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Asset prices and the measurement of wealth and saving

Michael Reiter

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: The paper defines concepts of real wealth and saving which take into account the intertemporal index number problem that results from changing interest rates. Unlike conventional measures of real wealth, which are based on the market value of assets and ignore the index number problem, the new measure correctly reflects the changes in the welfare of households over time. An empirically operational approximation to the theoretical measure is provided and applied to US data. A major empirical finding is that US real financial wealth increased strongly in the 1980s, much more than is revealed by the market value of assets.

Keywords: Real wealth; real saving; welfare; index numbers (search for similar items in EconPapers)
JEL-codes: C43 E22 E44 (search for similar items in EconPapers)
Date: 1999-09
New Economics Papers: this item is included in nep-fin
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:396

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