Wealth Accounts and Transfer Wealth in Microdistributional NTA
Wealth Accounts
Andrew Mason
Workshop on Microdistributional
NTA, May 2020
NTA Wealth Accounts
•
NTA wealth accounts would classify wealth
(assets and transfer wealth) by sector (public
and private) and by age
•
Wealth accounts would consist of
–
Opening balance or wealth at the beginning of the
period for each age
–
Net changes for each age group/cohort during the
period
–
Closing balance or wealth at the end of the period
for each age
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.
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.
Applying these concepts to transfer
wealth
•
“Saving” : the accumulation and disaccumulation
of transfer wealth over the lifecycle as any cohort
experiences net public transfers
•
“Revaluations” : Changes in interest rates. Other
prices? Unanticipated changes in survival.
•
Transfer wealth “transfers” : unanticipated
changes in public transfer inflows and outflows.
•
Where would a recession fit in?
Wealth accounts in the context of Microdistributional NTA classify wealth by sector (public and private) and age, depicting opening and closing balances along with net changes over a period. A simple NTA private asset account aggregates private assets by age, showcasing opening, net changes, and ending balances, along with other sources of asset changes like savings, revaluations, and capital transfers. The concept also delves into transfer wealth dynamics, including savings accumulation, revaluations due to interest rate changes, and unanticipated public transfer inflow/outflow variations.
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Presentation Transcript
Wealth Accounts Andrew Mason Workshop on Microdistributional NTA, May 2020
NTA Wealth Accounts NTA wealth accounts would classify wealth (assets and transfer wealth) by sector (public and private) and by age Wealth accounts would consist of Opening balance or wealth at the beginning of the period for each age Net changes for each age group/cohort during the period Closing balance or wealth at the end of the period for each age
Simple NTA Private Asset Account Aggregate private assets by age Age 0 1 2 3 Total Opening balance 0 15 50 30 95 Net changes in assets 6.54 37.44 16.72 -30 30.7 Ending balance 0 6.54 52.44 66.72 125.7 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.
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. Aggregate private assets by age Age 0 0 1 15 2 50 3 30 -30 -10 0.3 1.5 -21.8 66.72 Total Opening balance Net changes in assets Saving Other changes in volume Revaluations Capital transfers Ending balance 95 6.54 0 0 0 6.54 0 37.44 30 0.15 0.75 6.54 6.54 16.72 5 0.5 2.5 8.72 52.44 30.7 25 0.95 4.75 0 125.7 Other changes in volume Natural disasters and uncompensated seizures Revaluations Change in asset prices, exchange rates, PV calculations Capital transfers Bequests and other capital transfers (including household reclassifications)
Applying these concepts to transfer wealth Saving : the accumulation and disaccumulation of transfer wealth over the lifecycle as any cohort experiences net public transfers Revaluations : Changes in interest rates. Other prices? Unanticipated changes in survival. Transfer wealth transfers : unanticipated changes in public transfer inflows and outflows. Where would a recession fit in?
