TY  - JOUR
AU  - Kohara,Miki
AU  - Horioka,Charles Yuji
TI  - Do Borrowing Constraints Matter? An Analysis of Why the Permanent Income Hypothesis Does Not Apply in Japan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12330
PY  - 2006
Y2  - June 2006
UR  - http://www.nber.org/papers/w12330
L1  - http://www.nber.org/papers/w12330.pdf
N1  - Author contact info:
Miki Kohara
Osaka University
Japan
E-Mail: kohara@osipp.osaka-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
AB  - We use micro data on young married households from the Japanese Panel Survey of Consumers in order to analyze the importance of borrowing constraints in Japan. We find (1) that 8 to 15 percent of young married Japanese households are borrowing-constrained, (2) that household assets and the husband%u2019s educational attainment are the most important determinants of whether or not a household is borrowing-constrained, and (3) that the Euler equation implication is rejected for both the full sample and for the subsample of unconstrained households. These results suggest that the life cycle/permanent income hypothesis does not apply in Japan and that the presence of borrowing constraints is not the main reason why it does not apply.
ER  -