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2022 ◽  
pp. 1-19
Author(s):  
Donato Masciandaro ◽  
Charles Goodhart ◽  
Stefano Ugolini

We analyse the money-financed fiscal stimulus implemented in Venice during the famine and plague of 1629–31, which was equivalent to a ‘net-worth helicopter money’ strategy – a monetary expansion generating losses to the issuer. We argue that the strategy aimed at reconciling the need to subsidize inhabitants suffering from containment policies with the desire to prevent an increase in long-term government debt, but it generated much monetary instability and had to be quickly reversed. This episode highlights the redistributive implications of the design of macroeconomic policies and the role of political economy factors in determining such designs.


2021 ◽  
Author(s):  
◽  
David Law

<p>Recent policy changes and looming pressures in New Zealand have the potential to significantly impact the living standards of those who will enter retirement in the coming decades. In particular, a voluntary subsidised savings scheme known as KiwiSaver was introduced in 2007. Population ageing will increase the costs associated with New Zealand Superannuation (NZS), a universal government-funded pension paid for out of general taxation. In addition, rapid house price growth has made home ownership difficult for many, yet home ownership is likely to improve the living standards of retirees. These developments raise a number of important policy questions, which this thesis addresses. A variety of empirical approaches are employed, ranging from descriptive analysis to the application of regression techniques, including those designed to address specific econometric problems such as sample selection bias and unobserved heterogeneity. Data is primarily sourced from longitudinal and cross-sectional surveys. However, when required this is supplemented with house price, life expectancy and administrative data.  Chapters 2 and 3 of the thesis provide an evaluation of the performance of KiwiSaver, a subsidised voluntary savings scheme aimed at increasing the retirement wealth of a target population. The first of these chapters uses data from a cross-sectional survey conducted in 2010 and designed specifically for the purpose of evaluating KiwiSaver. Four key dimensions of performance are assessed using a variety of empirical techniques. Results suggest that only one-third of contributions to KiwiSaver represent additional savings. Regression analysis, designed to account for sample selection bias due to survey routing, finds no relationship between KiwiSaver membership and expected retirement income outcomes. Measures of target effectiveness and leakage suggest that KiwiSaver has been only modestly successful in reaching its target population and that leakage to the non-target population was high, at 93%. Finally, the scheme’s possible effect on national saving was examined, accounting for its costs, membership projections, government behaviour and additional savings by members. KiwiSaver’s effect on net national saving appears limited at best.  Chapter 3 analysis the extent to which membership of KiwiSaver has been associated with greater accumulations of net worth. The chapter uses two linked sources of data, Statistics New Zealand’s longitudinal Survey of Family, Income and Employment (SoFIE) and administrative data from the Inland Revenue Department on KiwiSaver membership. These data cover the period 2002 to 2010. Two approaches are employed to measure KiwiSaver’s impact, difference-in-differences (where the outcomes of interest are changes in net worth) and various panel regression techniques. Results appear consistent with those of Chapter 2. That is, neither approach suggests KiwiSaver membership has been associated with any positive effect on the accumulation of net worth.  Chapter 4 examines the implications for national savings of three retirement income policy options designed to improve the fiscal sustainability of NZS. These options include lifting the age of eligibility for NZS by two years, lowering the rate of indexation of NZS payments and making private saving compulsory then using those accumulations to reduce NZS entitlements. A model is developed that employs population and longevity projections allowing estimation of the contributions that many overlapping age cohorts might make to national savings in response to policy change. Government contributions to national savings, resulting primarily from reduced NZS payments, are also considered. Results suggest that even seemingly modest changes to retirement income policies could lead to substantial cumulative changes in national savings by 2061. However, lifting the age of eligibility for NZS appears able to generate superior improvements in the government’s fiscal position compared to the other two policy options over the medium term.  Chapter 5 examines patterns of home ownership and housing affordability across groups and over time, as well as various factors associated with the likelihood of each. The analysis draws on two surveys, the Household Economic Survey (HES) and SoFIE, and covers a period when the median house price in New Zealand increased by over 50%. A model which may be suggestive of whether or not an individual or couple is likely to find home-ownership affordable is applied. This model incorporates information relating to four important influences on affordability, in particular, income, net worth, house prices, and the structure of mortgage contracts (including the interest rate and mortgage term). While housing affordability was high for some groups during at least part of the period of analysis, for other groups affordability was persistently low, such as for singles and those on relatively low incomes. However, for nearly all groups examined housing affordability declined substantially over the period.  The final analytical chapter of the thesis extends the analysis of Chapter 5 to examine the potential benefits to housing affordability of the introduction of price level adjusted mortgages (PLAMs). These require lower repayments during the early years of a mortgage and higher repayments during latter years as compared to conventional mortgages. The analysis uses SoFIE and the model of housing affordability from Chapter 5, but with one important difference, a price level adjusted mortgage is assumed under various rates of inflation. Results are then compared to those derived from the housing affordability model under the assumption of a conventional mortgage. Findings suggest that PLAMs could indeed significantly improve housing affordability for prospective homeowners if they were available.</p>


