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Life-Cycle Model and Consumption: Structural Estimation of Precautionary and Life-Cycle Motives (in Japanese)


  • Naohito Abe
  • Tomoaki Yamada


This paper simulates a “buffer-stock” saving model of precautionary saving and estimates the parameters of the utility function by matching the simulated age-consumption profile with those observed in the micro-level data from the Family Income and Expenditure Survey (FIES) in Japan. Our empirical results show that with high degree of patience (small subjective discount rate) and low degree of risk aversion, about 40 % of saving by young consumers is due to the precautionary motives.

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  • Naohito Abe & Tomoaki Yamada, 2004. "Life-Cycle Model and Consumption: Structural Estimation of Precautionary and Life-Cycle Motives (in Japanese)," Hi-Stat Discussion Paper Series d04-37, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:hstdps:d04-37

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    Precautionary Saving; Structural Estimation;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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