THE DETERMINANTS OF JAPAN'S SAVING RATE: THE IMPACT OF THE AGE STRUCTURE OF THE POPULATION AND OTHER FACTORS

Abstract

In this paper, I analyze the determinants of saving in Japan using national income accounts data for the 1955-87 period. My results suggest that the age structure of the population is the primary determinant of both trends over time in Japan's saving rate and the high level thereof relative to the other developed countries and that Japan's saving rate can be expected to decline sharply due to the rapid increase in the ratio of the aged population to the working-age population. The level and rate of growth of income, wealth, (in the case of private and national saving) the unemployment rate, and (in the case of household saving) inflation are also found to influence the level of saving in Japan, and Japanese households are found to see through the corporate veil to some extent but not through the government veil.