IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Measurement Error and the Flow of Funds Accounts: Estimates of HouseholdAsset Demand Equations

Listed author(s):
  • Carl E. Walsh

In the household sector of the Flow of Funds Accounts, the difference between net acquisition of financial assets and net financial savings is equal to a statistical discrepancy which is often quite large relative to the reported changes in asset holdings. This means that the budget restrictions emphasized in the Brainard-Tobin approach to specifying asset demand equations are not satisfied by the data commonly used to estimate such equations. The view adopted in this paper is that the statistical discrepancy should be thought of as resulting from measurement error in the Flow of Funds data. By imposing a structure on the measurement error, a consistent estimator is developed and used to estimate asset demand equations for the household sector. The demand equations are similar in specification to those used by others so that the results allow a direct assessment of the effects of alternative treatments of the statistical discrepancy. The empirical results suggest that qualitative conclusions about the effects of financial flows and interest rates on asset demands are not affected by the way the statistical discrepancy is treated. Quantitative conclusions are, however, affected.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0732.

in new window

Date of creation: Aug 1981
Publication status: published as Walsh, Carl E. "Revisions In The 'Flash' Estimates Of GNP Growth: Measurement Error Or Forecast Error?," FRB San Francisco - Economic Review (1985): 5-13.
Handle: RePEc:nbr:nberwo:0732
Note: ME
Contact details of provider: Postal:
National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

Phone: 617-868-3900
Web page:

More information through EDIRC

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.:

in new window

  1. Pagan, Adrian, 1973. "Efficient estimation of models with composite disturbance terms," Journal of Econometrics, Elsevier, vol. 1(4), pages 329-340, December.
  2. Barten, A. P., 1969. "Maximum likelihood estimation of a complete system of demand equations," European Economic Review, Elsevier, vol. 1(1), pages 7-73.
  3. Backus, David & Purvis, Douglas, 1980. "An Integrated Model of Household Flow-of-Funds Allocations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(2), pages 400-421, Special I.
  4. Fair, Ray C, 1970. "The Estimation of Simultaneous Equation Models with Lagged Endogenous Variables and First Order Serially Correlated Errors," Econometrica, Econometric Society, vol. 38(3), pages 507-516, May.
  5. V. Vance Roley, 1980. "A Disaggregated Structural Model of the Treasury Securities, Corporate Bond, and Equity Markets: Estimation and Simulation Results," NBER Technical Working Papers 0007, National Bureau of Economic Research, Inc.
  6. Paul Wachtel, 1972. "A Model of Interrelated Demand for Assets by Households," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 1, number 2, pages 129-140 National Bureau of Economic Research, Inc.
  7. Backus, David, et al, 1980. "A Model of U.S. Financial and Nonfinancial Economic Behavior," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(2), pages 259-293, Special I.
  8. Saito, Mitsuo, 1977. "Household Flow-of-Funds Equations: Specification and Estimation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(1), pages 1-20, February.
  9. Hsiao, Cheng, 1976. "Identification and Estimation of Simultaneous Equation Models with Measurement Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 319-339, June.
  10. Denton, Frank T., 1978. "Single-equation estimators and aggregation restrictions when equations have the same sets of regressors," Journal of Econometrics, Elsevier, vol. 8(2), pages 173-179, October.
  11. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-957, Sept.-Nov.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0732. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.