Anda di halaman 1dari 55

GDP by Type of Expenditure

A.C. Kulshreshtha UN Statistical Institute for Asia and the Pacific

Show demand for goods and services Stimulus to the economy Use of supply of goods and services Link to welfare and production capacity Link with the rest of the world

Why GDP by Expenditure?

GDP by Expenditure
Estimates based on the supply and use of goods and services Estimate is at purchasers prices Estimate is equal to GDP by economic activity at market or purchasers price

What Are the Type of Expenditure?


Final consumption expenditure
Households General government Non profit institutions serving households

Gross domestic capital formation


Fixed assets, produced and non produced Inventory Valuables

Net export
Export of goods and services Import of goods and services
4

Final Consumption Expenditure

What Are Final Consumption Expenditure?


Expenditure on goods and services by consumer institutions
General government Households Non profit institutions serving households

Consumption expenditure on goods and services from supply of goods and services in the economy during the period
6

1.Household Consumption Expenditure


Consumption expenditure of resident household in the economic territory
From domestic production From imports of goods and services

Consumption expenditure of resident households in other economic territory


Import of goods and services

Household Consumption Expenditure?


(Contd.)

Households final consumption expenditure


Goods and services acquired/used/ consumed for well being of the members
Food, clothing, housing, transport, education, health, personal needs, durables, other miscellaneous expenditure

Purchased, own produced, barter, gifts,

1. Household Consumption Expenditure? (Contd.)


Consumption expenditure includes:
Purchases of goods and services Own production of goods, housing services and domestic services of paid employees Gifts received in kind Consumption expenditure of members of institutional households Durables for exclusive use of household or its members
9

Household Consumption Expenditure?


(Contd.)

Consumption expenditure excludes:


Purchases for household operated activities Expenditure of household on acquisition of house Expenditure of household for gifts to other households Expenditure of household for gifts to charities or other transfers

10

Household Consumption Expenditure?


(Contd.)

Consumption expenditure is valued at purchasers price Consumption expenditure is net of sale by household of second hand goods (clothing, household equipment, other goods previously purchased by households)

11

Classification of Individual Consumption by Purpose(COICOP) 1. 2. 3. 4. Food,and non alcoholic beverage Alcoholic beverage, tobacco and narcotics Clothing and footwear Housing, water, electricity, gas and other fuels 5. Furnishing, household equipment and routine maintenance of house

12

Classification of Individual Consumption by Purpose (COICOP) (Contd.)


6. Health 7. Transport 8. Communication 9. Recreation and culture 10. Education 11. Restaurant and hotels 12. Miscelleneous goods and services
13

How Household Consumption Expenditure is compiled? Direct use of Sources of data


Household expenditure survey Food Balance Sheet Balance of Payments statistics Retail trade survey

Commodity Flow Approach


Availability of good/service IC GC GFCF -Exports

14

What is Actual Final Consumption of Household? The value of goods and services that the household consumed or used. This includes:
Household consumption expenditure. Social transfer in kind from general government and non profit institutions.

15

What is Social Transfer-in-kind?


The value of general government consumption expenditure which benefits individual household or its members The total value of consumption expenditure of NPISH This is a transfer of services or goods for which the general government and NPISH has recorded as part of their consumption expenditure

16

What is Social Transfer-in-kind?(Contd.) The value of social transfer in kind is recorded as income in resource side of Redistribution of Income Account of household and as expenditure in Use of Adjusted Disposable Income of household.

17

What is Social Transfer-in-kind?(Contd.) The social transfer in kind is recorded in the use side of the redistribution of income account and subtracted from the consumption expenditure of in the use of adjusted disposable income of general government and NPISH

18

What is Social Transfer-in-kind?(Contd.)


The expenditure of government and NPISH that are classified under social transfer in kind includes:
Health services Education Culture, religion,social security and welfare services Housing and refuse collection Also includes purchases of goods or services of government that is directly provided to households not included in GO of any of general government production activities
19

Example on How to Treat Social Transfer in Kind


Example:government spent 50 million on the state
university. The record showed there was a revenue of 12 million from tuition, sale of books, and other services provided to the public. The treatment would be Household consumption expenditure = 12 million Government consumption expenditure= 50 12 = 38 million

20

Example on How to Treat Social Transfer in Kind (Contd.)


