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Market Value Vs. Financial Accounting Measures of National Saving

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  • 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.

Suggested Citation

  • David F. Bradford, 1989. "Market Value Vs. Financial Accounting Measures of National Saving," NBER Working Papers 2906, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2906
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    Cited by:

    1. Depta, Peter & Ravalli, Frank & Harding, Don, 1994. "Extended Measures of Investment and Saving," MPRA Paper 3319, University Library of Munich, Germany.
    2. Michael Reiter, 1999. "Asset prices and the measurement of wealth and saving," Economics Working Papers 396, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Robert E. Hall, 2001. "The Stock Market and Capital Accumulation," American Economic Review, American Economic Association, vol. 91(5), pages 1185-1202, December.
    4. David F. Bradford, 1998. "Transition to and Tax-Rate Flexibility in a Cash-Flow-Type Tax," NBER Chapters, in: Tax Policy and the Economy, Volume 12, pages 151-172, National Bureau of Economic Research, Inc.
    5. Jonathan Skinner & Daniel Feenberg, 1990. "The Impact of the 1986 Tax Reform Act on Personal Saving," NBER Working Papers 3257, National Bureau of Economic Research, Inc.
    6. Bradford, D.F., 1990. "What Is National Saving?: Alternative Measures In Historical And International Context," Papers 54, Princeton, Woodrow Wilson School - Discussion Paper.
    7. Bosworth, Barry & Collins, Susan M., 2010. "Rebalancing the US Economy in a Postcrisis World," ADBI Working Papers 236, Asian Development Bank Institute.
    8. David Bradford, "undated". "Consumption Taxes: Some Fundamental Transition Issues," EPRU Working Paper Series 95-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    9. Lee, Jangyoun, 2021. "Behind rising inequality and falling growth," Journal of Macroeconomics, Elsevier, vol. 70(C).
    10. Robert Dekle & Lawrence Summers, 1991. "Japan's High Saving Rate Reaffirmed," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 9(2), pages 63-78, September.

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