2021 ◽  
Author(s):  
◽  
David Law

<p>Recent policy changes and looming pressures in New Zealand have the potential to significantly impact the living standards of those who will enter retirement in the coming decades. In particular, a voluntary subsidised savings scheme known as KiwiSaver was introduced in 2007. Population ageing will increase the costs associated with New Zealand Superannuation (NZS), a universal government-funded pension paid for out of general taxation. In addition, rapid house price growth has made home ownership difficult for many, yet home ownership is likely to improve the living standards of retirees. These developments raise a number of important policy questions, which this thesis addresses. A variety of empirical approaches are employed, ranging from descriptive analysis to the application of regression techniques, including those designed to address specific econometric problems such as sample selection bias and unobserved heterogeneity. Data is primarily sourced from longitudinal and cross-sectional surveys. However, when required this is supplemented with house price, life expectancy and administrative data.  Chapters 2 and 3 of the thesis provide an evaluation of the performance of KiwiSaver, a subsidised voluntary savings scheme aimed at increasing the retirement wealth of a target population. The first of these chapters uses data from a cross-sectional survey conducted in 2010 and designed specifically for the purpose of evaluating KiwiSaver. Four key dimensions of performance are assessed using a variety of empirical techniques. Results suggest that only one-third of contributions to KiwiSaver represent additional savings. Regression analysis, designed to account for sample selection bias due to survey routing, finds no relationship between KiwiSaver membership and expected retirement income outcomes. Measures of target effectiveness and leakage suggest that KiwiSaver has been only modestly successful in reaching its target population and that leakage to the non-target population was high, at 93%. Finally, the scheme’s possible effect on national saving was examined, accounting for its costs, membership projections, government behaviour and additional savings by members. KiwiSaver’s effect on net national saving appears limited at best.  Chapter 3 analysis the extent to which membership of KiwiSaver has been associated with greater accumulations of net worth. The chapter uses two linked sources of data, Statistics New Zealand’s longitudinal Survey of Family, Income and Employment (SoFIE) and administrative data from the Inland Revenue Department on KiwiSaver membership. These data cover the period 2002 to 2010. Two approaches are employed to measure KiwiSaver’s impact, difference-in-differences (where the outcomes of interest are changes in net worth) and various panel regression techniques. Results appear consistent with those of Chapter 2. That is, neither approach suggests KiwiSaver membership has been associated with any positive effect on the accumulation of net worth.  Chapter 4 examines the implications for national savings of three retirement income policy options designed to improve the fiscal sustainability of NZS. These options include lifting the age of eligibility for NZS by two years, lowering the rate of indexation of NZS payments and making private saving compulsory then using those accumulations to reduce NZS entitlements. A model is developed that employs population and longevity projections allowing estimation of the contributions that many overlapping age cohorts might make to national savings in response to policy change. Government contributions to national savings, resulting primarily from reduced NZS payments, are also considered. Results suggest that even seemingly modest changes to retirement income policies could lead to substantial cumulative changes in national savings by 2061. However, lifting the age of eligibility for NZS appears able to generate superior improvements in the government’s fiscal position compared to the other two policy options over the medium term.  Chapter 5 examines patterns of home ownership and housing affordability across groups and over time, as well as various factors associated with the likelihood of each. The analysis draws on two surveys, the Household Economic Survey (HES) and SoFIE, and covers a period when the median house price in New Zealand increased by over 50%. A model which may be suggestive of whether or not an individual or couple is likely to find home-ownership affordable is applied. This model incorporates information relating to four important influences on affordability, in particular, income, net worth, house prices, and the structure of mortgage contracts (including the interest rate and mortgage term). While housing affordability was high for some groups during at least part of the period of analysis, for other groups affordability was persistently low, such as for singles and those on relatively low incomes. However, for nearly all groups examined housing affordability declined substantially over the period.  The final analytical chapter of the thesis extends the analysis of Chapter 5 to examine the potential benefits to housing affordability of the introduction of price level adjusted mortgages (PLAMs). These require lower repayments during the early years of a mortgage and higher repayments during latter years as compared to conventional mortgages. The analysis uses SoFIE and the model of housing affordability from Chapter 5, but with one important difference, a price level adjusted mortgage is assumed under various rates of inflation. Results are then compared to those derived from the housing affordability model under the assumption of a conventional mortgage. Findings suggest that PLAMs could indeed significantly improve housing affordability for prospective homeowners if they were available.</p>


2021 ◽  
Vol 5 (Supplement_1) ◽  
pp. 914-914
Author(s):  
Jeremy Yorgason ◽  
Dikla Segel-Karpas ◽  
Ashley Ermer ◽  
Hailey Weller ◽  
Shenan Owens ◽  
...  