Example:government spent 50 million on the state
university. The record showed there was a revenue of 12 million from tuition, sale of books, and other services provided to the public. The treatment would be Government consumption expenditure for education is social transfer in kind Social transfer in kind = 38 million Household adjusted income + 38 million and household actual final consumption = 12+ 38 = 50

21

What is Household Consumption Expenditure?


Use Household consumption expenditure Resources Disposable income
Compensation Property income Current transfer

Household saving

22

What is Household Actual Final Consumption? (Contd.)


Use Actual household consumption
Household consumption expenditure Individual consumption expenditure of government and NPISH ( Social transfer in kind) Household saving

Resources Adjusted disposable income


Household disposable income Government and NPISH social transfer in kind

23

2. Government Consumption Expenditure


Gross value of output less sale of goods and services of the following economic activities of general government
Public administration Education services Health services Other related services produced by general government
24

Coverage of Government Consumption Expenditure


Includes government purchases intended primarily as current transfer in kind, not used as intermediate input of production of services
Government purchased food to be distributed to the victims of flood Government purchased blankets to be distributed to the homeless

25

Estimation of GCE
Government consumption expenditure GCE = GO- Sales GO = gross output of general government Sales = sales of goods and services of government services

26

Type of Government Consumption Expenditure


Government consumption expenditure is classified into:
Individual consumption expenditure Expenditure whose recipient are individual persons or individual households(health services, education services, sports, social welfare) Collective consumption expenditure expenditure for general population-public goods- (public administration, police, etc..)
27

Sources of Data

What Is General Government Consumption Expenditure?

Government Finance Statistics Statement of Revenue and Expenditure of national and local government National Budget Statement Budget documents (Demand for Grants) of Central Government (all Ministries), all State Governments and all Local bodies
28

Classification of Function of Government(COFOG)


1. 2. 3. 4. 5. General public services Defence Public order and safety Economic affairs Environmental protection

29

Classification of Function of Government(COFOG) (Contd.)


6. 7. 8. 9. 10. Housing and community ammenities Health Recreation,culture and religion Education Social protection

30

The value of services of NPISH less the sale or receipt from goods and services Expenditure is generally funded through donations, current transfers, property income and operating surplus of market establishment of NPISH All expenditure of NPISH are taken as individual consumption expenditure and is social transfer in kind to households

3. What is Non-Profit Institutions Serving Households (NPISH) Consumption Expenditure?

31

3. Consumption Expenditure of NPISH


Final consumption expenditure of NPISH equals output of NPISH less sale of goods and services FCE = GO ( NPISH) Sales All Final consumption expenditure of NPISH is classified as individual consumption expenditure

32

Classification of the Purpose of the NPISH (COPNI)


1. 2. 3. 4. 5. 6. 7. 8. 9. Housing Health Recreation and culture Education Social protection Religion Political parties, labour and Environmental protection Services n.e.c.
33

4. Actual Final Consumption


Actual final consumption of households = household final consumption expenditure + individual consumption expenditure of general government + individual consumption expenditure of NPISH

34

4. Actual Final Consumption


Actual final consumption of general government = Government consumption expenditure individual consumption expenditure of general government

35

4. Actual Final Consumption


Actual final consumption of NPISH = NPISH consumption expenditure - individual consumption expenditure of of NPISH

36

5. Gross Domestic Capital Formation

37

Gross domestic capital formation

Acquisition of non financial assets less disposal of new or existing tangible fixed assets Acquisition of non financial assets less disposal of new or existing intangible fixed assets Major improvement of tangible non produced assets Cost of transfer of ownership of non produced assets
38

Some Issues to Consider


Capital assets are used repeatedly for production, including: animals, plants,etc..
Treated as addition to inventory while growing Treated as fixed assets once production starts Death and reduction of productivity taken as CFC

