Asset Prices and the Measurement of Wealth and Saving

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Asset Prices and the Measurement of Wealth and Saving

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Michael Reiter

Abstract

The paper defines concepts of real wealth and saving which take into account the intertemporal index number problem that results from changing interest rates. Unlike conventional measures of real wealth, which are based on the market value of assets and ignore the index number problem, the new measure correctly reflects the changes in the welfare of households over time. An empirically operational approximation to the theoretical measure is provided and applied to US data. A major empirical finding is that US real financial wealth increased strongly in the 1980s, much more than is revealed by the market value of assets.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 396.

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Date of creation: Sep 1999
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Handle: RePEc:upf:upfgen:396

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Find related papers by JEL classification:
C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

This paper has been announced in the following NEP Reports:

NEP-ALL-2000-03-06 (All new papers)
NEP-FIN-2000-03-06 (Finance)

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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.)

Omar LICANDRO & Javier RUIZ-CASTILLO & Jorge DURAN, 2002. "The Measurement of Growth under Embodied Technical Change," Discussion Papers (REL - Recherches Economiques de Louvain) 2002011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
Other versions:
- Omar Licandro & Jorge Durán & Javier Ruiz-Castillo, . "The Measurement of Growth under Embodied Technical Change," Working Papers 2001-09, FEDEA. [Downloadable!]
- Omar LICANDRO & Javier RUIZ-CASTILLO & Jorge DURAN, 2001. "The Measurement of Growth under Embodied Technical Change," Economics Working Papers ECO2001/14, European University Institute. [Downloadable!]
- Omar Licandro & Javier Ruiz-Castillo & Jorge Duran, 2002. "The Measurement of Growth under Embodied Technical Change," Recherches économiques de Louvain, De Boeck Université, vol. 68(1), pages 7-19. [Downloadable!]
Luigi, Cannari & Giovanni, D'Alessio & Grazia, Marchese, 2008. "Italian Household Wealth: Background, Main Results, Outlook," MPRA Paper 15106, University Library of Munich, Germany. [Downloadable!]
Luigi, Cannnari & Giovanni, D'Alessio & Romina, Gambacorta, 2008. "Capital Gains and Wealth Distribution in Italy," MPRA Paper 15108, University Library of Munich, Germany. [Downloadable!]

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