estimation of gdp from the expenditure side workshop on national accounts for asian member states of...
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Estimation of GDP Estimation of GDP
from the expenditure sidefrom the expenditure side Workshop on National Accounts Workshop on National Accounts for Asian for Asian Member States of the Organization of Islamic Member States of the Organization of Islamic
ConferenceConference
Ankara, 1-2 December 2008Ankara, 1-2 December 2008
UN Statistics DivisionUN Statistics Division
Expenditure components of GDPExpenditure components of GDP
Lecture outline:Lecture outline: For each expenditure categoryFor each expenditure category
ScopeScope Specific issuesSpecific issues MeasurementMeasurement Data sourcesData sources
Expenditure components of GDPExpenditure components of GDP Household final consumptionHousehold final consumption Government final consumptionGovernment final consumption Changes in inventoriesChanges in inventories Gross fixed capital formationGross fixed capital formation Acquisition less disposals of valuablesAcquisition less disposals of valuables Exports and importsExports and imports
Expenditure components of GDP – Sectors involvedExpenditure components of GDP – Sectors involved
HouseholdHousehold Household final consumptionHousehold final consumption Gross fixed capital formationGross fixed capital formation Changes in inventoriesChanges in inventories Acquisition less disposals of valuablesAcquisition less disposals of valuables
GovernmentGovernment Government final consumptionGovernment final consumption Gross fixed capital formationGross fixed capital formation Changes in inventoriesChanges in inventories Acquisition less disposals of valuablesAcquisition less disposals of valuables
CorporationsCorporations Gross fixed capital formationGross fixed capital formation Changes in inventoriesChanges in inventories Acquisition less disposals of valuablesAcquisition less disposals of valuables
NPISHNPISH Consumption NPISHConsumption NPISH Gross fixed capital formationGross fixed capital formation Changes in inventoriesChanges in inventories Acquisition less disposals of valuablesAcquisition less disposals of valuables
ROWROW Imports and exportsImports and exports
What is consumption?What is consumption?
Expenditure?Expenditure? through payment or through incurrence of a through payment or through incurrence of a
liabilityliability Monetary and non-monetaryMonetary and non-monetary
(barter, own account)(barter, own account) some transfers in kind deemed transfers in some transfers in kind deemed transfers in
cash cash (e.g. international relief goods, social (e.g. international relief goods, social
transfers in kind)transfers in kind)
Acquisition?Acquisition? Expenditure, Expenditure, plusplus all other transfers in kindall other transfers in kind
Use?Use? Actual consumption:Actual consumption: All acquisitions, All acquisitions, plusplus (for households) (for households) Individual consumption of government and Individual consumption of government and
NPISHNPISH
Accounting RulesAccounting Rules
ValuationValuation Purchaser price:Purchaser price:The purchaser's price is the amount paid by The purchaser's price is the amount paid by the purchaser, excluding any deductible VAT the purchaser, excluding any deductible VAT or similar deductible tax, in order to take or similar deductible tax, in order to take delivery of a unit of a good or service at the delivery of a unit of a good or service at the time and place required by the time and place required by the purchaser. The purchaser's price of a good purchaser. The purchaser's price of a good includes any transport charges paid includes any transport charges paid separately by the purchaser to take delivery separately by the purchaser to take delivery at the required time and placeat the required time and place..
