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Income Uncertainty and Wealth Accumulation: How Precautionary are Taiwanese Households?

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  • Yih-Luan Chyi
  • Yu-Lun Liu

Abstract

To assess how recent job loss impacts wealth accumulation of Taiwanese households, the present study investigates the empirical relevance of the precautionary saving motive to explain measures of wealth during the past 2 decades. This study demonstrates that households facing increased transitory shock accumulate increased amounts of financial and housing wealth, whereas permanent shocks cause households to accumulate housing wealth only. Empirical results suggest an important policy implication: households in Taiwan will save less when social insurance policies are effective in reducing future transitory and permanent shocks to household income. Copyright 2007 The Author Journal compilation 2007 East Asian Economic Association and Blackwell Publishing Ltd. .

Suggested Citation

  • Yih-Luan Chyi & Yu-Lun Liu, 2007. "Income Uncertainty and Wealth Accumulation: How Precautionary are Taiwanese Households? ," Asian Economic Journal, East Asian Economic Association, vol. 21(3), pages 301-319, September.
  • Handle: RePEc:bla:asiaec:v:21:y:2007:i:3:p:301-319
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    References listed on IDEAS

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    1. Glenn Jenkins & Chun-Yan Kuo, 2000. "Promoting Export–Oriented Foreign Direct Investment in Developing Countries: Tax and Customs Issues," Development Discussion Papers 2000-03, JDI Executive Programs.
    2. Ya-Hwei Yang, 1993. "Government Policy and Strategic Industries: The Case of Taiwan," NBER Chapters,in: Trade and Protectionism, NBER-EASE Volume 2, pages 387-411 National Bureau of Economic Research, Inc.
    3. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
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    Cited by:

    1. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, Oxford University Press, vol. 112(2), pages 443-478.

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