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Persistence of income shocks and consumption inequality: A case in Japan

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  • Tomoaki Yamada

    (Meiji University)

Abstract

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.

Suggested Citation

  • Tomoaki Yamada, 2009. "Persistence of income shocks and consumption inequality: A case in Japan," Economics Bulletin, AccessEcon, vol. 29(4), pages 2822-2831.
    • Handle: RePEc:ebl:ecbull:eb-09-00615
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    References listed on IDEAS

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    More about this item

    Keywords

    Uninsurable income risk; Consumption inequality;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • D3 - Microeconomics - - Distribution

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