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Measuring and interpreting household saving rate

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Measuring and interpreting household saving rate C dric Audenis St phane Gregoir Claudie Louvot – PowerPoint PPT presentation

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Title: Measuring and interpreting household saving rate


1
Measuring and interpreting household saving rate
  • Cédric Audenis
  • Stéphane Gregoir
  • Claudie Louvot

2
Informational contents of the saving rate
unconsumed fraction of income derived from
gross (or net) production and capital
  • Short term
  • Countrys capacity to cope with a cyclical
    downturn
  • Saving for rainy days (health problems,
    unemployment,)
  • Long term
  • Countrys capacity to finance itself
  • Saving for retirement

3
Objectives
  • Looking for a meaningful and internationally
    comparable measures of household saving rate
  • No information on the absolute level
  • Not necessarily the measure adapted to
    econometric modellings

4
(No Transcript)
5
For a more comparable measure6 issues
  • Various institutions
  • The relative size of individually identifiable
    consumption
  • The existence of pension funds
  • The relative share of indirect taxes
  • Measurement and conceptual issues
  • The measurement of FCC
  • Accounting for holding gains
  • Durable goods consumption

6
A measure that can be constructed today (I)
  • Various institutions more socialised economies
    have larger  standard  saving rate

7
A common measure that can be constructed today
(II)
  • Statistical treatment of the voluntary saving for
    retirement
  • Pension funds public pension schemes (SNA93)
  • Various definitions Pension funds life
    insurance

8
(No Transcript)
9
Possible improvements capital depreciation
  • Need of net saving rate BUT
  • Statistical measure of capital depreciation
  • Difficult to measure housing service of
    constant quality
  • Harmonization in progress

10
Possible improvements indirect taxes
  • Heterogeneity in the structure of taxes ceteris
    paribus, a larger share of indirect taxes on
    consumption implied a lower saving rate
  • Indirect taxes deducted from disposable income,
    indirect taxes deducted from consumption
  • Saving reduce by indirect taxes levied on
    investment
  • Ambiguous impact on the saving rate

11
Topics that merit closer examination capital
gains
  • How to deal with capital gains ?
  •  realised  and  unrealised  capital gains
  • Measurement problem quoted/unquoted shares and
    their relative share in household portfolio
  • Only capital gains realised vis-à-vis another
    sector might be considered as household income
    and possibly saving.
  • Taxes levied on capital gains indirect and very
    rough

12
Topics that merit closer examination durable
goods
  • For some durable goods consumption is close to
    investment decision
  • In terms of agent behaviour
  • Measurement issue resource income related to
    the production of durable-goods-related services,
    use user cost of durable goods
  • Different public utilities may lead to different
    durable goods consumption

13
Conclusion
Impact of Change in French saving rate
Adjusted income -3 ?
FCC -5.5 ?
Indirect taxes 1.7 ?
Pension funds 0 ?
Durable goods 6.3 ?
Capital gains 4.5 ?
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