Household net wealth: an international comparison
New Zealand Treasury Working Paper 01/19
Published: 2001
Authors: Iris Claus and Grant Scobie
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.
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Acknowledgement
The authors would like to thank Bob Buckle, Wai Kin Choy, Lesley Haines, Roger Hurnard, Struan Little, Jas McKenzie, David Skilling, Clive Thorp and Bruce White for valuable comments. This paper has also benefited of comments from participants at a Treasury seminar and the New Zealand Association of Economists conference in Christchurch, June 2001.Disclaimer
The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.
