The Stagnation of Household Consumption in Japan

33 Pages Posted: 31 Mar 2004

See all articles by Charles Yuji Horioka

Charles Yuji Horioka

Kobe University; National Bureau of Economic Research; Asian Growth Research Institute; Osaka University

Date Written: February 2004

Abstract

In this paper, I consider the extent to which the stagnation of household consumption is responsible for the decade-long recession in Japan during the 1990s and early 2000s and the reasons for the stagnation of household consumption during this period. I find that the stagnation of private investment (and inventory investment) rather than that of household consumption was the major cause of the decade-long recession, that household consumption was nonetheless relatively stagnant during this decade, and that the stagnation of household consumption was due primarily to the stagnation of household disposable income, the decline in household wealth (which in turn was due primarily to the collapse of land and equity prices), and to a lesser extent, increased uncertainty about the future (especially about old age in general and old-age pensions in particular), the deterioration of future prospects, and deflationary expectations concerning consumer prices.

JEL Classification: E21, E32

Suggested Citation

Horioka, Charles Yuji, The Stagnation of Household Consumption in Japan (February 2004). Available at SSRN: https://ssrn.com/abstract=518064 or http://dx.doi.org/10.2139/ssrn.518064

Charles Yuji Horioka (Contact Author)

Kobe University ( email )

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National Bureau of Economic Research ( email )

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Asian Growth Research Institute ( email )

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Osaka University ( email )

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