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Asset Holding and Consumption: Evidence from Japanese Panel Data in the 1990s

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  • HORI Masahiro
  • SHIMIZUTANI Satoshi

Abstract

The 1990s crash in Japan's stock and land market should have had adverse effects on household consumption. This paper takes advantage of a panel data from Japanese households to evaluate the impacts of the wealth gains or losses on households' spending. We obtain the following empirical findings. First, stockholders' consumption is responsive to stock market movements while this is not the case for non-stockholders, suggesting the importance of "direct" wealth effects. Second, we compared the marginal propensity to consume (MPC) out of stock price changes and real estate price changes, and found that they are roughly comparable. The MPC out of wealth gains or losses is estimated to be 0.05 to 0.1 slightly higher than estimates reported in previous studies on Japanese consumption using aggregate data.

Suggested Citation

  • HORI Masahiro & SHIMIZUTANI Satoshi, 2003. "Asset Holding and Consumption: Evidence from Japanese Panel Data in the 1990s," ESRI Discussion paper series 055, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esj:esridp:055
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    File URL: http://www.esri.go.jp/jp/archive/e_dis/e_dis060/e_dis055a.pdf
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    References listed on IDEAS

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    1. Mankiw, N. Gregory & Zeldes, Stephen P., 1991. "The consumption of stockholders and nonstockholders," Journal of Financial Economics, Elsevier, vol. 29(1), pages 97-112, March.
    2. Hall, Robert E, 1988. "Intertemporal Substitution in Consumption," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 339-357, April.
    3. Annette Vissing-Jorgensen, 2002. "Limited Asset Market Participation and the Elasticity of Intertemporal Substitution," NBER Working Papers 8896, National Bureau of Economic Research, Inc.
    4. Miki Kohara, 2001. "Consumption insurance between Japanese households," Applied Economics, Taylor & Francis Journals, vol. 33(6), pages 791-800.
    5. Alon Brav & George M. Constantinides & Christopher C. Geczy, 2002. "Asset Pricing with Heterogeneous Consumers and Limited Participation: Empirical Evidence," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 793-824, August.
    6. James M. Poterba, 2000. "Stock Market Wealth and Consumption," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 99-118, Spring.
    7. Annette Vissing-Jorgensen, 2002. "Limited Asset Market Participation and the Elasticity of Intertemporal Substitution," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 825-853, August.
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    Cited by:

    1. Muellbauer, John & Murata, Keiko, 2009. "Consumption, Land Prices and the Monetary Transmission Mechanism in Japan," CEPR Discussion Papers 7269, C.E.P.R. Discussion Papers.
    2. Masahiro HORI & Takeshi NIIZEKI, 2017. "Housing Wealth Effects in Japan: Evidence Based on Household Micro Data," ESRI Discussion paper series 339, Economic and Social Research Institute (ESRI).
    3. Masahiro HORI & Takeshi NIIZEKI, 2017. "Housing Wealth Effects in Japan: Evidence Based on Household Micro Data," ESRI Discussion paper series 339, Economic and Social Research Institute (ESRI).

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