Persistence of income shocks and consumption inequality: A case in Japan

Tomoaki Yamada

Economics Bulletin, 2009, vol. 29, issue 4, 2822-2831

Abstract: The present study investigate the relationship between the persistence of uninsurable income shocks and consumption inequality over a household's life cycle in Japan. Using a life cycle model with incomplete asset markets and calibrated parameters for the Japanese economy, we quantitatively show that moderate persistence of shocks generate a nonlinear consumption inequality profile over the life cycle. The moderate persistence of shocks well replicates the pattern of consumption inequality in Japan.

Keywords: Uninsurable income risk; Consumption inequality (search for similar items in EconPapers)
JEL-codes: D3 E2 (search for similar items in EconPapers)
Date: 2009-11-09
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