Public Assetbased Reallocations Amonthep Chawla EastWest Center Nihon

Public Asset-based Reallocations Amonthep Chawla East-West Center Nihon University Population Research Institute National Transfer Accounts 1

Outline ► Overview of the Public Sector and Public Asset-based Reallocations ► Implementation with Illustrative Values ► Conclusions National Transfer Accounts 2

The Public Sector ► The public sector includes all inflows to and outflows from the general government. ► Public enterprise is part of the private sector; however, the general government may receive property income from public enterprise. National Transfer Accounts 3

Public Asset-based Reallocations ► Public assets generate interage flows between public asset income and public saving. ► Public asset income includes public operating surplus and public property income. ► Based on SNA, the public sector has no public capital income. ► Public property income includes inflows from and outflows to the private sector and ROW. National Transfer Accounts 4

Public Asset-based Reallocations (cont. ) ► The government saves when it acquires an asset or dispose of debt, generating an outflow ► The government dis-saves when it dispose of an asset or acquires debt, generating an inflow. ► Public saving is measured as the sum of public asset income and public transfer surplus/deficit. National Transfer Accounts 5

Public Transfer Surplus/Deficit ► Balancing item that insures that transfer outflows and inflows are equal ► Relationship between transfer surplus/deficit and public saving § If taxes and grants exceed public transfer inflows, transfer surplus and public asset income are saved § if taxes and grants fall short of public transfer inflows, transfer deficit must be financed out of asset income with the residual saved National Transfer Accounts 6

Estimation Methods Aggregate Controls: similar to private property income, public property income includes interest, rent, dividends and other less important components of property income. ► Age Profile: the age profiles of public property income (both inflows and outflows) and public saving follow the general tax profile. ► National Transfer Accounts 7

Asset-base Reallocations for Japan: an Illustration Asset-based Reallocations, Japan, 2004, Aggregate, billion yen Total Age groups 0 -19 20 -29 30 -49 50 -64 65+ Public asset-based reallocations 22, 749 715 2, 456 8, 577 7, 643 3, 358 Public asset income -5, 458 -172 -589 -2, 058 1, 834 -805 Capital income 0 0 0 -5, 796 -182 -626 -2, 185 -1, 947 -855 Other property income, net 338 11 36 127 113 50 Less: Public saving -28, 207 -887 -3, 046 Public Interest, net National Transfer Accounts -4, 163 10, 635 9, 477 8

National Transfer Accounts 9

National Transfer Accounts 10

Summary ► Taxes, public expenditures and public asset income determine how much resources are available for individuals to save through the public sector ► Reallocations through public assets are one of major mechanisms that individuals at all age groups rely on to finance their lifecycle deficit National Transfer Accounts 11

Acknowledgement Support for this project has been provided by the following institutions: ► the John D. and Catherine T. Mac. Arthur Foundation; ► the National Institute on Aging: NIA, R 37 -AG 025488 and NIA, R 01 -AG 025247; ► the International Development Research Centre (IDRC); ► the United Nations Population Fund (UNFPA); ► the Academic Frontier Project for Private Universities: matching fund subsidy from MEXT (Ministry of Education, Culture, Sports, Science and Technology), 2006 -10, granted to the Nihon University Population Research Institute. National Transfer Accounts 12

The End National Transfer Accounts 13