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The low interest policy and the household saving behavior in Japan

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  • Latsos, Sophia

Abstract

This paper scrutinizes the role of prolonged, expansionary monetary policy on the savings behavior of Japanese households, focusing on the dramatic change of the household savings behavior since 1998, from high to low savings. Existing literature generally attributes this behavioral change to the country's shift from a high-growth to a low-growth economy and its demographic change. In contrast, this paper empirically examines changes in the incentives for saving and the ability to save connected to monetary policy. It finds that monetary policy has had a significant impact on Japan's household behavior via three channels: the interest rate channel, the redistribution channel, and the wealth channel.

Suggested Citation

  • Latsos, Sophia, 2019. "The low interest policy and the household saving behavior in Japan," Working Papers 159, University of Leipzig, Faculty of Economics and Management Science.
    • Handle: RePEc:zbw:leiwps:159
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    Cited by:

    1. Emilia Anuta Corovei & Adela Socol, 2019. "The Macroeconomic Drivers for Household Deposits Growth in the Eurozone," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(3), pages 144-151, September.
    2. Thomas Mayer & Gunther Schnabl, 2019. "Reasons for the Demise of Interest: Savings Glut and Secular Stagnation or Central Bank Policy?," CESifo Working Paper Series 7954, CESifo.
    3. Schnabl, Gunther & Murai, Taiki, 2020. "The Japanese banks in the lasting low-, zero- and negative-interest rate environment," Working Papers 169, University of Leipzig, Faculty of Economics and Management Science.

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    More about this item

    Keywords

    household saving; interest-rate elasticity of saving; Japanese household savings; Bank of Japan; low interest rate policy;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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