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The Saving Rate in Japan: Why It Has Fallen and Why It Will Remain Low

Author

Listed:
  • R. Anton Braun

    (Faculty of Economics, University of Tokyo)

  • Daisuke Ikeda

    (Northwestern University and Bank of Japan)

  • Douglas H. Joines

    (Department of Finance and Business Economics, Marshall School of Business, University of Southern California)

Abstract

During the 1990s, Japan began experiencing demographic changes that are larger and more rapid than in other OECD countries. These demographic changes will become even more pronounced in future years. We are interested in understanding the role of lower fertility rates and aging for the evolution of Japan's saving rate. We use a computable general equilibrium model to analyze the response of the national saving rate to changes in demographics and total factor productivity. In our model aging accounts for 2 to 3 percentage points of the 9 percent decline in the Japanese national saving rate between 1990 and 2000 and persistently depresses Japan's national saving rate in future years.

Suggested Citation

  • R. Anton Braun & Daisuke Ikeda & Douglas H. Joines, 2007. "The Saving Rate in Japan: Why It Has Fallen and Why It Will Remain Low," CIRJE F-Series CIRJE-F-535, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2007cf535
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    References listed on IDEAS

    as
    1. R. Anton Braun & Daisuke Ikeda & Douglas H. Joines, 2006. "Saving and interest rates in Japan: Why they have fallen and why they will remain low," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
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    3. C. Y. Horioka & H. Fujisaki & W. Watanabe & T. Kouno, 2000. "Are Americans More Altruistic than the Japanese? A U.S.-Japan Comparison of Saving and Bequest Motives," International Economic Journal, Taylor & Francis Journals, vol. 14(1), pages 1-31.
    4. Kenneth L. Judd, 1998. "Numerical Methods in Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262100711, September.
    5. Guvenen, Fatih, 2006. "Reconciling conflicting evidence on the elasticity of intertemporal substitution: A macroeconomic perspective," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1451-1472, October.
    6. Selahattin Imrohoroglu & Ayse Imrohoroglu & Kaiji Chen, 2006. "The Japanese Saving Rate," American Economic Review, American Economic Association, vol. 96(5), pages 1850-1858, December.
    7. Hayashi, Fumio & Ando, Albert & Ferris, Richard, 1988. "Life cycle and bequest savings A study of Japanese and U.S. households based on data from the 1984 NSFIE and the 1983 survey of consumer finances," Journal of the Japanese and International Economies, Elsevier, vol. 2(4), pages 450-491, December.
    8. S. Rao Aiyagari, 1994. "Uninsured Idiosyncratic Risk and Aggregate Saving," The Quarterly Journal of Economics, Oxford University Press, vol. 109(3), pages 659-684.
    9. Hall, Robert E, 1988. "Intertemporal Substitution in Consumption," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 339-357, April.
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    11. R. Anton Braun & Toshihiro Okada & Nao Sudou, 2006. "U.S. R&D and Japanese Medium Term Cycles," Bank of Japan Working Paper Series 06-E-6, Bank of Japan.
    12. Hayashi, Fumio, 1995. "Is the Japanese Extended Family Altruistically Linked? A Test Based on Engel Curves," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 661-674, June.
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