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Did lower interest rates reduce Japan's household savings rate since the 1990s? Evidence based on the maturation of postal savings certificates

Author

Listed:
  • Satoshi Shimizutani

    (Senior Research Fellow, Institute for International Policy Studies)

  • Noriko Inakura

    (Ph.D. candidate, Graduate School of Systems and Information Engineering, University of Tsukuba)

Abstract

Japan's traditionally high household saving rate has declined substantially since the early 1990s. While this decline is often explained as a result of the rapid increase in the population share of the elderly who are dissaving, we argue that the cause is a decline in interest income triggered by falling interest rates. To examine our hypothesis, we focus on the effect of the maturation of relatively high-yielding postal savings certificates. Estimating a savings function, we find that the reduction in interest income caused by the maturation of the postal saving certificates reduced household saving rates by more than 3 percentage points.

Suggested Citation

  • Satoshi Shimizutani & Noriko Inakura, 2008. "Did lower interest rates reduce Japan's household savings rate since the 1990s? Evidence based on the maturation of postal savings certificates," Economics Bulletin, AccessEcon, vol. 5(22), pages 1-8.
    • Handle: RePEc:ebl:ecbull:eb-08e20007
    as

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    References listed on IDEAS

    as
    1. Maiko Koga, 2006. "The Decline Of Japan'S Saving Rate And Demographic Effects," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 312-321, June.
    2. Karen E. Dynan & Jonathan Skinner & Stephen P. Zeldes, 2004. "Do the Rich Save More?," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 397-444, April.
    3. repec:dpr:wpaper:0384 is not listed on IDEAS
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    Keywords

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D1 - Microeconomics - - Household Behavior

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