TimingTiming AccrualAccrual
Household final consumptionHousehold final consumption
Scope:Scope:• Purchase of goods and servicesPurchase of goods and services• Own account production of goodsOwn account production of goods• Owner occupied dwellingsOwner occupied dwellings• Services produced by paid domestic staffServices produced by paid domestic staff• Compensation of employees in kindCompensation of employees in kind• Expenditures on financial intermediation servicesExpenditures on financial intermediation services• Services insurance and pension fundsServices insurance and pension funds• Certain licenses and feesCertain licenses and fees
Household final consumptionHousehold final consumptionHousehold as consumerHousehold as consumer
Each household is a consumerEach household is a consumer
Some households are also producersSome households are also producers• Households with an unincorporated enterpriseHouseholds with an unincorporated enterprise• Household that live in their own home (owner Household that live in their own home (owner
occupied dwellings)occupied dwellings)
Expenditures on goods and services by Expenditures on goods and services by households as households as producersproducers are either are either intermediate consumptionintermediate consumption or or fixed capital fixed capital formationformation
Household final consumptionHousehold final consumption
ResidencyResidency Household final consumption expenditureHousehold final consumption expenditure
Some households are also producersSome households are also producers• IncludesIncludes: expenditures of residents abroad: expenditures of residents abroad
• ExcludesExcludes: expenditures of non-residents: expenditures of non-residents
Specific issuesSpecific issues Free services provided by employerFree services provided by employer Goods produced by household for own consumptionGoods produced by household for own consumption Purchase of services from other householdPurchase of services from other household Distinction between wages in kind and intermediate Distinction between wages in kind and intermediate
consumption by employersconsumption by employers
Household final consumptionHousehold final consumption
Data sources:Data sources: Household budget surveysHousehold budget surveys Retail trade statisticsRetail trade statistics Administrative dataAdministrative data Production dataProduction data Foreign trade data (cif to purchaser price)Foreign trade data (cif to purchaser price)
Compilation methodsCompilation methods Direct observationsDirect observations Benchmark to indicator methodBenchmark to indicator method Commodity flow methodCommodity flow method
Household final consumptionHousehold final consumption
Validation of estimates:Validation of estimates: Growth ratesGrowth rates
Correlation with development in disposable Correlation with development in disposable income, wages and salariesincome, wages and salaries
Comparison of implicit deflator with CPIComparison of implicit deflator with CPI
Development of saving ratioDevelopment of saving ratio
Comparison of composition of consumption Comparison of composition of consumption over timeover time
Government final consumptionGovernment final consumption
Scope:Scope: Government agencies (usually defined by law)Government agencies (usually defined by law)
PlusPlus
NPIs mainly controlled and financed by government NPIs mainly controlled and financed by government unitsunits
What does government produce?What does government produce? Non-market outputNon-market output
• General administrationGeneral administration• Specific services for general population (e.g. foreign policy)Specific services for general population (e.g. foreign policy)• Individual services (e.g. education and health services)Individual services (e.g. education and health services)
Market outputMarket output (usually small) (usually small)
Government final consumptionGovernment final consumption
How is the Government output measured?How is the Government output measured?
Non-market producer in general Non-market producer in general
output valuation on cost basisoutput valuation on cost basis
Thus the Thus the output output is the sum ofis the sum of • Compensation of employeesCompensation of employees• Intermediate consumptionIntermediate consumption• Consumption of fixed capitalConsumption of fixed capital• Other taxes on productionOther taxes on production
Government final consumptionGovernment final consumption
Who uses government non-market output?Who uses government non-market output?
Expenditure approach: Expenditure approach: GovernmentGovernment
Actual consumption:Actual consumption:• General administration and services for the General administration and services for the
population as a whole population as a whole GovernmentGovernment• Individual government servicesIndividual government services HouseholdHousehold
Government final consumptionGovernment final consumption
MeasurementMeasurement
Government final consumptionGovernment final consumption= = Total outputTotal output- Goods and services sold on the market- Goods and services sold on the market+ Goods and services purchased to be provided free to the + Goods and services purchased to be provided free to the
populationpopulation
ValuationValuationNo product taxes No product taxes on government outputon government output
Thus for government;Thus for government;Consumption equals non-market outputConsumption equals non-market output
Government final consumptionGovernment final consumption
EstimationEstimation
Most common sourcesMost common sources
Government accountsGovernment accounts
Main estimation processMain estimation process Adjustment for time of recordingAdjustment for time of recording ReclassificationsReclassifications Competing coverage Competing coverage
(e.g. local government, extra budgetary units)(e.g. local government, extra budgetary units)
Consumption of NPISHsConsumption of NPISHs
What are non-profit institutions serving householdsWhat are non-profit institutions serving households
NPIS are legal or social entities NPIS are legal or social entities Created for the purpose of producing goods and services Created for the purpose of producing goods and services Can not be a source of income, profit or gains for the Can not be a source of income, profit or gains for the
units that establish, control or finance them. units that establish, control or finance them. Articles of association prevents sharing benefits by Articles of association prevents sharing benefits by
owners of NPIsowners of NPIs Serving householdsServing households
Examples:Examples:• Cultural institutions Cultural institutions • Philanthropic InstitutionsPhilanthropic Institutions• Religious InstitutionsReligious Institutions• Charitable InstitutionsCharitable Institutions• Political partiesPolitical parties• Sports clubsSports clubs• Other recreational organizationsOther recreational organizations
Consumption of NPISHsConsumption of NPISHs
What do NPISHs produce?What do NPISHs produce?
