Did lower interest rates reduce Japan's household savings rate since the 1990s? Evidence based on the maturation of postal savings certificates

Satoshi Shimizutani and Noriko Inakura ()
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Noriko Inakura: Ph.D. candidate, Graduate School of Systems and Information Engineering, University of Tsukuba

Economics Bulletin, 2008, vol. 5, issue 22, 1-8

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 more than 3 percentage points.

Keywords: household; savings; rate (search for similar items in EconPapers)
JEL-codes: D1 E2 (search for similar items in EconPapers)
Date: 2008-08-26
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