Policy Evaluation of Public Insurance Institutions from the view points of flow of funds

Insurance institutions which are operated by public sector have two characters; one is as redistribution institution, and the other is as financial institution which manage large amount of funds. The fact that public insurance institutions (PuII) invest large amount of funds means that the activity of PuII seriously affects macro economy through flow of funds. The purpose of this paper is to evaluate the performance of PuII with the model in which inter-institutional flow of funds matrix is linked to production function. With the investment return, the efficiency of funds management at PuII itself is only evaluated. Whereas, with the effect on GDP calculated from the model which we developed, the efficiency of funds distribution in macro economy can be evaluated. We calculated and compared the effect of PuII and Private insurance institutions (PrII). The main result of this paper is the effect of PuII is smaller than that of PrII through the period of our analysis, however the difference between PuII and PrII is becoming small. Therefore approximating portfolio of PuII to that of PrII is effective in macro economy, with consideration about the implication of managing by public sector.