Chain volume measures are complicated; therefore, real cases are used for illustration. Chain volume measures (reference year = 2010)of government final consumption expenditure are used.

Government final consumption expenditure (government expenditure) equals the sum of remuneration paid by government (remuneration) and net purchase of goods and services (net purchase). Detailed steps as follows:

The first step is to deflate the current price of each component. First, divide the current prices of remuneration and net purchase by price indices compiled using the preceding year as the base year, to derive short term volume measures. Table 4 shows that the short term volume measure of remuneration in 2011 is $10,740 million, equal to current price ($11,898 million) divided by price index (110.78); short term volume measure of net purchase is derived in the same way, where short term volume measure of government expenditure ($19,385 million) equals the sum of the short term volume measure of remuneration ($10,740 million) and net purchase ($8,645 million).

The second step is to divide the short term volume measure of each component by the current price in the preceding year, to derive the short term volume index of each component. Short term volume indices of government expenditure in 2011 and 2010 are 105.46 (19,385/18,382) and 104.87 (17,502/16,689) respectively.

The third step is to calculate the chain volume indices (reference year = 2010) using the abovementioned chain volume measures formulae. For years following the reference year, multiply the index (100) in the reference year (2010) by short term volume index, then multiply by the chain volume index of the preceding year. In 2011, chain volume index of government expenditure is 105.46 (i.e., short term volume index in 2011 is 105.46). For years preceding the reference year, divide the index (100) in the reference year (2010) by the short term volume index in the following year, then multiply by the chain volume index of the following year. In 2009, chain volume index is 95.35, i.e., 100 divided by short term volume index in 2010 (104.87), and multiplied by chain volume index in 2010 (100.00); chain volume index in 2008 is 84.23, i.e., 100 divided by short term volume index in 2009 (113.21), and multiplied by chain volume index in 2009 (95.35).

The fourth step is to multiply the chain volume indices by current prices in the reference year to derive the chain volume measures. In 2011, chain volume measure of government expenditure ($19,385 million) equals chain volume index in 2011 (105.46) multiplied by the current price in 2010 ($18,382 million); chain volume measure in 2009 ($17,528 million) equals chain volume index in 2009 (95.35) multiplied by current price in 2010; chain volume measure in 2008 ($15,483 million) equals chain volume index in 2008 (84.23) multiplied by current price in 2010.

As government expenditure, remuneration and net purchase are calculated individually, except the reference year and the following year, chain volume measures are non-additive.

Table 4. Chain volume measures of government expenditure


 

Year20082009 20102011

Current price (MOP 106)

Government expenditure

Remuneration

Net purchase

    

14,820

9,100

5,720

  

16,689

9,722

6,967

  

18,382

10,384

7,998

    

20,883

11,898

8,985

Price index ( t - 1 = 100 )

Government expenditure

Remuneration

Net purchase

 

  

100.35

98.27

   

102.06

109.15

  

110.78

103.93

Short term volume measures ( t - 1 = 100 )

Government expenditure

Remuneration

Net purchase

 

  

  

16,777

9,688

7,089

     

    

17,502

10,175

7,327

  

     

19,385

10,740

8,645

Short term volume index ( t - 1 = 100 )

Government expenditure

Remuneration

Net purchase

 

  

113.21

106.47

123.94

  

104.87

104.65

105.18

  

105.46

103.43

108.09

Chain volume index ( 2010 = 100 )

Government expenditure

Remuneration

Net purchase

  

84.23

89.75

76.71

  

95.35

95.56

95.08

  

100.00

100.00

100.00

  

105.46

103.43

108.09

Chain volume measures ( 2010 = 100 )

Government expenditure

Remuneration

Net purchase

  

15,483

9,320

6,135

  

17,528

9,923

7,604

  

18,382

10,384

7,998

  

19,385

10,740

8,645