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Household Net Wealth: An International Comparison

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Abstract

Household saving can be measured as either the difference between the flows of current income and expenditure, or through households’ balance sheets as changes in the stocks of accumulated net wealth. This paper examines household saving in New Zealand and other OECD countries, with particular focus on the stock of net wealth. The ratio of real assets to disposable income in New Zealand is close to OECD levels. However, household financial net wealth as a proportion of disposable income has been falling in New Zealand since the late 1980s, whereas it has been rising in other OECD countries. As a result, housing assets in New Zealand have become an increasing share of households' wealth portfolios. The implied savings rate from households’ balance sheets is significantly higher than the flow measure. Moreover, it follows the business cycle more closely, consistent with consumption smoothing behaviour by households.

Suggested Citation

  • Iris Claus & Grant Scobie, 2001. "Household Net Wealth: An International Comparison," Treasury Working Paper Series 01/19, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:01/19
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    File URL: https://treasury.govt.nz/sites/default/files/2007-09/twp01-19.pdf
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    1. Michael J. Boskin, 1988. "Issues in the Measurement and Interpretation of Saving and Wealth," NBER Working Papers 2633, National Bureau of Economic Research, Inc.
    2. C John McDermott & Alasdair Scott, 1999. "Concordance in business cycles," Reserve Bank of New Zealand Discussion Paper Series G99/7, Reserve Bank of New Zealand.
    3. John K Gibson & Grant M Scobie, 2001. "Household Saving Behaviour in New Zealand: A Cohort Analysis," Treasury Working Paper Series 01/18, New Zealand Treasury.
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    Cited by:

    1. Enrique López & Andrés Salamanca, 2009. "El efecto riqueza de la vivienda en Colombia," COYUNTURA ECONÓMICA, FEDESARROLLO, December.
    2. Iris Claus & David Haugh & Grant Scobie & Jonas Tornquist, 2001. "Saving and growth in an open economy," Treasury Working Paper Series 01/32, New Zealand Treasury.
    3. Trinh Le, 2007. "Does New Zealand have a household saving crisis?," Macroeconomics Working Papers 23081, East Asian Bureau of Economic Research.
    4. Skopek, Nora & Buchholz, Sandra & Blossfeld, Hans-Peter, 2011. "Wealth inequality in Europe and the delusive egalitarianism of Scandinavian countries," MPRA Paper 35307, University Library of Munich, Germany.
    5. John K Gibson & Grant M Scobie, 2001. "Household Saving Behaviour in New Zealand: A Cohort Analysis," Treasury Working Paper Series 01/18, New Zealand Treasury.
    6. Mark van Zijll de Jong & Grant M. Scobie, 2006. "Housing: An Analysis of Ownership and Investment Based on the Household Savings Survey," Treasury Working Paper Series 06/07, New Zealand Treasury.
    7. Patricia Fraser & Martin Hoesli & Lynn McAlevey, 2008. "House Prices and Bubbles in New Zealand," The Journal of Real Estate Finance and Economics, Springer, vol. 37(1), pages 71-91, July.

    More about this item

    Keywords

    Household net wealth; saving; financial deregulation;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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