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Households' Purchasing Behaviors before and after the Change in the Rate of Consumption Tax

Author

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  • Abe, Naohito
  • Inakura, Noriko

Abstract

The change in tax rate on consumption conducted in April 2015 increased household expenditure in March, and decreased it in the following months. This up and down in consumption led to large fluctuations in Real Gross Domestic Product. After the change in the tax rate, movements in real and nominal expenditure started to differ to a large extent. This paper investigates the heterogeneity of the rate of price change among individuals based on scanner data. More precisely, we analyze how the tax revision affected the rate of price changes differently across age and income groups. Our empirical analysis reveals that the individual level rates of price change reacted very differently to the tax change. In particular, consideration of commodity level price differential across individuals within the same commodity group creates large differential in the rate of price change across income groups.

Suggested Citation

  • Abe, Naohito & Inakura, Noriko, 2015. "Households' Purchasing Behaviors before and after the Change in the Rate of Consumption Tax," Economic Review, Hitotsubashi University, vol. 66(4), pages 321-336, October.
    • Handle: RePEc:hit:ecorev:v:66:y:2015:i:4:p:321-336
    DOI: 10.15057/27556
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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence

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