Working Paper: NBER ID: w2906
Authors: David F. Bradford
Abstract: Although National Income and Product Account (NIPA) saving measures, and especially NIPA saving rates, are widely used in both scholarly and journalistic treatments, they are seriously defective as representations of the variables derived from economic analysis, either for measuring economic performance or as elements of the explanation for consumption behavior. The cost-based value of a restricted class of assets recorded in the national income and product accounts is a version of the financial accounting for the tangible assets of a business firm. Economic analysis calls instead for the current asset market value of business enterprises (and their equivalents) as the measure of wealth, and the annual change in that value as the measure of saving. National Balance Sheet data on wealth at asset market value presented in this paper show that NIPA saving measures are not good proxies for market value measures. The picture of recent national saving experience that emerges from market value data is quite different. Various conceptual and data quality issues are discussed.
Keywords: National Income Accounts; Market Value Measures; Saving Measures; Economic Performance
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| NIPA saving measures (E01) | misrepresentation of national saving (E21) |
| market value measures (D46) | accurate representation of national saving (E21) |
| NIPA measures (E01) | changes in estimated aggregate income (E25) |
| differences in definitions (P50) | discrepancies in aggregate wealth measures (E21) |
| discrepancies in aggregate wealth measures (E21) | interpretation of national saving (E21) |