NNational ational TTransfer ransfer AAccountsccounts11

Public Asset-based Public Asset-based ReallocationsReallocations

Amonthep ChawlaAmonthep ChawlaEast-West CenterEast-West Center

Nihon University Population Nihon University Population Research InstituteResearch Institute

National Transfer Accounts2

OutlineOutline

►Overview of the Public Sector and Overview of the Public Sector and Public Asset-based ReallocationsPublic Asset-based Reallocations

► Implementation with Illustrative ValuesImplementation with Illustrative Values►ConclusionsConclusions

National Transfer Accounts3

The Public SectorThe Public Sector

►The public sector includes all inflows to The public sector includes all inflows to and outflows from the general and outflows from the general government. government.

►Public enterprise is part of the private Public enterprise is part of the private sector; however, the general sector; however, the general government may receive property government may receive property income from public enterprise. income from public enterprise.

National Transfer Accounts4

Public Asset-based ReallocationsPublic Asset-based Reallocations

► Public assets generate interage flows Public assets generate interage flows between public asset income and public between public asset income and public saving.saving.

► Public asset income includes public Public asset income includes public operating surplus and public property operating surplus and public property income. income.

► Based on SNA, the public sector has no Based on SNA, the public sector has no public capital income.public capital income.

► Public property income includes inflows from Public property income includes inflows from and outflows to the private sector and ROW.and outflows to the private sector and ROW.

National Transfer Accounts5

Public Asset-based Reallocations Public Asset-based Reallocations (cont.)(cont.)►The government saves when it The government saves when it

acquires an asset or dispose of debt, acquires an asset or dispose of debt, generating an outflowgenerating an outflow

►The government dis-saves when it The government dis-saves when it dispose of an asset or acquires debt, dispose of an asset or acquires debt, generating an inflow. generating an inflow.

►Public saving is measured as the sum Public saving is measured as the sum of public asset income and public of public asset income and public transfer surplus/deficit.transfer surplus/deficit.

National Transfer Accounts6

Public Transfer Public Transfer Surplus/DeficitSurplus/Deficit►Balancing item that insures that transfer Balancing item that insures that transfer

outflows and inflows are equaloutflows and inflows are equal►Relationship between transfer Relationship between transfer

surplus/deficit and public savingsurplus/deficit and public saving If taxes and grants exceed public transfer If taxes and grants exceed public transfer

inflows, transfer surplus and public asset inflows, transfer surplus and public asset income are savedincome are saved

if taxes and grants fall short of public if taxes and grants fall short of public transfer inflows, transfer deficit must be transfer inflows, transfer deficit must be financed out of asset income with the financed out of asset income with the residual savedresidual saved

National Transfer Accounts7

Estimation MethodsEstimation Methods

► Aggregate Controls: similar to private Aggregate Controls: similar to private property income, public property property income, public property income includes interest, rent, income includes interest, rent, dividends and other less important dividends and other less important components of property income.components of property income.

► Age Profile: the age profiles of public Age Profile: the age profiles of public property income (both inflows and property income (both inflows and outflows) and public saving follow the outflows) and public saving follow the general tax profile.general tax profile.

National Transfer Accounts8

Asset-base Reallocations for Asset-base Reallocations for Japan: an IllustrationJapan: an Illustration

TotalTotal Age groupsAge groups

0-190-19 20-2920-29 30-4930-49 50-6450-64 65+65+

Public asset-Public asset-based based reallocationsreallocations

22,74922,749 715715 2,4562,456 8,5778,577 7,647,6433

3,3583,358

Public asset Public asset incomeincome

-5,458-5,458 -172-172 -589-589 -2,058-2,058 --1,831,83

44

-805-805

Capital incomeCapital income 00 00 00 00 00 00

Public Interest, netPublic Interest, net -5,796-5,796 -182-182 -626-626 -2,185-2,185 --1,9471,947

-855-855

Other property Other property income, netincome, net

338338 1111 3636 127127 113113 5050

Less: Public Less: Public saving saving

--28,20728,207

-887-887 --3,0463,046

--10,6310,63

55

--9,479,47

77

--4,1634,163

Asset-based Reallocations, Japan, 2004, Aggregate, billion yen

National Transfer Accounts9

Per Capita Public Asset-based Reallocations, Japan, 2004

-500,000

-400,000-300,000

-200,000

-100,0000

100,000

200,000300,000

400,000

0 10 20 30 40 50 60 70 80 90+yen

Asset-based Reallocations Asset income Saving

National Transfer Accounts10

Per Capita Public Property Income, Japan, 2004

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

0 10 20 30 40 50 60 70 80 90+yen

Interest inflows Interest outflows

Other property income, inflows Other property income, outflows

National Transfer Accounts11

SummarySummary

►Taxes, public expenditures and public Taxes, public expenditures and public asset income determine how much asset income determine how much resources are available for individuals resources are available for individuals to save through the public sectorto save through the public sector

►Reallocations through public assets Reallocations through public assets are one of major mechanisms that are one of major mechanisms that individuals at all age groups rely on to individuals at all age groups rely on to finance their lifecycle deficitfinance their lifecycle deficit

National Transfer Accounts12

AcknowledgementAcknowledgement

Support for this project has been provided by the Support for this project has been provided by the following institutions:following institutions:

► the John D. and Catherine T. MacArthur Foundation; the John D. and Catherine T. MacArthur Foundation; ► the National Institute on Aging: NIA, R37-AG025488 the National Institute on Aging: NIA, R37-AG025488

and NIA, R01-AG025247; and NIA, R01-AG025247; ► the International Development Research Centre the International Development Research Centre

(IDRC);(IDRC);► the United Nations Population Fund (UNFPA); the United Nations Population Fund (UNFPA); ► the Academic Frontier Project for Private Universities: the Academic Frontier Project for Private Universities:

matching fund subsidy from MEXT (Ministry of matching fund subsidy from MEXT (Ministry of Education, Culture, Sports, Science and Technology), Education, Culture, Sports, Science and Technology), 2006-10, granted to the Nihon University Population 2006-10, granted to the Nihon University Population Research Institute.Research Institute.

NNational ational TTransfer ransfer AAccountsccounts1313

The EndThe End