Government final consumption expenditure (GFCE) is an aggregate transaction amount on a country's
national income accounts representing
government expenditure
Public expenditure is spending made by the government of a country on collective needs and wants, such as pension, provisions, security, infrastructure, etc. Until the 19th century, public expenditure was limited as laissez faire philosophies b ...
on goods and services that are used for the direct satisfaction of individual needs (''individual
consumption'') or collective needs of members of the community (''collective consumption'').
It consists of the value of the goods and services produced by the government itself other than own-account
capital formation
Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways:
*It is a specific statistical concept, also known as net inve ...
and sales and of purchases by the government of goods and services produced by market producers that are supplied to households - without any transformation - a
social transfersin kind (for more detail, see, for example, Lequiller and Blades (2014)
[Chapter 5.3 in Lequiller, F. and D. Blades (2014), Understanding National Accounts: Second Edition, OECD Publishing. http://dx.doi.org/10.1787/9789264214637-en])
Data
Data on government final consumption expenditure shed light on the involvement of governments in providing goods and services for the direct needs of the population. A high government share in the provision of individual consumption goods and services is often found in countries known as
welfare state
A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...
s. This may be illustrated by looking at data for the European Union (downloadable from Eurostat's database providing figures o
government expenditure:
*Approximately one quarter of the economy-wide final consumption expenditure in the European Union of 27 member states is made by governments; countries with relatively large government shares in final consumption expenditure are Denmark, Luxembourg, the Netherlands, Finland and Sweden (around one-third of their final consumption expenditure).
*60% of the governments' final consumption expenditure in the European Union of 27 member states is individual consumption; the largest shares of individual consumption in government final consumption expenditure are observed for Sweden (more than 70%).
*These findings mirror the importance of social transfers in kind in European countries, where the share of
household final consumption expenditure
Household final consumption expenditure (POES) is a transaction of the national account's use of income account representing consumer spending. It consists of the expenditure incurred bresident households on individual consumption goods and servi ...
in actual final consumption of the households is often less than 80%.
See also
*
Final consumption expenditure In the national accounts expenditure on goods and services that are used for the direct satisfaction of individual needs (''individual consumption'') or collective needs of members of the community (''collective consumption'') is recorded in the us ...
*
Household final consumption expenditure
Household final consumption expenditure (POES) is a transaction of the national account's use of income account representing consumer spending. It consists of the expenditure incurred bresident households on individual consumption goods and servi ...
*
Government spending
Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual ...
Notes
References
*Databases
**Eurostat
National accounts data(including government final consumption expenditure), member states of the European Union and other countries
*Further information:
**Eurostat
National accounts website**F. Malherbe
Le site de la comptabilité nationale(in French language)
External links
Government final consumption expenditure
{{DEFAULTSORT:Government Final Consumption Expenditure
National accounts
Expenditure