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Precautionary Motives versus Waiting Options: Evidence from Aggregate Household Saving in Japan

Author

Listed:
  • Saito, Makoto

    (Hitotsubashi U)

  • Shiratsuka, Shigenori

    (Institute for Monetary and Econ Studies, Bank of Japan)

Abstract

Exploiting theoretical implications for saving motives under uncertainty proposed by Epstein (1980), this paper empirically examines which motive is more dominant in aggregate household savings in Japan, precautionary savings or savings as waiting options. The former motive is driven by the magnitude of risks, while the latter is promoted by the subsequent resolution of uncertainty. Empirical results indicate that saving behavior since the 1980s is more consistent with precautionary savings; however, estimation results from the behavior during the 1990s offer some evidence in favor of savings as waiting options.

Suggested Citation

  • Saito, Makoto & Shiratsuka, Shigenori, 2003. "Precautionary Motives versus Waiting Options: Evidence from Aggregate Household Saving in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 1-20, October.
  • Handle: RePEc:ime:imemes:v:21:y:2003:i:3:p:1-20
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    File URL: http://www.imes.boj.or.jp/research/papers/english/me21-3-1.pdf
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    References listed on IDEAS

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    6. Ogawa, Kazuo, 1991. "Income Risk and Precautionary Saving," Economic Review, Hitotsubashi University, vol. 42(2), pages 139-152, April.
    7. Steigerwald, Doug, 1997. "Consumption Adjustment under Changing Income Uncertainty," University of California at Santa Barbara, Economics Working Paper Series qt5kp8k6xc, Department of Economics, UC Santa Barbara.
    8. Murata, Keiko, 2003. "Precautionary Savings and Income Uncertainty: Evidence from Japanese Micro Data," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 21-52, October.
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    Citations

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    Cited by:

    1. Murata, Keiko, 2003. "Precautionary Savings and Income Uncertainty: Evidence from Japanese Micro Data," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(3), pages 21-52, October.
    2. Charles Yuji Horioka, 2004. "The Stagnation of Household Consumption in Japan," CESifo Working Paper Series 1133, CESifo Group Munich.
    3. Horioka, Charles Yuji, 2006. "The causes of Japan's `lost decade': The role of household consumption," Japan and the World Economy, Elsevier, vol. 18(4), pages 378-400, December.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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