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Japanese Saving Rate

  • Kaiji Chen

    (University of Southern California)

  • Ayse Imrohoroglu

    (University of Southern California)

  • Selo Imrohoroglu

    (University of Southern California)

Japanese and U.S. saving rates have been significantly different over the last forty years. Can a standard growth model explain this difference? The answer is yes. Our results indicate that both an infinite horizon, complete markets setup and an overlapping generations model with incomplete markets are about equally able to generate saving rates that are remarkably similar to the data during 1961-1998. Our quantitative findings identify changes in the growth rate of total factor productivity and the low initial capital stock as the main factors generating the time series behavior of the net national saving rate in Japan. We show that if the Japanese had faced the U.S. TFP and initial conditions, their saving rate would have looked very similar to that of the U.S. households. In other words, it seems that there is nothing peculiar about the Japanese saving behavior.

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File URL: http://econwpa.repec.org/eps/mac/papers/0502/0502017.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 0502017.

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Length: 31 pages
Date of creation: 07 Feb 2005
Date of revision:
Handle: RePEc:wpa:wuwpma:0502017
Note: Type of Document - pdf; pages: 31
Contact details of provider: Web page: http://econwpa.repec.org

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