1. N ational T ransfer A ccounts 1 Public Asset-based Reallocations Amonthep Chawla East-West Center Nihon University Population Research Institute

2. N ational T ransfer A ccounts 2 Outline ► Overview of the Public Sector and Public Asset-based Reallocations ► Implementation with Illustrative Values ► Conclusions

3. N ational T ransfer A ccounts 3 The Public Sector ► The public sector includes all inflows to and outflows from the general government. ► Public enterprise is part of the private sector; however, the general government may receive property income from public enterprise.

4. N ational T ransfer A ccounts 4 Public Asset-based Reallocations ► Public assets generate interage flows between public asset income and public saving. ► Public asset income includes public operating surplus and public property income. ► Based on SNA, the public sector has no public capital income. ► Public property income includes inflows from and outflows to the private sector and ROW.

5. N ational T ransfer A ccounts 5 Public Asset-based Reallocations (cont.) ► The government saves when it acquires an asset or dispose of debt, generating an outflow ► The government dis-saves when it dispose of an asset or acquires debt, generating an inflow. ► Public saving is measured as the sum of public asset income and public transfer surplus/deficit.

6. N ational T ransfer A ccounts 6 Public Transfer Surplus/Deficit ► Balancing item that insures that transfer outflows and inflows are equal ► Relationship between transfer surplus/deficit and public saving  If taxes and grants exceed public transfer inflows, transfer surplus and public asset income are saved  if taxes and grants fall short of public transfer inflows, transfer deficit must be financed out of asset income with the residual saved

7. N ational T ransfer A ccounts 7 Estimation Methods ► Aggregate Controls: similar to private property income, public property income includes interest, rent, dividends and other less important components of property income. ► Age Profile: the age profiles of public property income (both inflows and outflows) and public saving follow the general tax profile.

8. N ational T ransfer A ccounts 8 Asset-base Reallocations for Japan: an Illustration Total Age groups 0-1920-2930-4950-6465+ Public asset-based reallocations 22,7497152,4568,5777,6433,358 Public asset income -5,458-172-589-2,058 - 1,834 -805 Capital income 000000 Public Interest, net -5,796-182-626-2,185-1,947-855 Other property income, net 338113612711350 Less: Public saving - 28,207 -887-3,046 - 10,635 - 9,477 -4,163 Asset-based Reallocations, Japan, 2004, Aggregate, billion yen

9. N ational T ransfer A ccounts 9

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11. N ational T ransfer A ccounts 11 Summary ► Taxes, public expenditures and public asset income determine how much resources are available for individuals to save through the public sector ► Reallocations through public assets are one of major mechanisms that individuals at all age groups rely on to finance their lifecycle deficit

12. N ational T ransfer A ccounts 12 Acknowledgement Support for this project has been provided by the following institutions: ► the John D. and Catherine T. MacArthur Foundation; ► the National Institute on Aging: NIA, R37-AG025488 and NIA, R01-AG025247; ► the International Development Research Centre (IDRC); ► the United Nations Population Fund (UNFPA); ► the Academic Frontier Project for Private Universities: matching fund subsidy from MEXT (Ministry of Education, Culture, Sports, Science and Technology), 2006-10, granted to the Nihon University Population Research Institute.

13. N ational T ransfer A ccounts 13 The End