TY  - JOUR
AU  - Wakabayashi,Midori
AU  - Horioka,Charles Yuji
TI  - Borrowing Constraints and Consumption Behavior in Japan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11560
PY  - 2005
Y2  - August 2005
UR  - http://www.nber.org/papers/w11560
L1  - http://www.nber.org/papers/w11560.pdf
N1  - Author contact info:
Midori Wakabayashi
College of Economics
Osaka Prefecture University
1-1, Gakuen-cho
Sakai, Osaka 599-8531   JAPAN
E-Mail: mwaka@eco.osakafu-u.ac.jp

Charles Y. Horioka
Institute of Social and Economic Research
Osaka University
6-1 Mihogaoka, Ibaraki-shi
Osaka-fu 567-0047
JAPAN
Tel: 81-6-6879-8586
Fax: 81-6-6878-2766
E-Mail: horioka@iser.osaka-u.ac.jp
M2  - featured in NBER digest on 2005-08-22
AB  - In this paper, we use Japanese micro data to examine what characteristics borrowing-constrained households have and whether borrowing constraints have an important influence on household consumption behavior. We identify borrowing-constrained households using three different indicators, some of which are unique to our data source, and find that the characteristics of households that are likely to be borrowing-constrained differ depending on which of the three indicators we use. We also find that changes in current income have a positive and significant impact on changes in consumption in the case of households that are likely to be borrowing-constrained but not in the case of households that are unlikely to be borrowing-constrained. This result suggests that borrowing constraints have an important influence on household consumption behavior and that the presence of borrowing constraints is one explanation for why the life cycle-permanent income hypothesis does not hold in the real world.
ER  -