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Do Koreans Consume Excessively?

Author

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  • Chulsoo Kim

    (Sookmyung Women's University)

Abstract

Recent declining growth rates and the IMF balance of payment crisis in Korea have often been attributed partly to excessive consumption. After examining several definitions commonly used for excessive consumption, this paper suggests that a more appropriate definition of excessive consumption should be based on dynamic optimization considerations: consuming more than permanent income. This paper constructs permanent income hypothesis consumption, and shows that Korean consumers consumed too little, 15.0%∼19.7% less than their permanent income. Therefore, this paper concludes that Korea does not suffer from excessive consumption.

Suggested Citation

  • Chulsoo Kim, 2001. "Do Koreans Consume Excessively?," Korean Economic Review, Korean Economic Association, vol. 17, pages 5-23.
    • Handle: RePEc:kea:keappr:ker-200106-17-1-01
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    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-200106-17-1-01.pdf
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    Citations

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    Cited by:

    1. Soyoung Kim, 2014. "Effects of Monetary Policy Shocks on the Exchange Rate in the Republic of Korea: Capital Flows in Stock and Bond Markets," Asian Development Review, MIT Press, vol. 31(1), pages 121-135, March.

    More about this item

    Keywords

    excessive consumption; permanent income hypothesis;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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