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NTA Wealth Accounts and Challenges in Constructing Them

Learn about NTA wealth accounts, their classification by sector and age, and the challenges in constructing them. Explore modeling public and private transfers, data availability, and other issues related to transfer wealth.

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NTA Wealth Accounts and Challenges in Constructing Them

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Presentation Transcript

  1. Wealth Accounts

  2. Outline • What is wealth in NTA? (Ron) • What are wealth accounts? • What are the main challenges in constructing wealth accounts? • Modelling public and private transfers (including capital transfers) (Miguel) • Data availability (Michael)

  3. What is wealth? • Ron addresses this issue emphasizing transfer wealth.

  4. NTA Wealth Accounts • NTA wealth accounts classify wealth (assets and transfer wealth) by sector (public and private) and by age • Wealth accounts consist of • Opening balance or wealth at the beginning of the period • Net changes for each age group/cohort during the period • Closing balance or wealth at the end of the period

  5. Simple NTA Private Asset Account Members of each age group have initial assets, net changes in their assets during the year, a birthday, and end up a year older with new assets at the end of the year.

  6. With changes in assets elaborated In standard models, we simplify using A(x,t)=A(x-1,t-1)+S(x,t). A complete accounting requires that we incorporate other sources of change in assets.

  7. Special issues related to public assets • Public asset transfers arise as responsibility of age group (tax bill) shifts • Over time older age groups transfer public assets to younger age groups • Children including newborns have public assets (or debt) • Other?

  8. Issues related to transfer wealth • Transfer wealth is prospective • Based on expectations about what will happen in the future • Calculation requires a model that captures how current transfers and capital transfers will change over time.

  9. An NTA Model? • Reconcile the imbalances that arise in public and private transfer systems because of changes in population age structure. • Assess the implications of changes in public policy for macroeconomic outcomes. • Explore the effects of demography on economic growth and standards of living. • Earlier models (tau model) could be enhanced. Work at AGENTA. World Bank project. • Wealth accounts are specific to a particular model simulation. Is it possible to have a “standard” model and a “standard” wealth account?

  10. Bequests and capital transfers

  11. Issues related to transfer wealth • Transfer wealth is prospective • Based on expectations about what will happen in the future • Calculation requires a model that captures how current transfers and capital transfers will change over time. • Net changes in transfer wealth • Transfer wealth is saved or dis-saved as cohorts receive benefits and pay taxes. Include in the flow account? • Changes in public policy (other changes in volume?) • Changes in PV calculations (revaluation)

  12. Data Sources • Changes in Wealth • National statistical agencies • UN System of National Accounts compilation • IMF Government Finance Statistics (GFS) • OECD Stat

  13. Data Sources • Opening (and Closing) Wealth • National statistical agencies • UN System of National Accounts compilation • IMF Fiscal Monitor and GFS • OECD Stat • Picketty and Zucman (2013) • http://piketty.pse.ens.fr/en/capitalisback

  14. Data Availability

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