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The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits

Melvin Stephens and Takashi Unayama ()

No 16342, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Japanese public pension benefits, which were distributed quarterly through February 1990 and every other month since then, induce substantial but predictable income fluctuations. The relative magnitude of the payments combined with the delay between payments yields a stronger test of the Life-Cycle/Permanent Income Hypothesis than in prior studies. Applying two identification strategies to monthly household panel data, we find that consumption significantly responds to quarterly benefit receipt. Additional analysis suggests that our findings cannot be explained by either liquidity constraints or precautionary savings motives.

JEL-codes: E21 H55 (search for similar items in EconPapers)
Date: 2010-09
Note: ME PE
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Published as Melvin Stephens & Takashi Unayama, 2011. "The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 86-118, October.

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