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# The Aggregates

Australian System of National Accounts: Concepts, Sources and Methods
Reference period
2020-21 financial year

2.62    The aggregates, including value added, income, consumption and saving, are composite values which measure one aspect of economic activity. They are summary indicators and key magnitudes for purposes of macroeconomic analysis and comparisons over time. Some aggregates may:

• be obtained directly as totals of particular transactions (e.g. final consumption, GFCF and social contributions); or
• result from aggregating balancing items for the institutional sectors (e.g. value added, disposable income and saving).

2.63    Aggregates are commonly presented as net or gross measures. The distinction between the two is based on whether consumption of fixed capital has been deducted from the measure. A gross measure includes consumption of fixed capital, whereas net measures are obtained by deducting consumption of fixed capital from gross measures. 2008 SNA recommends that net measures should be produced where it is possible to do so as they take into account a reduction in the value of previously created fixed assets when they are used up in the production process. However, the SNA recognises that it is very difficult to measure consumption of fixed capital with any precision and acknowledges that gross measures will be commonly used in practice.

2.64    Aggregates are also presented in current price or volume measures. A key advantage of volume measures is that the price effect is eliminated and a real change from one period to another is obtained. However, some aggregates, such as income, are not able to be measured in volume terms as they cannot be broken down into quantity and price components.

## Gross Domestic Product (GDP)

2.65    GDP derives from the concept of value added. Gross value added is the difference between output and intermediate consumption. GDP is the sum of gross value added of all resident producer units, plus taxes on products less subsidies on products. This derivation is referred to as GDP measured by the production approach (GDP(P)).

$$\small GDP(P) = Output - Intermediate \: Use + Taxes \: on \: Products - Subsidies \: on \: Products$$

2.66    GDP is also equal to the sum of the final uses of goods and services (all uses except intermediate consumption) measured at purchasers' prices, less the value of imports of goods and services. This derivation is referred to as GDP measured by the expenditure approach (GDP(E)).

$$\small {GDP(E) = Final \: Consumption \: Expenditure \: by \: Households \: (C) \: and \: Government \: (G) \\ \hspace{1.5cm}+ Gross \: Capital \: Formation + Exports \: of \: goods \: and \: services \: (X)\\ \hspace{1.5cm} - Imports \: of \: goods \: and \: services \: (M)}$$

2.67    Finally, GDP is also equal to the sum of primary incomes distributed by resident producer units. This derivation is referred to as GDP measured by the income approach (GDP(I)).

$$\small {GDP(I)=Compensation \: of \: Employees \: (COE) \: + \: Gross \: Operating \: Surplus \: (GOS) \\ \hspace{1.4cm} + \: Gross \: Mixed \: Income \: (GMI)+(Taxes \: on \: Production \: and \: Imports\\ \hspace{1.4cm}-Subsidies \: on \: Production \: and \: Imports \: (NT))}$$

## Gross National Income (GNI)

2.68    GNI is equal to GDP less primary incomes payable to non-resident units plus primary incomes receivable from non-resident units. In other words, GNI is equal to compensation of employees, plus gross operating surplus and gross mixed income, plus taxes (less subsidies) on production and imports, less property income payable to the rest of the world plus the corresponding items receivable from the rest of the world. Thus, GNI is the sum of gross primary incomes receivable by resident institutional units or sectors. In contrast to GDP, GNI is not a concept of value added, but a concept of income. By deducting the consumption of fixed capital from GNI, net national income (NNI) is obtained.

$$\small {GNI=COE+GOS+GMI+NT+Net \: primary \: income \: receivable \: from \\ \hspace{1.3cm} non–residents \: (NPINR) \\ \hspace{0.8cm}=GDP+NPINR }$$

## Gross National Disposable Income (GNDI)

2.69    Gross national disposable income is equal to GNI less current transfers (other than taxes, less subsidies, on production and imports) payable to non-resident units, plus the corresponding transfers receivable by resident units from the rest of the world. Gross national disposable income measures the income available to the total economy for final consumption and gross saving. By deducting consumption of fixed capital from gross national disposal income, net national disposable income is obtained. National disposable income is the sum of disposable income of all resident institutional units or sectors.

$$\small {GDNI=COE+GOS+GMI+NT+NPINR+Net \: current \: transfers \: receivable \\ \hspace{1.5cm} from \: non–residents \: (NCT) \\ \hspace{1.1cm}=GDP+NPINR+NCT }$$