The Flow of Household Funds in Japan

Charles Horioka ()

Public Policy Review, 2008, vol. 4, issue 1, 37-52

Abstract: In this paper, I consider why Japan's household saving rate was so high in the past and why it has shown a downward trend in more recent years, and based on this analysis, I project future trends in Japan's household saving rate. To preview my main findings, I find, first, that Japan's household saving rate used to be high but that it has declined sharply in recent years and that it is no longer high in either absolute or relative terms. Moreover, Japan's household saving rate will continue its decline due to the rapid aging of her population and other factors and may well become zero or negative within a few years. However, the government's fiscal deficits (government dissaving) as well as corporate investment in plant and equipment can be expected to decline at the same time, and moreover, there is always the option of borrowing from abroad, so the sharp decline in the household saving rate will not necessarily cause any problems.

Date: 2008
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Working Paper: The Flow of Household Funds in Japan (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:mof:journl:ppr004b

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