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Tomoaki Yamada
''Persistence of income shocks and consumption inequality: A case in Japan''
( 2009, Vol. 29 No.4 )
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
JEL: E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
D3 - Distribution: General
Manuscript Received : Oct 12 2009 Manuscript Accepted : Nov 09 2009

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