Do borrowing constraints matter? An analysis of why the permanent income hypothesis does not apply in Japan

Arbeitspapier

We use micro data on young married households from the Japanese Panel Survey of Consumers in order to analyze the importance of borrowing constraints in Japan. We find (1) that 8 to 15 percent of young married Japanese households are borrowing-constrained, (2) that household assets and the husband's educational attainment are the most important determinants of whether or not a household is borrowing-constrained, and (3) that the Euler equation implication is rejected for both the full sample and for the subsample of unconstrained households. These results suggest that the life cycle/permanent income hypothesis does not apply in Japan and that the presence of borrowing constraints is not the main reason why it does not apply.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 663

Classification and Topics

• Classification: Wirtschaft
• Subject: Borrowing constraints ; Liquidity constraints ; Consumption ; Life Cycle/Permanent Income Hypothesis ; Permanent Income Hypothesis ; Euler Equation ; Households ; Japan ; Einkommenshypothese ; Privater Haushalt ; Liquiditätsbeschränkung ; Japan ; Euler-Gleichung

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kohara, Miki ; Horioka, Charles Yuji
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/92756
• Last update: 10.03.2025, 11:45 AM CET