public sector. Finally, a decision tree to

assist with the classifi cation of public sector entities

and the application of sector classifi cation principles

to some examples are discussed.

(^1) Maintaining a list or register of these units and their sector
classifi cation will ensure consistent classifi cation in all macroeco-
nomic datasets.