Generally:Generally: Goods and services provided for freeGoods and services provided for free to householdsto households
Possibly:Possibly: Small scale market Goods and servicesSmall scale market Goods and services
Examples of Goods and services provided for freeExamples of Goods and services provided for free Charity (e.g. free food for the poor)Charity (e.g. free food for the poor) Religious events and counseling political representationReligious events and counseling political representation Meeting facilitiesMeeting facilities Consumer supportConsumer support Health servicesHealth services Vocational training Vocational training
Consumption of NPISHsConsumption of NPISHs
How is the NPISHs output measured?How is the NPISHs output measured?
Non-market producer in general Non-market producer in general
output valuation on cost basisoutput valuation on cost basis
Thus the Thus the output output is the sum ofis the sum of • Compensation of employeesCompensation of employees• Intermediate consumptionIntermediate consumption• Consumption of fixed capitalConsumption of fixed capital• Other taxes on productionOther taxes on production
Consumption of NPISHsConsumption of NPISHs
Who uses non-market output of NPISHs?Who uses non-market output of NPISHs?
Expenditure approach: Expenditure approach: NPISHs themselveNPISHs themselve
Actual consumption: Actual consumption: HouseholdsHouseholds
Measurement and valuationMeasurement and valuation Consumption NPISH = Total output - Output soldConsumption NPISH = Total output - Output sold
General assumption in 1993 SNA: NPISHs do not pay taxes on their General assumption in 1993 SNA: NPISHs do not pay taxes on their outputoutput
Thus for NPISHs Thus for NPISHs
Consumption equals OutputConsumption equals Output (non-market) (non-market)
Consumption of NPISHsConsumption of NPISHs
Data sourcesData sources
Census/surveys of NPISHsCensus/surveys of NPISHs
Household budget surveysHousehold budget surveys
Administrative records (e.g. umbrella Administrative records (e.g. umbrella organizations)organizations)
Changes in inventoriesChanges in inventories
Four types of inventoriesFour types of inventories
Finished goodsFinished goods
Goods to be used in the production processGoods to be used in the production process
Goods for resaleGoods for resale
Work-in-progressWork-in-progress (e.g. buildings under construction, crops in the field, livestock (e.g. buildings under construction, crops in the field, livestock
for production while maturing, fruit trees while growing)for production while maturing, fruit trees while growing)
Changes in inventoriesChanges in inventories
ValuationValuation
Main concern:Main concern: Avoiding including holding gains Avoiding including holding gains and losses in the value of transactionsand losses in the value of transactions
Thus:Thus: Goods:Goods:
• Additions to inventoriesAdditions to inventories: at prices prevailing at the time : at prices prevailing at the time of their entryof their entry
• Withdrawals from inventoriesWithdrawals from inventories: at prices prevailing at the : at prices prevailing at the time of withdrawaltime of withdrawal
Work-in-progress:Work-in-progress:• Additions to inventoriesAdditions to inventories: at prices prevailing at the time : at prices prevailing at the time
of their entry or costs plus mark upof their entry or costs plus mark up• Withdrawals from inventoriesWithdrawals from inventories: at prices prevailing at the : at prices prevailing at the
time of withdrawal or costs plus mark up.time of withdrawal or costs plus mark up.
