<p>The GDP expenditure approach is the sum of consumption, private investment, government spending, and the difference between exports and imports. I have not dug into the German Statistisches Bundesamt but unsold goods should be accounted for in the expenditure approach under "change in private inventories" or "inventory investment" (grouped with private investment).</p>

CC BY-SA 4.0
2019-11-03T00:06:47.903Z
Even when the unsold goods are shredded or burned?
Hans-Peter Stricker
CC BY-SA 4.0
2019-11-03T15:28:49.597Z
Government spending for what? Payments by the government to whom? And isn't investment of private companies e.g. in machines exluded, as well as expenditures for intermediate products?
Hans-Peter Stricker
CC BY-SA 4.0
2019-11-03T22:40:14.137Z
I'm not sure with respect to your first question. Maybe https://economics.stackexchange.com/a/13071/8387 will help. Government spending is for things like building bridges. Payments usually go to government employees and contractors. Most machines you're probably thinking of are not considered intermediate products as they don't further transform into the final good. If you run a print shop, then the paper and ink that is used to produce prints is an intermediate good but the printing press itself is not.
Kent Shikama
CC BY-SA 4.0
2019-11-02T20:30:18.210Z
2019-11-02T20:30:18.210Z
Kent Shikama
<p><a href="https://translate.google.com/translate?sl=de&amp;tl=en&amp;u=https%3A%2F%2Fwww.lai.fu-berlin.de%2Fe-learning%2Fprojekte%2Fvwl_basiswissen%2Fbip%2Fdefinition%2Findex.html" rel="nofollow noreferrer">Here</a> I've read the following (translated by Google)</p>
<blockquote>
<p>GDP can be calculated in two ways: firstly, by origin, that is, by
estimating the value of all goods and services produced, and secondly
by the use side, that is, by recording total
expenditure on consumer and capital goods, including external trade
(the difference between the value of imported and exported goods and
services).</p>
<p>These two calculations are always congruent, as consumption
adjusted for net exports corresponds to production.</p>
</blockquote>
<p>I wonder about one thing: What about all the products being produced but never sold and used: food, clothes, printed media, to name just a few. They appear only on the one side, not on the other. So how can the two numbers be congruent?</p>
<p>And if they are not congruent: Which of them is finally published e.g. by the German Statistisches Bundesamt?</p>

CC BY-SA 4.0
2019-11-03T10:37:36.793Z
Related: https://economics.stackexchange.com/questions/13070/are-goods-that-are-wasted-counted-into-the-gdp-of-a-nation
Henry
CC BY-SA 4.0
2019-11-03T10:43:46.173Z
I would say there are three measures of GDP: the production measure (which subtracts intermediate goods and services used in production), the expenditure measure and the income measure.  They are defined to produce the same result but their calculations often fails to do so
Henry
CC BY-SA 4.0
2019-11-03T13:32:53.637Z
@Henry: This also astonishes me. The Statistisches Bundesamt gives sample calculations where the [production](https://bit.ly/2JLG5m4) and [expenditure](https://bit.ly/2PJp282) measures yield exactly the same result, up to 0.00001%. This is completely implausible in my opinion. But even if the results do agree only up to 0.1% (which would be very good!) - this would not justify to say that the BIP has grown by 0.1% over the last year, would it?
Hans-Peter Stricker
CC BY-SA 4.0
2019-11-03T15:00:56.563Z
Hans: Many national statistics agencies balance their various measures of GDP to make them add up to the same thing.  In the UK last year, [the ONS wrote a brief article about it](https://blog.ons.gov.uk/2018/03/16/getting-the-balance-right-how-ons-creates-a-single-estimate-of-gdp/)
Henry
CC BY-SA 4.0
2019-11-03T15:05:34.150Z
But the balancing produces errors which easily (?) can be larger than the change rate over time - or it should be made plausible when not.
Hans-Peter Stricker
CC BY-SA 4.0
2019-11-03T15:13:52.523Z
@Henry: Thanks for the ONS link (while the post is quite short and gives no insight in the methodology and relliabilty of the balancing process).
Hans-Peter Stricker
<gdp>
Congruence of GDP as calculated by production and by consumption
Hans-Peter Stricker
# Congruence of GDP as calculated by production and by consumption

(Asked by: username_0 on 2019-11-02)

[Here](https://translate.google.com/translate?sl=de&tl=en&u=https%3A%2F%2Fwww.lai.fu-berlin.de%2Fe-learning%2Fprojekte%2Fvwl_basiswissen%2Fbip%2Fdefinition%2Findex.html) I've read the following (translated by Google)

> GDP can be calculated in two ways: firstly, by origin, that is, by
> estimating the value of all goods and services produced, and secondly
> by the use side, that is, by recording total
> expenditure on consumer and capital goods, including external trade
> (the difference between the value of imported and exported goods and
> services).
>
> These two calculations are always congruent, as consumption
> adjusted for net exports corresponds to production.

I wonder about one thing: What about all the products being produced but never sold and used: food, clothes, printed media, to name just a few. They appear only on the one side, not on the other. So how can the two numbers be congruent?

And if they are not congruent: Which of them is finally published e.g. by the German Statistisches Bundesamt?

**Tags:** gdp

> **Comments:**
> **username_1**: Related: https://economics.stackexchange.com/questions/13070/are-goods-that-are-wasted-counted-into-the-gdp-of-a-nation  
> **username_1**: I would say there are three measures of GDP: the production measure (which subtracts intermediate goods and services used in production), the expenditure measure and the income measure.  They are defined to produce the same result but their calculations often fails to do so  
> **username_0**: @username_1: This also astonishes me. The Statistisches Bundesamt gives sample calculations where the [production](https://bit.ly/2JLG5m4) and [expenditure](https://bit.ly/2PJp282) measures yield exactly the same result, up to 0.00001%. This is completely implausible in my opinion. But even if the results do agree only up to 0.1% (which would be very good!) - this would not justify to say that the BIP has grown by 0.1% over the last year, would it?  
> **username_1**: Hans: Many national statistics agencies balance their various measures of GDP to make them add up to the same thing.  In the UK last year, [the ONS wrote a brief article about it](https://blog.ons.gov.uk/2018/03/16/getting-the-balance-right-how-ons-creates-a-single-estimate-of-gdp/)  
> **username_0**: But the balancing produces errors which easily (?) can be larger than the change rate over time - or it should be made plausible when not.  
> **username_0**: @username_1: Thanks for the ONS link (while the post is quite short and gives no insight in the methodology and relliabilty of the balancing process).  

---

## 1 answers

### Answer by username_2 on 2019-11-02. Score: 1

The GDP expenditure approach is the sum of consumption, private investment, government spending, and the difference between exports and imports. I have not dug into the German Statistisches Bundesamt but unsold goods should be accounted for in the expenditure approach under "change in private inventories" or "inventory investment" (grouped with private investment).

> **Comments:**
> **username_0**: Even when the unsold goods are shredded or burned?  
> **username_0**: Government spending for what? Payments by the government to whom? And isn't investment of private companies e.g. in machines exluded, as well as expenditures for intermediate products?  
> **username_2**: I'm not sure with respect to your first question. Maybe https://economics.stackexchange.com/a/13071/8387 will help. Government spending is for things like building bridges. Payments usually go to government employees and contractors. Most machines you're probably thinking of are not considered intermediate products as they don't further transform into the final good. If you run a print shop, then the paper and ink that is used to produce prints is an intermediate good but the printing press itself is not.  

---

