Consumption Growth in a Booming Economy: Taiwan 1976-96
AbstractConsumption and income have both grown rapidly in Taiwan over the past forty years, with younger birth cohorts experiencing faster growth. The long upward trend in consumption presents a strong challenge to the consumption smoothing predictions of the Permanent Income Hypothesis. We investigate the extent to which consumption theory can account for this trend in an environment where a large majority of households have high savings rates. Household survey data from 1976-96 are used to estimate dynamic pseudo-panel models with inter-cohort heterogeneity. We evaluate the impacts on consumption of migration, mortality, household composition, liquidity constraints, unanticipated aggregate shocks, hyperbolic discounting, habit formation and precautionary saving. Taiwanese consumption growth is found to result from high levels of prudence, with the faster consumption growth of younger cohorts attributed to their greater participation in industries with more earnings risk.Classification-JEL: O12; O16; E21; C23
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Economic Growth Center, Yale University in its series Working Papers with number 823.
Length: 56 pages
Date of creation: May 2001
Date of revision:
consumption growth; pseudo-panel; prudence; Taiwan;
Find related papers by JEL classification:
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Devereux, Paul J., 2007.
"Improved Errors-in-Variables Estimators for Grouped Data,"
Journal of Business & Economic Statistics,
American Statistical Association, vol. 25, pages 278-287, July.
- Devereux, Paul J., 2007. "Improved Errors-in-Variables Estimators for Grouped Data," CEPR Discussion Papers 6167, C.E.P.R. Discussion Papers.
- Paul J Devereux, 2006. "Improved Errors-in-Variables Estimators for Grouped Data," Working Papers 200602, School Of Economics, University College Dublin.
- Wooheon Rhee, 2004. "Habit Formation And Precautionary Saving: Evidence From The Korean Household Panel Studies," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 1-19, December.
- David J. Mckenzie, 2002. "The Prudence of Mexican Consumers," Economia Mexicana NUEVA EPOCA, , vol. 0(2), pages 393-407, July-Dece.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Louise Danishevsky).
If references are entirely missing, you can add them using this form.