Changes in inventoriesChanges in inventories
Data SourcesData Sources
Business surveysBusiness surveys
Administrative data on stocks held by Administrative data on stocks held by government entitiesgovernment entities
Agricultural surveysAgricultural surveys
Building permitsBuilding permits
Capital FormationCapital Formation
What are they? DefinitionWhat are they? Definition
Usually goods but also servicesUsually goods but also services
That are ownedThat are owned
From which owner expects future From which owner expects future economic benefits over a period of time by economic benefits over a period of time by using it or holding it (asset boundary)using it or holding it (asset boundary)
That will be used for more than one yearThat will be used for more than one year
Fixed Capital FormationFixed Capital Formation
What are they? ScopeWhat are they? Scope
They includeThey include
• New capital goodsNew capital goods
• Existing capital goodsExisting capital goods
• Improvements to existing capital goodsImprovements to existing capital goods
They can beThey can be • PurchasedPurchased• Self-producedSelf-produced
Fixed Capital Formation – Main TypesFixed Capital Formation – Main Types
Fixed assetsFixed assets• DwellingsDwellings• Other buildings and structures including land improvementsOther buildings and structures including land improvements
Machinery and equipmentMachinery and equipment• Transport equipmentTransport equipment• ICT equipmentICT equipment• Other machinery and equipmentOther machinery and equipment
Weapon systemsWeapon systems
Cultivated biological resourcesCultivated biological resources• Animal resources yielding repeat products.Animal resources yielding repeat products.• Tree, crop and plant resources yielding repeat productsTree, crop and plant resources yielding repeat products
Costs of ownership transfer on non-produced assets Costs of ownership transfer on non-produced assets
Intellectual property productsIntellectual property products
• Research and development Research and development • Mineral exploration and evaluation Mineral exploration and evaluation • Computer software and databasesComputer software and databases
Entertainment, literary or artistic originals Entertainment, literary or artistic originals
Other intellectual property productsOther intellectual property products
Fixed Capital FormationFixed Capital Formation
ValuationValuation Market pricesMarket prices Cost plus mark-upCost plus mark-up Discounted future benefitsDiscounted future benefits
Time of recordingTime of recording Change of ownershipChange of ownership When construction takes place under a When construction takes place under a
contract of sale agreed in advance the contract of sale agreed in advance the ownership of the structure is effectively ownership of the structure is effectively transferred in stages as the work proceedstransferred in stages as the work proceeds
Fixed Capital FormationFixed Capital Formation
Data sourcesData sources GeneralGeneral
• Surveys and censuses users and producersSurveys and censuses users and producers• Foreign trade statisticsForeign trade statistics
Construction, machinery and equipmentConstruction, machinery and equipment
• Survey of investorsSurvey of investors• Survey of construction company and other producersSurvey of construction company and other producers• Administrative data (e.g. building permits)Administrative data (e.g. building permits)• Foreign trade statisticsForeign trade statistics
Livestock, timber etc.Livestock, timber etc.• Agricultural censuses and surveysAgricultural censuses and surveys• Administrative dataAdministrative data
ValuablesValuables
What are they? DefinitionWhat are they? Definition
Valuables are assets that:Valuables are assets that:• Are acquired as store of wealthAre acquired as store of wealth• Are not used up in productionAre not used up in production• Do not deteriorate over timeDo not deteriorate over time
Examples:Examples:
• Precious stones and metalsPrecious stones and metals• AntiquesAntiques• Works of artsWorks of arts• JewelleryJewellery
Data sources:Data sources: Household surveysHousehold surveys Retail trade surveys Retail trade surveys Surveys and censuses of producersSurveys and censuses of producers
Exports and ImportsExports and Imports
Scope:Scope:
Besides general cases of imports and Besides general cases of imports and exports, this also includes:exports, this also includes:
• Barter transactionBarter transaction• giftsgifts• Shuttle tradeShuttle trade• Goods for processingGoods for processing• Construction servicesConstruction services• Installation servicesInstallation services• Financial servicesFinancial services• Trade and transport servicesTrade and transport services• Transactions with extra territorial enclavesTransactions with extra territorial enclaves
Exports and ImportsExports and Imports
Sources:Sources:
Foreign trade statisticsForeign trade statistics
Problems:Problems: Time of recordingTime of recording CoverageCoverage Currency denominationCurrency denomination
Balance of payments statisticsBalance of payments statisticsProblems:Problems:
Lack of detailsLack of details coveragecoverage Currency denominationCurrency denomination