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Habit Formation And Precautionary Saving: Evidence From The Korean Household Panel Studies

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  • Wooheon Rhee

    (Department of Economics, Kyunghee University)

Abstract

We examined the evidence of precautionary saving and Constantinides (1990) type habit formation model by using the Korean Household Panel Studies, which has six years of time series observations and thousands of cross section observations. Employing the dynamic panel data estimation method, we found that the estimates of parameters corresponding to the degree of habit formation and precautionary saving are statistically insignificant for food consumption, but statistically significant or at least marginally significant for nondurables and services consumption.

Suggested Citation

  • Wooheon Rhee, 2004. "Habit Formation And Precautionary Saving: Evidence From The Korean Household Panel Studies," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(2), pages 1-19, December.
    • Handle: RePEc:jed:journl:v:29:y:2004:i:2:p:1-19
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

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    2. Marcos D. Chamon & Eswar S. Prasad, 2010. "Why Are Saving Rates of Urban Households in China Rising?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(1), pages 93-130, January.
    3. P.V. Viswanath, 2021. "Connectivity and Savings Propensity among Odisha Tribals," Sustainability, MDPI, vol. 13(2), pages 1-15, January.
    4. Terada-Hagiwara, Akiko, 2009. "Explaining Filipino Households’ Declining Saving Rate," ADB Economics Working Paper Series 178, Asian Development Bank.
    5. Yicong Li & Qiran Zhao & Tianchang Zhai & Wei Si, 2023. "Structural transition of protein intake in urban China: Stage characteristics and driving forces," Agribusiness, John Wiley & Sons, Ltd., vol. 39(S1), pages 1559-1577, December.
    6. Fusaro, Marc Anthony & Dutkowsky, Donald H., 2011. "What explains consumption in the very short-run? Evidence from checking account data," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 542-552.

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    More about this item

    Keywords

    Habit Formation; Precautionary Saving; Korean Household Panel Studies; Dynamic Panel Data Estimation;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection

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