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Market Value Vs. Financial Accounting Measures of National Saving

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Author Info
David F. Bradford

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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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2906.

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Date of creation: Nov 1993
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Handle: RePEc:nbr:nberwo:2906

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  4. Summers, Lawrence H, 1986. " Does the Stock Market Rationally Reflect Fundamental Values?," Journal of Finance, American Finance Association, vol. 41(3), pages 591-601, July. [Downloadable!] (restricted)
  5. Michael J. Boskin, 1988. "Issues in the Measurement and Interpretation of Saving and Wealth," NBER Working Papers 2633, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September. [Downloadable!] (restricted)
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  12. West, Kenneth D., 1988. "The insensitivity of consumption to news about income," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 17-33, January. [Downloadable!] (restricted)
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  13. Bradford, David F., 1981. "The incidence and allocation effects of a tax on corporate distributions," Journal of Public Economics, Elsevier, vol. 15(1), pages 1-22, February. [Downloadable!] (restricted)
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  14. Auerbach, Alan J, 1983. "Taxation, Corporate Financial Policy and the Cost of Capital," Journal of Economic Literature, American Economic Association, vol. 21(3), pages 905-40, September. [Downloadable!] (restricted)
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  15. Lawrence Summers & Chris Carroll, 1987. "Why Is U.S. National Saving So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-2), pages 607-642. [Downloadable!]
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  17. Bradford, David F., 1978. "Factor prices may be constant but factor returns are not," Economics Letters, Elsevier, vol. 1(3), pages 199-203. [Downloadable!] (restricted)
  18. Ben S. Bernanke & John Y. Campbell, 1988. "Is There a Corporate Debt Crisis?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1988-1), pages 83-140. [Downloadable!]
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  20. Robert E. Lipsey & Irving B. Kravis, 1987. "Is the U.S. a Spendthrift Nation?," NBER Working Papers 2274, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  22. Robert A. Pollack, 1975. "The Intertemporal Cost of Living Index," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 1, pages 179-198 National Bureau of Economic Research, Inc. [Downloadable!]
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  24. Auerbach, Alan J, 1979. "Wealth Maximization and the Cost of Capital," The Quarterly Journal of Economics, MIT Press, vol. 93(3), pages 433-46, August. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Robert E. Hall, 2001. "The Stock Market and Capital Accumulation," American Economic Review, American Economic Association, vol. 91(5), pages 1185-1202, December. [Downloadable!] (restricted)
    Other versions:
  2. 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. [Downloadable!] (restricted)
  3. Barry Bosworth & Gary Burtless, 2002. "Pension Reform in the Presence of Financial Market Risk," Working Papers, Center for Retirement Research at Boston College 2002-01, Center for Retirement Research. [Downloadable!]
  4. David F. Bradford, 1990. "What is National Saving?: Alternative Measures in Historical and International Context," NBER Working Papers 3341, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. David Bradford, 1997. "Transition to and Tax Rate Flexibility in a Cash-Flow Type Tax," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  6. David F. Bradford, 1996. "Consumption Taxes: Some Fundamental Transition Issues," NBER Working Papers 5290, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Barry Bosworth, 2004. "Why Don't Americans Save?," Working Papers, Center for Retirement Research at Boston College 2004-26, Center for Retirement Research. [Downloadable!]
  8. Depta, Peter & Ravalli, Frank & Harding, Don, 1994. "Extended Measures of Investment and Saving," MPRA Paper 3319, University Library of Munich, Germany. [Downloadable!]
  9. Michael Reiter, 1999. "Asset Prices and the Measurement of Wealth and Saving," Economics Working Papers 396, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  10. Robert Dekle & Lawrence H. Summers, 1991. "Japan's High Saving Rate Reaffirmed," NBER Working Papers 3690, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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