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Persistence of income shocks and consumption inequality: A case in Japan

Author

Listed:
  • Tomoaki Yamada

    () (Meiji University)

Abstract

The present study investigate the relationship between the persistence of uninsurable income shocks and consumption inequality over a household's life cycle in Japan. Using a life cycle model with incomplete asset markets and calibrated parameters for the Japanese economy, we quantitatively show that moderate persistence of shocks generate a nonlinear consumption inequality profile over the life cycle. The moderate persistence of shocks well replicates the pattern of consumption inequality in Japan.

Suggested Citation

  • Tomoaki Yamada, 2009. "Persistence of income shocks and consumption inequality: A case in Japan," Economics Bulletin, AccessEcon, vol. 29(4), pages 2822-2831.
  • Handle: RePEc:ebl:ecbull:eb-09-00615
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I4-P36.pdf
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    References listed on IDEAS

    as
    1. MaCurdy, Thomas E., 1982. "The use of time series processes to model the error structure of earnings in a longitudinal data analysis," Journal of Econometrics, Elsevier, vol. 18(1), pages 83-114, January.
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    7. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 437-467, June.
    8. Abe, Naohito & Yamada, Tomoaki, 2009. "Nonlinear income variance profiles and consumption inequality over the life cycle," Journal of the Japanese and International Economies, Elsevier, vol. 23(3), pages 344-366, September.
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    More about this item

    Keywords

    Uninsurable income risk; Consumption inequality;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D3 - Microeconomics - - Distribution

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