Did Japanese Consumers Become More Prudent During 1998-1999?: Evidence From Household Level Data

Masahiro Hori and Satoshi Shimizutani

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

Abstract: This paper explores empirically whether Japanese consumers became more prudent in the second half of the 1990s, a decade in which Japan registered historically low economic growth. Employing the methodology developed by Dynan (1993), this study uses micro-level data from the Family Savings Survey and the Family Income and Expenditure Survey to estimate the coefficient of prudence for Japanese households in the second half of the 1990s. The estimates reveal that the coefficient of prudence is positive and statistically significant in the 1998-1999 period. The obtained value for the coefficient of prudence is four, which is much higher than those estimated for U.S. households (not significantly different from zero) or U.K. households (around 2). The estimated coefficient for young households is higher still, which is consistent with simulation studies conducted by Gourinchas and Parker (2002) showing that precaution is the most important saving motive for younger households.

Keywords: Precautionary saving; Coefficient of Prudence; Euler equation; Household Data (search for similar items in EconPapers)
JEL-codes: D12 (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Did Japanese consumers become more prudent during 1998-1999? Evidence from household-level data (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d05-109

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