I am trying to calculate GDP for countries and the numbers don't seem to add up.
I am using the formula GDP = Consumption + Investment + Government spending + Imports - exports
I am using the example of France
It has a GDP about 2500 bn dollars per year.
Thus the components of C, I, G and X-Y should equal about 2500 right?
These are the figures that I have found
C = 1360, Investment = 20 per cent of GDP ie around 500, G= 1370
Frances trade balance is negative to about 55 bn per year and government borrowing is 85 bn
So if you calculate 1360 + 500 + 1370 - 55 - 85 you end up with 3090 which is more that 20 per cent more than the published figure.
So where am I going wrong in my calculations?
I was thinking it was something to do with PPP v nominal dollar values but the difference between the two is only 10 per cent whereas my figures differ by more than 20 per cent
Thanks for any help
Figures are from
C = https://en.wikipedia.org/wiki/List_of_largest_consumer_markets
I = https://en.wikipedia.org/wiki/List_of_countries_by_gross_fixed_investmen...
G = https://en.wikipedia.org/wiki/List_of_countries_by_government_budget
X-Y = http://atlas.media.mit.edu/en/profile/country/fra/
The main problem with your calculation is that you are using as "G" the French government's budgetary expenditure, which most likely includes large transfer payments. Transfer payments are not part of GDP. Another problem is that you are adjusting for the government borrowing, which has no place in the GDP calculations. In general, it would help if you use as your data source INSEE (https://www.insee.fr/en/accueil) or FRED (https://fred.stlouisfed.org/), or perhaps Eurostat (http://ec.europa.eu/eurostat), and convert GDP component values stated originally in euros into dollars using the same exact exchange rate.
Here are the data for France in 2016 (nominal, billions of euros, annual) that I obtained from INSEE (https://www.insee.fr/en/statistiques/fichier/2839233/t_1101.xls):
GDP = 2,228.9
C = 1,186.1 + 46.8 = 1,232.9
Ig = 276.7 + 20.3 + 111.6 + 4.7 + 23.3 = 436.6
G = 526.7 + 76.1 = 602.8
X = 652.2
M = (minus) 695.6
Given the exchange rate of 1.10-1.20 euro per 1 dollar, the main discrepancy between the above numbers and yours is in terms of "G."
The issue is unrelated to the purchasing power parity.