Did Japanese Consumers Become More Prudent During 1998-1999?: Evidence From Household Level Data
AbstractThis paper explores empirically whether Japanese consumers became more prudent in the second half of the 1990s, a decade in which Japan registered historically low economic growth. Employing the methodology developed by Dynan (1993), this study uses micro-level data from the Family Savings Survey and the Family Income and Expenditure Survey to estimate the coefficient of prudence for Japanese households in the second half of the 1990s. The estimates reveal that the coefficient of prudence is positive and statistically significant in the 1998-1999 period. The obtained value for the coefficient of prudence is four, which is much higher than those estimated for U.S. households (not significantly different from zero) or U.K. households (around 2). The estimated coefficient for young households is higher still, which is consistent with simulation studies conducted by Gourinchas and Parker (2002) showing that precaution is the most important saving motive for younger households.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d05-109.
Date of creation: Aug 2005
Date of revision:
Precautionary saving; Coefficient of Prudence; Euler equation; Household Data;
Other versions of this item:
- Masahiro Hori & Satoshi Shimizutani, 2006. "Did Japanese consumers become more prudent during 1998-1999? Evidence from household-level data," International Economic Journal, Taylor & Francis Journals, vol. 20(2), pages 197-209.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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