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Precautionary Motives versus Waiting Options: Evidence from Aggregate Household Saving in Japan

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  • Saito, Makoto

    (Hitotsubashi U)

  • Shiratsuka, Shigenori

    (Institute for Monetary and Econ Studies, Bank of Japan)

Abstract

Exploiting theoretical implications for saving motives under uncertainty proposed by Epstein (1980), this paper empirically examines which motive is more dominant in aggregate household savings in Japan, precautionary savings or savings as waiting options. The former motive is driven by the magnitude of risks, while the latter is promoted by the subsequent resolution of uncertainty. Empirical results indicate that saving behavior since the 1980s is more consistent with precautionary savings; however, estimation results from the behavior during the 1990s offer some evidence in favor of savings as waiting options.

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File URL: http://www.imes.boj.or.jp/research/papers/english/me21-3-1.pdf
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Bibliographic Info

Article provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.

Volume (Year): 21 (2003)
Issue (Month): 3 (October)
Pages: 1-20

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Handle: RePEc:ime:imemes:v:21:y:2003:i:3:p:1-20

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  1. Mark Kazarosian, 1997. "Precautionary Savings-A Panel Study," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 241-247, May.
  2. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
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  5. Christopher D. Carroll & Karen E. Dynan & Spencer D. Krane, 2003. "Unemployment Risk and Precautionary Wealth: Evidence from Households' Balance Sheets," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 586-604, August.
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  8. Acemoglu, Daron & Scott, Andrew, 1994. "Consumer Confidence and Rational Expectations: Are Agents' Beliefs Consistent with the Theory?," Economic Journal, Royal Economic Society, vol. 104(422), pages 1-19, January.
  9. Murata, Keiko, 2003. "Precautionary Savings and Income Uncertainty: Evidence from Japanese Micro Data," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 21-52, October.
  10. Malley, James R & Moutos, Thomas, 1996. "Unemployment and Consumption," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 584-600, October.
  11. Carroll, Christopher D & Fuhrer, Jeffrey C & Wilcox, David W, 1994. "Does Consumer Sentiment Forecast Household Spending? If So, Why?," American Economic Review, American Economic Association, vol. 84(5), pages 1397-1408, December.
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  13. Joon-Ho Hahm & Douglas G. Steigerwald, 1999. "Consumption Adjustment under Time-Varying Income Uncertainty," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 32-40, February.
  14. João Miguel Ejarque, 1997. "Uncertainty and Durable Consumption in the Great Depression," Discussion Papers 97-04, University of Copenhagen. Department of Economics.
  15. Kantor, Shawn Everett & Fishback, Price V, 1996. "Precautionary Saving, Insurance, and the Origins of Workers' Compensation," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 419-42, April.
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Cited by:
  1. Murata, Keiko, 2003. "Precautionary Savings and Income Uncertainty: Evidence from Japanese Micro Data," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 21-52, October.
  2. Charles Yuji Horioka, 2004. "The Stagnation of Household Consumption in Japan," ISER Discussion Paper 0599, Institute of Social and Economic Research, Osaka University, revised Jun 2004.

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