Working Group on Wealth NTA 7 June 2010

Some Basics Long-term goal of NTA is to construct a complete set of accounts –Flow accounts are very useful –But for answering other questions wealth accounts are very helpful (comparing generation is an example) SNA provides a useful framework for completing the accounts. –A(t+1)=A(t) + S(t) + asset transfers (t) + other changes in assets (t)

Components Asset transfers –Transfers of existing assets by governments –Bequests –Other asset transfers, e.g., dowry, bride price –Transfers due to changes in living arrangements Other changes –Natural catastrophes and other non-economic events –Changes in asset prices

What distinguishes NTA from SNA Incorporating age into the accounts More complete accounting of intergenerational W(x+1,t+1) = W(x,t) + S’(x,t) + wealth transfers (x,t) + other changes in wealth (x,t) W = A + T S’ refers to the accumulation of assets (S) and the accumulation of transfer wealth.

How should we proceed? Priority –Wealth accounts –Asset (or wealth) transfer accounts –Other components of a full NTA system are interesting but lower priority Wealth accounts is the topic of this working group

Issues Assets –Is a balance sheet available for the country? –If not, is there some useful way to construct an estimate of assets? –What methods can be used to assign assets by age Surveys with assets by age of head? Rely on age profile of asset income? –How do we treat public debt?

Issues Transfer wealth –How do we forecast/project transfer inflows and outflows? –How do we decide on an appropriate discount rate?

Discussion and next steps