Interest Income and Household Savings: Evidence Based on the Maturation of Postal Savings Certificates

Noriko Inakura and Satoshi Shimizutani

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: Japan's traditionally high household saving rate has declined substantially since the early 1990s. While this decline is often explained as a result of the rapid increase in the population share of the elderly who are dissaving, we argue that the cause is a decline in interest income triggered by falling interest rates. To examine our hypothesis, we focus on the effect of the maturation of relatively high-yielding postal savings certificates. Estimating a savings function, we find that the reduction in interest income caused by the maturation of the postal saving certificates reduced household saving rates by 3 percentage points.

Keywords: interest rate income; household saving rate; postal saving certificate (search for similar items in EconPapers)
JEL-codes: D12 E21 G29 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-fin, nep-fmk, nep-mac and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d06-165

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