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Unemployment Risk and Consumption: Can the Buffer Stock Saving Behavior Explain the Japanese Experience?

Author

Listed:
  • Masayuki Keida

    (Graduate School of Economics, University of Tokyo)

  • Takashi Unayama

    (Institute of Economic Research, Kyoto University)

  • Katsunori Yamada

    (Graduate School of Economics, Kyoto University)

Abstract

This paper showed that the drop of propensity to consume in Japan during the lost decade is attributable to increase of income risks, mainly due to rises in unenployment rate/ To asses the impacts of income risks, we used the buffer stock saving model and a numerical method. The buffer stock saving model has put aside effects of income risks on propensity to consume, while it stresses on determination of the target wealth. On the other hand, we focused on dynamics of propensity to consume in response to increases ofincome risks with explicit consideration of wealth distribution dynamics.

Suggested Citation

  • Masayuki Keida & Takashi Unayama & Katsunori Yamada, 2004. "Unemployment Risk and Consumption: Can the Buffer Stock Saving Behavior Explain the Japanese Experience?," KIER Working Papers 595, Kyoto University, Institute of Economic Research.
  • Handle: RePEc:kyo:wpaper:595
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    More about this item

    Keywords

    Income Risk; Japanese Household Consumption; Precautionary Saving;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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