# Does Household final consumption Expenditure include Consumption expenditure of Imported Goods

From World Bank, I got the Household final consumption Expenditure for many countries across time. I wonder if this consumption includes Consumption expenditure of Imported Goods / Import Volume?

If I want to compute the share of consumption of home goods in total consumption, should I use the following formula?

$\frac{Household final consumption Expenditure - Import Volume}{Household final consumption Expenditure}$

or should I use:

$\frac{Household final consumption Expenditure}{Household final consumption Expenditure + Import Volume}$

• Why not just look at imports as a percentage of GDP? Is there a reason to focus on consumer goods and services and exclude goods and services which are used in production processes? If you can explain the reason for the consumer good focus or the reason that the importance of exports in household income is not relevant to the question you want to present or test mathematically, it might be easier to provide a useful answer. – nathanwww Jun 9 '18 at 20:09
• Total imports also include goods and services purchased by businesses in order to produce outputs, so both are wrong. You would need data that presents imports of consumer goods and services only, to the exclusion of goods and services purchased as inputs into production processes. – nathanwww Jun 9 '18 at 20:10
• thanks for your ideas. i see the point. so GDP would include all consumptions, and to compute the share of consumption of home products, i can use $1-\frac{import}{GDP}$? – user68863 Jun 10 '18 at 19:07
• @nathanwww Im thinking about $1 - \frac{Import - Import_for_Export}{GDP + Import - Import_for_Export - Export}$. What do you think? – user68863 Jun 11 '18 at 8:34
• If you have a teacher, maybe plan to spend 5-10 minutes (or more) on this with them during their office hours, so they can identify some potential misunderstandings related to materials currently/recently being learned. – nathanwww Jun 11 '18 at 15:57

Yes.

Household final consumption expenditure consists of the expenditure, including expenditure whose value must be estimated indirectly, incurred by resident households on individual consumption goods and services, including those sold at prices that are not economically significant and including consumption goods and services acquired abroad.

(From System of National Accounts, 2008, p. 623, PDF).

To elaborate, in the familiar identity $$Y = C + I + G + (X - M),$$ the reason we subtract $M$ (imports) is that the terms $C$, $I$, and $G$ also include imported goods and services.

In particular and to your secondary question, let:

• $C_d =$ Consumption of domestically-produced goods and services.
• $C_m =$ Consumption of foreign-produced goods and services.

Then: $$C=C_d+C_m.$$

And what I believe you want is $\frac{C_d}{C}$ or equivalently $1-\frac{Cm}{C}$.