Debtor versus creditor principle of interest recording in macroeconomic statistics. A comment – by

August 31, 2002 Die – France Debtor versus creditor principle of interest recording in macroeconomic statistics A comment – by Philippe de Rougemont 1. This paper intends to suggest additional arguments in favor of the debtor principle 1and against the creditor principle of interest recording in macroeconomic statistics. While recognizing the formidable power of attraction of the creditor principle, both at the conceptual and compilation level, the paper points at some overlooked arguments and recommends sticking to the debtor principle – until financial techniques are such that new levels of wide, massive and systematic use of refinancing by all institutional units warrant a revisiting. 2. Under the creditor principle, the interest flow (D.41) is equal to the current (market) yield to maturity (CYTM) times the current (market) value of the instrument: its amount therefore varies over time in sympathy with market yields changes, even for fix-rate instruments. Under the debtor principle, the interest flow (D.41) is equal to the CYTM at 2time of issue of the instrument times the amount of principal outstanding : its amount is 3therefore fixed at time of issue for all successive future periods . 3. Although the market prices of securities by construction vary inversely with market yields, this is insufficient to ensure a constant product (CTYM times the market price). Such a product will be a function of the current premium/discount ...