Revised Estimates of Personal Sector Wealth for South Africa
AbstractIn 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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Bibliographic InfoPaper provided by EconWPA in its series Development and Comp Systems with number 0409070.
Length: 40 pages
Date of creation: 28 Sep 2004
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Other versions of this item:
- Janine Aron & John Muellbauer, 2004. "Revised estimates of personal sector wealth for South Africa," CSAE Working Paper Series 2004-24, Centre for the Study of African Economies, University of Oxford.
- Janine Aron & John Muellbauer, 2004. "Revised Estimates of Personal Sector Wealth for South Africa," Economics Series Working Papers WPS/2004-24, University of Oxford, Department of Economics.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-18 (All new papers)
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