Understanding Government Consumption

Government fi nal consumption represents one of the key indicators provided by national accounts, but at thesame time one with relatively problematic economic interpretation. Th e concept of government fi nal consumptionexpenditure involves a number of conventions. As a result, its economic and statistical character diff ersfrom other fi nal expenditure components in total economy like household consumption or investment. Th earticle explains how government fi nal consumption expenditure and actual fi nal consumption are defi nedand valued in national accounts, describes the borderline between individual and collective consumption expenditureand examines the relation between government fi nal consumption expenditure and governmenttotal expenditure. Th e concepts are illustrated in quantitative terms on the example of the Czech Republic.