Re: Savings and NIPA

[Harry Veeder <eo200@xxxxxx>]

The first case, although I would simply say it contributes to capital
formation at the macro level. Whether 'householders' will derive
income directly or indirectly from such capital is another question.

Harry Veeder

> From: Esteban Perez <eperez@xxxxxxxxxxxx>
> Date: Tue, 29 Apr 2003 12:17:56 -0400
> To: pkt@xxxxxxxxxxxxxxxx, eo200@xxxxxxxxxxxxxxxxxxx
> Subject: Re: Savings and NIPA
>
> Do you mean that in accounting terms gross fixed capital formation  (flow and
> measured ususally by the total value of producers' acquisitions (assets) less
> disposals of fixed assets during a given period (generally the accounting
> period)) is undertaken by households and that it should be part of household
> debt (liablitiy and stock)?
>
> or in a more conceptual sense that  if you define
> household savings as:
> Sh = Wages and salaries and transfers and interest minus taxes and interets...
> Then your household balance sheet,
> Ih - Sh =  Increment Ddebt h -  Increment Hh (money, wealth?)
>
> or that if a household has debt held in the form of securities which allow the
> debtor to remove part of the liabilities it is an investment?.
> or that if a household buys a consumer durable (and you define that as
> investment) with debt that debt you would also consider the debt as an
> investment.
>
> Thanks.
>
> Esteban Perez
>>>> Harry Veeder <eo200@xxxxxxxxxxxxxxxxxxx> 04/28/03 09:54am >>>
> Wouldn't household debt count as investment?
>
> Harry Veeder
>
>> From: Esteban Perez <eperez@xxxxxxxxxxxx>
>> Date: Mon, 28 Apr 2003 13:49:26 -0400
>> To: pkt@xxxxxxxxxxxxxxxx, eo200@xxxxxxxxxxxxxxxxxxx, pdavidso@xxxxxxx
>> Subject: Re: Savings and NIPA
>>
>>
>> Godley and also more recently Th. Palley (JPKE, 2002) have made reference to
>> the falling savings rate in the US which measured by NIPA accounts has been
>> declining since the 1980's. But have emphasized another accompanying fact the
>> rising trend of the household debt-income ratio. debt has increased faster
>> than income. When one looks at savings and debt it is important alos to look
>> at the distribution of income. Palley shows these results using Fed's (1998)
>> Survey of Consumer Finances (p.21, JPKE, Vol 25, 1, 2002)
>>
>> Income                  debt/income                debt share
>>
>> <50,000                              2.98                         46
>> (66% of all households)
>>
>>> 50,000                              1.40                          54
>> (33% of all households)
>>
>> The decline in the savings rate is part of a bigger picture that also
>> includes
>> rising debt, rising profits, reduced savings rate, worsening distribution of
>> income) and the question is is it sustainable?. Godley has also emphasized
>> the
>> current account deficit. A reduced savings rate per-se may not be the problem
>> unless one thinks that savings determines investment.
>>
>> Esteban Perez
>> *-----------------------------------------------------------------
>
>
>