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Capital Gains in Japan: Their Magnitude and Impact on Consumption

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  • Horioka, Charles Yuji

Abstract

This paper estimates the magnitude of net capital gains on household wealth in Japan and then conducts an econometric analysis of their impact on consumption using national accounts data for the 1955-93 period. It finds that net capital gains on household wealth have been sizeable albeit volatile in Japan during this period and that their impact on consumption has been substantial especially during the late 1980s and early 1990s. The econometric analysis is one of the first cointegration analyses of Japanese consumption behavior and finds strong support for the life cycle/permanent income hypothesis. Copyright 1996 by Royal Economic Society.

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  • Horioka, Charles Yuji, 1996. "Capital Gains in Japan: Their Magnitude and Impact on Consumption," Economic Journal, Royal Economic Society, vol. 106(436), pages 560-577, May.
    • Handle: RePEc:ecj:econjl:v:106:y:1996:i:436:p:560-77
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    Cited by:

    1. Apergis, Nicholas & Bouras, Christos & Christou, Christina & Hassapis, Christis, 2018. "Multi-horizon wealth effects across the G7 economies," Economic Modelling, Elsevier, vol. 72(C), pages 165-176.
    2. Ricardo M. Sousa, 2009. "Wealth Effetcs on Consumption: Evidence from the euro area," NIPE Working Papers 12/2009, NIPE - Universidade do Minho.
    3. F. Thomas Juster & Joseph Lupton & James P. Smith & Frank Stafford, 2004. "Savings and Wealth; Then and Now," Labor and Demography 0403027, University Library of Munich, Germany.
    4. Palle S. Andersen, 1997. "Forecast errors and financial developments," BIS Working Papers 51, Bank for International Settlements.
    5. Quentin Wibaut, 2000. "Politique monétaire et prix des actifs: le cas des Etats-Unis," Working Paper Document 11, National Bank of Belgium.
    6. Muellbauer, John & Murata, Keiko, 2009. "Consumption, Land Prices and the Monetary Transmission Mechanism in Japan," CEPR Discussion Papers 7269, C.E.P.R. Discussion Papers.
    7. Nicholas Apergis & Stephen M. Miller, 2004. "Consumption Asymmetry and the Stock Market: Further Evidence," Working papers 2004-19, University of Connecticut, Department of Economics.
    8. Azuma, Yoshiaki & Nakao, Takeo, 2009. "Why the saving rate has been falling in Japan," MPRA Paper 62581, University Library of Munich, Germany.
    9. Chris Stewart, 2003. "An International Comparison Of Long-Run Consumer Behaviour," European Research Studies Journal, European Research Studies Journal, vol. 0(1-2), pages 145-168, January -.
    10. Yuto Iwasaki & Nao Sudo, 2017. "Myths and Observations on Unconventional Monetary Policy -- Takeaways from Post-Bubble Japan --," Bank of Japan Working Paper Series 17-E-11, Bank of Japan.
    11. Ogawa, Kazuo & Kitasaka, Shin-ichi & Yamaoka, Hiroshi & Iwata, Yasuharu, 1996. "An empirical re-evaluation of wealth effect in Japanese household behavior," Japan and the World Economy, Elsevier, vol. 8(4), pages 423-442, December.
    12. Ricardo M. Sousa, 2003. "Property of stocks and wealth effects on consumption," NIPE Working Papers 2/2003, NIPE - Universidade do Minho.
    13. Peltonen, Tuomas A. & Sousa, Ricardo M. & Vansteenkiste, Isabel S., 2012. "Wealth effects in emerging market economies," International Review of Economics & Finance, Elsevier, vol. 24(C), pages 155-166.
    14. Nicholas Apergis & Stephen M. Miller, 2005. "Consumption asymmetry and the stock market: New evidence through a threshold adjustment model," Working papers 2005-08, University of Connecticut, Department of Economics.
    15. Wan, Junmin, 2018. "Prevention and landing of bubble," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 190-204.
    16. Masaya Sakuragawa, 2013. "Bubble cycle," Working Papers e055, Tokyo Center for Economic Research.

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G19 - Financial Economics - - General Financial Markets - - - Other

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