Abstract Retirement is an expected stage of life that couples plan for far in advance. Despite knowing that years of life without regular income are anticipated, some underprepare, leading to financial uncertainty in later years. In this study we explore financial concerns for retirement expressed by a sample of 335 midlife (Mage=44) couples that participated in the Flourishing Families study. We also examined predictors of those concerns across a 1-year period. Results suggested that both husbands and wives worried about insufficient income, excess spending, and heavy debt in retirement. Minor concerns included being worried about paying for their children’s education, net worth, and general expenses. Lower income was predictive of both husbands and wives being worried about having insufficient income in retirement. Higher income was predictive of husbands having concerns about excess spending. Although having retirement benefits was not predictive of any worries, having retirement savings was associated with wives having a greater likelihood of reporting worries about heavy debt and net worth in retirement. Better financial communication was associated with fewer husbands reporting concerns about excess spending and fewer wives reporting concerns about heavy debt. Having concerns about a spouse not being financially responsible were associated with more husbands reporting worries about excess spending and heavy debt in retirement. When wives reported higher social connection with a child, they also were more likely to report worries about expenses. Findings suggest that saving for retirement, communicating well about finances, and being financially responsible are associated with fewer financial concerns in retirement.


2021 ◽  
Vol 5 (Supplement_1) ◽  
pp. 599-599
Author(s):  
Mengya Wang ◽  
Suzanne Bartholomae ◽  
Jonathan Fox

Abstract Retirement has been considered as a major transition in one’s life. Financial security in retirement is a major concern for many Americans. Evidence has shown that being financially prepared for retirement could has a significant, positive impact on one’s life satisfaction. Employing data from the 2012 and 2018 National Financial Capability Study (N=1023), this study analyzes the relationship between participants’ retirement planning in 2012 and their financial satisfaction in 2018. An Ordinary Least Squares regression is used in the current study. This study found relatively low retirement preparedness levels (retirement planning, retirement saving, retirement plan: employer-based or individually held, investment) among the participants in 2012. Based on the descriptive results, adults closest to retirement (ages 55 to 64) are more likely to be planning compared to the other groups, as are adults who were married, highly educated, males, and white. According to the liner regression results, this study found that adults who had a retirement savings goal, had a retirement plan (employer-based or individually held), made regular contributions to retirement plans, and owned investments in 2012 are more likely to be satisfied with their personal financial condition in 2018. As expected, individuals with higher incomes, larger net worth, and those who are older are significantly more likely to be financial satisfied. However, even after controlling for these variables, results show that planning does indeed impact the level of financial satisfaction. Our findings highlight the importance of policies and programs to support Americans with retirement planning.


2021 ◽  
Vol 80 (4) ◽  
pp. 3-30
Author(s):  
Filipp Prokopev ◽  

In this paper, I analyse the relationship between the credit spreads of Russian bond issuers and monetary policy shocks. According to the theory of demand-side financial imperfections, in the presence of financial frictions, the higher the net worth of a firm, the lower its external finance premium. The theory of the balance sheet channel of monetary policy suggests that monetary shocks may affect the net worth of a firm through debt outflows. Together, these ideas predict that the external finance premium of more indebted companies is more sensitive to monetary policy shocks. However, my empirical findings from the credit spreads of Russian companies do not support this theory.


2021 ◽  
Vol 2 (2) ◽  
pp. 57-118
Author(s):  
Mihai Copaciu ◽  
◽  
Joana Madjoska ◽  
Mite Miteski ◽  
◽  
...  

This paper describes the theoretical structure and estimation results for a DSGE model for the Macedonian economy. Having as benchmark the model of Copaciu et al. (2015), modified to allow for a fixed exchange rate, we are able to match relatively well the volatility observed in the data. Given the monetary policy regime in place, the debt deflation channel is more important relative to the financial accelerator one when compared to the flexible exchange rate case. The lack of balance sheet effects results in no significant differences in terms of net worth evolution across the two types of entrepreneurs when impulse response functions are evaluated. However, the shocks related to the financial sector appear to be especially important for investment, for the domestic interest rate and interest rate spreads, illustrating the relevance of including financial frictions in the model. With the exchange rate not acting as a shock absorber, the external shocks are more relevant for the CPI inflation and the domestic interest rate. The drop in GDP associated with the pandemic mainly reflects the negative innovations to the consumption preference shock and to the permanent technology shock.


2021 ◽  
Vol 5 (1) ◽  
pp. 135-140
Author(s):  
Wan Ahmad Fauzi bin Hashim Wan Husain

The special position of Malays and Natives of Sabah and Sarawak remains a national debate despite the fact that its position has been lawfully accorded according to Article 153, Federal Constitution. Those who had significantly benefitted from the implementation of policies under Article 153 among non-Malays and non-Natives of Sabah and Sarawak, especially from an economic policy have yet turned up to defend many allegations thrown at the Government. As a matter of fact, many Malays themselves admitted that the Government had introduced many good programs to elevate the living standard of their community but yet to see much improvement across the country. On the contrary, the wealth accumulated by non-Malays as well as non-Natives of Sabah and Sarawak beyond RM1 billion personal net worth as shown in many popular magazines has proven to increase both in the number of individuals and its value. Hence, this paper aims to examine Article 153 and its governance on policies for affirmative action against social injustice using historical and legal analysis methods. The findings in this study could justify the position of Article 153 and evaluate the truth of so many allegations against it.


2021 ◽  
pp. 329-364
Author(s):  
Simon A. Kingaby
Keyword(s):  

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