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Age-period-cohort decomposition of aggregate data: an application to US and Japanese household saving rates

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  • Kosei Fukuda

    (College of Economics, Nihon University, Tokyo, Japan)

Abstract

This paper compares two methods of analyzing aggregate data that is classified by period and age. Because there is a linear relationship among age, period, and cohort, it is not possible to distinguish the separate effects without employing an identifying assumption. The first method, which is applied in the economics literature, assumes that period effects are orthogonal to a linear time trend. The second method, which is applied in the statistics literature, assumes that the effect parameters change gradually. Simulation results suggest that the performances of both methods are comparable. The results of applying the second method to household saving rates suggest that period effects had a negligible influence in the United States but considerable influence in Japan. Copyright © 2006 John Wiley & Sons, Ltd.

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  • Kosei Fukuda, 2006. "Age-period-cohort decomposition of aggregate data: an application to US and Japanese household saving rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 981-998.
    • Handle: RePEc:jae:japmet:v:21:y:2006:i:7:p:981-998
    DOI: 10.1002/jae.906
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    References listed on IDEAS

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    1. Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 2005. "Explaining the wealth holdings of different cohorts: Productivity growth and Social Security," European Economic Review, Elsevier, vol. 49(5), pages 1361-1391, July.
    2. Pierre-Olivier Gourinchas & Jonathan A. Parker, 2002. "Consumption Over the Life Cycle," Econometrica, Econometric Society, vol. 70(1), pages 47-89, January.
    3. Paxson, Christina, 1996. "Saving and growth: Evidence from micro data," European Economic Review, Elsevier, vol. 40(2), pages 255-288, February.
    4. Orazio P. Attanasio, 1998. "Cohort Analysis of Saving Behavior by U.S. Households," Journal of Human Resources, University of Wisconsin Press, vol. 33(3), pages 575-609.
    5. Yosihiko Ogata & Koichi Katsura & Niels Keiding & Claus Holst & Anders Green, 2000. "Empirical Bayes Age–Period–Cohort Analysis of Retrospective Incidence Data," Scandinavian Journal of Statistics, Danish Society for Theoretical Statistics;Finnish Statistical Society;Norwegian Statistical Association;Swedish Statistical Association, vol. 27(3), pages 415-432, September.
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    Cited by:

    1. Kosei Fukuda, 2006. "A cohort analysis of female labor participation rates in the U.S. and Japan," Review of Economics of the Household, Springer, vol. 4(4), pages 379-393, December.
    2. Djavad Salehi-Isfahani & Marenglen Marku, 2011. "Reversal of Fortunes: The Rise and Fall of Lifetime Earnings of Iranian Men," Economic Development and Cultural Change, University of Chicago Press, vol. 59(4), pages 877-906.
    3. Kosei Fukuda, 2010. "Three new empirical perspectives on the Hodrick–Prescott parameter," Empirical Economics, Springer, vol. 39(3), pages 713-731, December.
    4. Fukuda, Kosei, 2008. "Empirical evidence on intergenerational inequality of tax burdens in the U.S. and Japan," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2214-2220, December.
    5. Kosei Fukuda, 2007. "Age-period-cohort decomposition of social security taxes and benefits in the USA and Japan," International Economics and Economic Policy, Springer, vol. 4(3), pages 227-240, November.
    6. Okoampah, Sarah, 2016. "Cohort size effects on wages, working status, and work time," Ruhr Economic Papers 629, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Kosei Fukuda, 2008. "A Cohort Analysis Of Us Age–Earnings Profiles," Bulletin of Economic Research, Wiley Blackwell, vol. 60(2), pages 191-207, April.
    8. Bischofberger, Stephan M. & Hiabu, Munir & Mammen, Enno & Nielsen, Jens Perch, 2019. "A comparison of in-sample forecasting methods," Computational Statistics & Data Analysis, Elsevier, vol. 137(C), pages 133-154.
    9. Fukuda, Kosei, 2009. "Measuring major and minor cycles in univariate economic time series," Economic Modelling, Elsevier, vol. 26(5), pages 1093-1100, September.
    10. Kosei Fukuda, 2008. "Age–Period–Cohort Decomposition of U.S. and Japanese Birth Rates," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 27(4), pages 385-402, August.
    11. Kosei Fukuda, 2010. "A cohort analysis of household vehicle expenditure in the U.S. and Japan: A possibility of generational marketing," Marketing Letters, Springer, vol. 21(1), pages 53-64, March.

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