Review of Expenditure
Aggregates
Derek Blades
World Bank Consultant
Contents

Expenditure aggregates

Valuation

Two measures of consumption
Main expenditure
aggregates
Expenditure Aggregates of 1993 SNA
Final Consumption Expenditure
Households
Non-profit Institutions Serving Households
Government:
• Individual
• Collective
Gross capital formation
Gross fixed capital formation
Changes in inventories
Acquisitions, less disposals, of valuables
Balance of Exports and Imports
Exports of goods and services
Imports of goods and services
Gross Domestic Product
Expenditure Aggregates of 1993 SNA
Final Consumption Expenditure
Households
Non-profit Institutions Serving Households
Government:
• Individual
• Collective
Gross capital formation
Gross fixed capital formation
Changes in inventories
Acquisitions, less disposals, of valuables
Balance of Exports and Imports
Exports of goods and services
Imports of goods and services
Gross Domestic Product
Categories
Groups
Classes
Basic
Headings
Consumption expenditure by households
13
43
90
110
Consumption expenditure by NPISHs
1
1
1
1
Consumption expenditure by government:
Individual
Collective
5
1
7
1
16
5
21
5
Gross fixed capital formation
3
6
11
12
1
1
1
2
Acquisitions less disposals of valuables
1
1
1
2
Balance of exports and imports
1
1
1
2
GDP
26
61
126
155
Main Aggregates
Change in inventories
Household consumption expenditure

“Real” expenditures
• food, clothing, transport, rent,
services….

Imputed expenditures:
• rents of owner-occupiers
• food and other goods for own
consumption
• goods and services provided
as income in kind
Consumption expenditure by NPISHs



Examples:
•
•
•
•
religious organisations (mosques, temples, churches, schools, clinics,
hospitals)
trade unions
political parties in multi-party states
UNICEF, OXFAM, Red Crescent
Consumption expenditure is the total of:
•
•
•
•
•
compensation of employees,
intermediate consumption,
consumption of fixed capital,
taxes less subsidies on production
minus any payments received from households for services provided.
Only one basic heading – no breakdown by type
Consumption Expenditure by
Government
All levels of government are covered-central,
federal, provincial, local, townships …
Consumption expenditure is the total of:

•
•
•
•
•

compensation of employees,
intermediate consumption,
consumption of fixed capital,
taxes less subsidies on production
minus any payments received from households for
services provided.
Divided between “individual” and “collective”
Individual
versus
Collective

Most expenditures on housing, health,
recreation and culture, education and
social protection are individual. (21 basic
headings)

Expenditures on general public services,
defence, public order and safety,
economic affairs and environment
protection are collective. (5 basic
headings)
Gross fixed capital formation (GFCF)

Goods that are expected to be used in production for several
years

GFCF is always measured net of sales:
•
sales for scrap, sales to other domestic producers, exports of
second-hand assets

1993 SNA includes expenditures on software and on mineral
exploration in GFCF

Three basic headings:
•
•
•
Machinery and equipment
Construction
Other products
Change in inventories

Work in progress - construction, ships…

Stocks of raw materials, finished goods,
goods for resale, goods stored by
government as strategic reserves, such
as food and fuel.

Estimates may not be comprehensive
but should cover important items such as
food and fuel stocks, stocks of mining
companies, large retailers...
Acquisitions
Valuables

Valuables are goods
acquired as a store
of value:
•
•
•

less
Precious metals
Paintings and antiques
Jewellery
Not used in
production
disposal of
Valuation
Valuation - general rule


General rule is to use the prices at which
sales of goods and services are transacted
- “purchasers” (or “market”) prices.
These prices may be reduced by discounts
or rebates:
• bargaining, sales, bulk purchases…

Note that price data for ICP must
also reflect discounts or rebates.
Valuation - imputed rents

Use rents actually paid for similar kinds of
dwellings, in similar locations and with similar
facilities

If not possible, rents are valued at cost consumption of fixed capital, return on capital,
regular maintenance, and insurance
Valuation – goods produced for
own consumption

Prices in local markets
for livestock, vegetables,
fruit…

Estimated basic prices
for furniture, textiles,
hand-tools (retail prices
less sales taxes and
retail margins)
Valuation – Government and NPISH





Compensation of employees – not only wages
and salaries
Intermediate consumption – valued at
purchasers prices
Consumption of fixed capital – in current prices
(not historical)
Taxes less subsidies on production
minus any payments received from households
for services provided.
Valuation - GFCF

GFCF is valued at purchasers’ prices

Prices should include:
•
•
•

cost of transport
cost of installation
and any fees or taxes for transfer of ownership.
Own-account production of fixed capital assets
is valued at basic prices or, if not available, at
the costs of production.
Valuation - Change in Inventories

The change in inventories must reflect only
the physical change - not holding gains or
losses due to changes in prices during the
year.

The physical quantities of inventories at the
beginning and end of the year are usually
valued using the average prices over the
year or, failing that, mid-year prices.
Valuation - Exports and Imports

Exports of goods and services
•

Free-on-board (f.o.b.) prices
Imports of goods and services
•
Cost, insurance, freight (c.i.f.) prices
Two Measures of
Consumption
Two ways of looking at
consumption
 Who
buys?

Who consumes?
Consumption Expenditure
Actual Consumption

Consumption
expenditure

Actual consumption
•
Households:
•
Households
•
•
Non-profit institutions
•
•
•
Government:
•
•
Individual
Collective
versus
•
Household
expenditures
Non-profit institutions
Government individual
expenditures
Government:
•
Government collective
expenditures
To summarise:


Actual consumption of households consists of:
•
•
•
Actual consumption expenditure of government
consists of:
•

All consumption expenditure of households
All consumption expenditures of non-profit institutions
serving households
Individual consumption expenditures of government
Collective consumption expenditures of government
ICP compares actual consumption, not
consumption expenditures