Re: Savings and NIPA

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

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
> *-----------------------------------------------------------------