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How is government Consumption of Fixed Capital (CFC) impacted by natural disasters such as Hurricane Katrina?
The loss of and damage to capital assets (structures, equipment and software) owned by general government will not be shown as an increase in CFC. Production by general government is measured by the costs of production, including CFC as a partial measure of the services of government assets. We do not show a spike in the value of CFC due to the loss because it would imply an increase in government production. However, CFC of government enterprises, like the CFC of private enterprises, will show a one-time increase.
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