General government spending by destination

General government final consumption can be broken down into two distinct groups. The first reflects expenditures for collective consumption (defence, justice, etc.) that benefit society as a whole, or large parts of society, and are often known as public goods and services. The second relates to expenditures for individual consumption (health care, housing, education, etc.), that reflect expenditures incurred by government on behalf of individual households. This category of expenditure is equal to social transfers in kind from government to households and so includes expenditure by government on market goods and services provided to households. As goods and services produced by government usually do not have a market price, the relevant products are valued at the sum of costs needed to produce these goods and services. These costs mainly consist of compensation of employees, intermediate consumption and depreciation. Final consumption of government can then be estimated as the difference between, on the one hand, government output, and, on the other hand, payments made for goods and services produced by government and the relevant output that is used for fixed capital formation. This indicator is measured as percentage of gross domestic product. All OECD countries compile their data according to the 2008 System of National Accounts (SNA 2008), except Chile, Japan and Turkey (SNA 1993).

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Keywords: government spending, general government consumption