tag:blogger.com,1999:blog-2826531655042170344.post5958961347045224544..comments2024-03-26T11:29:52.986+00:00Comments on Economic Incentives: Household Income, Spending and SavingsSeamushttp://www.blogger.com/profile/15679299530222667673noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2826531655042170344.post-47190713350545223042010-11-20T22:55:56.646+00:002010-11-20T22:55:56.646+00:00Hi Yoganmahew,
It took me a while to get around t...Hi Yoganmahew,<br /><br />It took me a while to get around to this. Apologies. In the household sector the Gross Domestic Product figure measures the production of goods and services bu households and unincorporated self-employed individuals. It is output that is not attributed to firms or government.<br /><br />Compensation of employees is the wages and salaries paid by households and unincorpoated self employed individuals.<br /><br />On debt and interest. The table here covers the current account. Debt features in the capital account which I will consider in a subsequent post. <br /><br />Interest is featured under the heading 'property income'. Interest form most of the heading 'less property income' and would. The impact of falling interest rates in both categories. Interest paid fell from €8.1 billion in 2008 to €4.0 billion in 2009. The heading 'plus property income' is a combination of interest, dividends and rents. Interest earned fell from €4.5 to €2.0 billion.<br /><br />The impact of debt cannot be gauged solely from the current account. For example, the current account tells us that savings in 2007 were €32 million. <br /><br />Of course, this was just the balance of people whose consumption was less than their disposable income and were savings against people whose consumption was greater than their disposable income and were dissaving (borrowing to fund their expenditure). <br /><br />€32 million was the balance of these and it likely that household deposits increased by more than this in 2007. (In fact Central Bank data suggest that deposits from the household sector increased by €6 billion in 2007.)<br /><br />Likewise in 2009 the household sector current account suggests savings of €11 billion but the majority of this went to pay down debt rather than increase deposits.Seamushttps://www.blogger.com/profile/15679299530222667673noreply@blogger.comtag:blogger.com,1999:blog-2826531655042170344.post-47877497151937484892010-10-29T20:27:10.633+01:002010-10-29T20:27:10.633+01:00Hi Seamus,
There are a couple of things that I do...Hi Seamus,<br /><br />There are a couple of things that I don't understand in the accounts - the whole first paragraph - GDP, compensation of employees etc.<br /><br />Second is the position of debt and interest. Neither seems to be accounted for? In the years to 2008, debt was increasing consumption, both through rising revolving debt and through equity release. In the years since, that has reduced, but debt is being repaid and mortgage interest rates for variable rate holders have risen.<br /><br />Do the effects of debt and interest not make a derived disposable income/consumption figure bunk? <br /><br />Ta for any guidance you can provide!yoganmahewnoreply@blogger.com