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Satoshi Shimizutani and Noriko Inakura
''Did lower interest rates reduce Japan's household savings rate since the 1990s? Evidence based on the maturation of postal savings certificates''
( 2008, Vol. 5 No.22 )
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
JEL: E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
D1 - Household Behavior: General
Manuscript Received : Jul 25 2008 Manuscript Accepted : Aug 26 2008

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