Do Koreans Consume Excessively?

Chulsoo Kim
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Chulsoo Kim: Sookmyung Women's University

Korean Economic Review, 2001, vol. 17, 5-23

Abstract: Recent declining growth rates and the IMF balance of payment crisis in Korea have often been attributed partly to excessive consumption. After examining several definitions commonly used for excessive consumption, this paper suggests that a more appropriate definition of excessive consumption should be based on dynamic optimization considerations: consuming more than permanent income. This paper constructs permanent income hypothesis consumption, and shows that Korean consumers consumed too little, 15.0%∼19.7% less than their permanent income. Therefore, this paper concludes that Korea does not suffer from excessive consumption.

Keywords: excessive consumption; permanent income hypothesis (search for similar items in EconPapers)
JEL-codes: E21 (search for similar items in EconPapers)
Date: 2001
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