4
1986.The main source of these gains presumably lies in the re
purchase of shares at high prices as a conseguence of take-overs
(or of defensive measures by corporations threatened by
raiders).The stock exchange boom of 1982 - 1987 has favoured
speculative gains as also has the boom in real estate.
What is the importance of the realised capital gains for the
household saving? If the gains are made by households which hold
shares directly or which get capital gains dividends from
investment funds ,and if they spend these gains on consumption,
then the result will be a reduction of household saving as
measured by NIPA, which is spurious,because the saving
propensities have not changed - as much is saved as before and the
additional consumption is financed out of the capital gains. It is
very difficult to estimate even approximately how much spurious
reduction in saving may have been caused by realised capital gains
of households. A large part of share capital is held by households
directly or indirectly (although some of it has been shifted to
the pension funds in the course of time), but the holding,direct
and via investment funds,is highly concentrated,so that only a
fairly small proportion of the gains can have been
consumed.Nevertheless it is possible that the saving rate has been
reduced by something like a third to one half of a percentage
point on account of realised capital gains of households.
Quite apart from realised gains the mere fact of the stock
exchange boom has led to an appreciation of the assets of pension
funds which in itself has led to considerable overfunding. This
has led to an absolute and relative reduction in the contributions
to the funds. Tne policy of the funds is to aim at a certain
target investment which enables them to meet the pension claims.
They are constrained by law to reduce their contributions if there