1. Private Asset-based Reallocations Amonthep Chawla Andrew Mason Nov 6, 2007 5 th NTA Workshop @ SKKU

2. Background Individuals rely on assets to achieve their economic lifecycle path. Private assets can be reallocated upward or downward, depending on types of assets (Lee 1994; Mason et al. 2007). –Capital can be allocated only from young to old. –Credit can be allocated in either direction.

3. Background II Examples of private assets are private capital stock, private consumer credit (debt), public credit (debt) and foreign assets. The main objective is to estimate how different types of private assets are reallocated from one age group to another. Need details on private asset-based reallocations

5. Data Asset Income Private physical asset income Private interest income Private interest expense Public interest income Private foreign asset income Private Saving Private investment Private lending to the public sector Private lending to consumers Private borrowing by consumers Private saving, foreign assets returns to capital and land income on consumer credit expense on consumer debt income on public credit income earned by residents on foreign assets net accumulation of private capital/land lending to the government lending to consumers borrowing by consumers net saving of foreign assets by residents

6. Where to find data for consumer credit? It is not too difficult…don’t panic!

7. Calculated from OECD Financial Accounts Table IIIa Balance Sheets and from OECD National Accounts, Table 3. Disposable income is net national disposable income. Households include non-profit institutions serving households. Source: Crook and Hochguertel 2006 Note: NTA consumer credit does not include mortgage credit

8. Preliminary Results Net private credit income Private saving –Investment –Credit

9. Per Capita Private Interest Income and Expense, Thailand, 1996

10. Per Capita Private Saving, Thailand, 1996 Given age profile of saving (residual from the NTFA) Hump-shape for private investment

11. Reallocations from old to young

12. Reallocations from young (taxpayers=savers) to old (investors=dis-savers) Note that Thailand had budget surplus in 1996

14. How to do this? Need to investigate more on details of private asset income and private saving. Find macro controls for private capital stock and credit and need to take into account of the foreign sector. Follow the excel file (will be uploaded on the website soon ) Any question…ask Andy! Good Luck!