Households' Capital Account: Investment, Gross and Net Savings in the NIPA
We recreate the NIPA adjustments pioneered by Ruggles and Ruggles (1992) for the period 1947-2012 and reconrm their results: household net lending to other sectors is counter-cyclical and is a small fraction private rms' gross capital formation (GCF). To test the causal role of household Net Savings in terms of GCF and GDP growth, a VEC model is estimated. The VECM is cointegrated stationary for the three annual time series, but exogeneity testing shows household Net Savings is exogenous. We argue this is evidence of inter-secotral investment demand as driving feature of growth.