American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits
American Economic Journal: Applied Economics
vol. 3,
no. 4, October 2011
(pp. 86–118)
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 D12, D91, E21, H55)Citation
Stephens, Melvin, and Takashi Unayama. 2011. "The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits." American Economic Journal: Applied Economics, 3 (4): 86–118. DOI: 10.1257/app.3.4.86Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D15 Intertemporal Consumer Choice; Life Cycle Models and Saving
- E21 Macroeconomics: Consumption; Saving; Wealth
- H55 Social Security and Public Pensions
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