Include produced assets acquired by purchases, barter, capital transfers and produced for own use

39

Some Issues to Consider


Only transfer cost of non produced assets are included in capital formation Household durables for household operated activities and household own use should be allocated to GDCF and HCE

40

Prices Used in Change in Inventory


addition withdrawal Finished product basic basic Goods in progress basic basic Goods for resale purchasers purchasers Raw materials purchasers purchasers Supplies purchasers purchasers

41

Estimation of Change in Inventory


= value of addition value of withdrawal recurrent losses = (volume of closing inventory volume of opening inventory) * average price during the period = value at closing inventory value at opening inventory
42

Estimation of Capital Formation on Non Produced Assets


Improvement of non produced assets Include transfer cost in change of ownership
Commission Taxes Other cost

43

6. Export and Imports of Goods and Services

44

Transactions With Rest of the World

Goods and services (included in estimation of GDP by expenditure) Incomes (flows of factor services: payment for resources of resident institutions used by rest of the world such as labour income, investment income and rent of natural resources) Capital Financial instruments
45

Transactions of Goods and Services With Rest of the World

Exports flow of goods and services from resident units to non resident units Imports flow of goods and services from non resident units to resident units

46

Transactions of Goods and Services With Rest of the World


Transactions of goods classified using
Harmonized system ( developed by international Customs association for tax purposes) System of International Trade classification ( SITC)

Recorded when transfer of ownership takes place, in practice when recorded in:
Customs ( crosses geographic boundary) Purchases of non resident in economic territory

47

Transactions of Goods and Services With Rest of the World


Exports
Goods valued at f.o.b. free on board( excludes value of insurance and freight) during change of ownership or as the goods crosses the customs boundary Trade in non factor services include provision of services to non residents
Merchandising of goods Transport, insurance, hotels and restaurants, etc..

Data on transaction of goods taken from customs manifest and institutions purchasing from local economy ( embassies and non resident institutions)
48

Transactions of Goods and Services With Rest of the World


Exports
Data on exports of services includes exports of non factor services and purchases of non resident from resident institutions Data on export of services are taken from surveys or transactions from the banks, purchases of non resident in domestic territory are recorded as travel in BOP. Exports could be understated by undervaluation, smuggling, misdeclaration, undercoverage and cross boarder trade and other unrecorded flows such as ecommerce in services
49

Transactions of Goods and Services With Rest of the World


Imports
Includes both imports of goods and non factor services Goods are valued at CIF ( cost, insurance and freight) at customs boundary but national accounts compilation removes insurance and freight and transfer to services Imports of goods purchased by resident during travel to rest of the world is recorded as services under travel

50

Transactions of Goods and Services With Rest of the World


Imports
Data on imports of goods and services are understated by smuggling, undervaluation , e-commerce, and underrecording of transactions, and payment outside the banking system. Transactions of other services are difficult to measure, e,g communication, computer services ( such as development of software) and e- commerce

51

Transactions of Goods and Services With Rest of the World


Some exclusion in transactions of goods and services with rest of the world
Transactions of non resident units in the economy with rest of the world flows of sample product, goods for exhibition, goods for repair and for rent Flows of goods of returning residents

52

Transactions of Goods and Services With Rest of the World


Some exclusion in transactions of goods and services with rest of the world
Factor services ( labour, financial resources, etc) Goods under operational leasing or for rent

53

Standard International Trade Classification(SITC)


0 1 2 3 - Food and live animals - Beverages and tobacco - Crude materials, inedible, except fuels - Mineral fuels, lubricants and related materials 4 - Animal and vegetable oils, fats and waxes 5 - Chemicals and related products, n.e.s.

54

Standard International Trade Classification(SITC)


6 - Manufactured goods classified chiefly by material 7 - Machinery and transport equipment 8 - Miscellaneous manufactured articles 9 - Commodities and transactions not classified elsewhere in the SITC I - Gold, monetary II - Gold coin and current coin

55