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Revised Estimates of Personal Sector Wealth for South Africa

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  • Janine Aron

    (Centre for the Study of African Economies)

  • John Muellbauer

    (Nuffield College, University of Oxford)

Abstract

In common with many emerging market countries, South Africa’s government does not publish balance sheet wealth estimates on a market value basis, as produced in the U.S., U.K., Japan, and elsewhere. Yet without information on the market values of liquid and illiquid personal sector wealth, it is difficult to explain aggregate consumer spending and saving, consumers’ demand for credit, and the broad money holdings of households. Behavioural equations for these variables are key components of central banks’ macro-econometric models, used in forecasting and policy-making.Understanding the domestic asset value channel of the monetary policy transmission mechanism is especially important for inflation targeting countries. We construct the first coherent set of aggregate, personal sector wealth estimates at market value for South Africa. Our quarterly estimates derive from published data on financial flows, and various other capital market data, often at book value. Our methods rely, where relevant, on accumulating flow of funds data using appropriate benchmarks, and, where necessary, converting book to market values using appropriate asset price indices. Relating asset to income ratios for various asset classes to asset price movements and rates of return, throws light on the changing composition of personal sector wealth. Most striking are the rise in pension wealth- overtaking gross housing asseta in the late 1980s; the rise in household debt; and the relative decline of liquid and housing assets, from the early and mid-1980s, respectively.

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File URL: http://128.118.178.162/eps/dev/papers/0409/0409070.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0409070.

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Length: 40 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpdc:0409070

Note: Type of Document - pdf; pages: 40
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Web page: http://128.118.178.162

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  1. Bulow, Jeremy I, 1982. "What Are Corporate Pension Liabilities?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 97(3), pages 435-52, August.
  2. Berg, Lennart, 1994. "Household Savings and Debts: The Experience of the Nordic Countries," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 10(2), pages 42-53, Summer.
  3. B.W. Smit & B.A. Mocke, 1991. "Capital Flight from South Africa: Magnitude and Causes," South African Journal of Economics, Economic Society of South Africa, Economic Society of South Africa, vol. 59(2), pages 60-77, 06.
  4. Fedderke, J. W. & Liu, W., 2002. "Modelling the determinants of capital flows and capital flight: with an application to South African data from 1960 to 1995," Economic Modelling, Elsevier, Elsevier, vol. 19(3), pages 419-444, May.
  5. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 108(450), pages 1330-61, September.
  6. Olli-Pekka Lehmussaari, 1990. "Deregulation and Consumption: Saving Dynamics in the Nordic Countries," IMF Staff Papers, Palgrave Macmillan, vol. 37(1), pages 71-93, March.
  7. Alan S. Blinder & Angus Deaton, 1985. "The Time Series Consumption Function Revisited," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 465-521.
  8. Ryland Thomas, 1997. "The Demand for M4: A Sectoral Analysis. Part 1 - The Personal Sector," Bank of England working papers, Bank of England 61, Bank of England.
  9. James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 14(2), pages 99-118, Spring.
  10. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198288244, October.
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Cited by:
  1. James B. Davies & Susanna Sandström & Anthony B. Shorrocks & Edward N. Wolff, 2009. "The Level and Distribution of Global Household Wealth," NBER Working Papers 15508, National Bureau of Economic Research, Inc.

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