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Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Working Paper Series 2020 > (Research Paper) Marginal Propensity to Consume and the Housing Choice
June 19, 2020
We study the MPC heterogeneity of households in Japan both theoretically and empirically. We build a heterogeneous-agent overlapping-generations general equilibrium model with an illiquid and indivisible housing asset. We show that mortgage debtor exhibits high MPC and households about to upgrade their house exhibit low MPC. Using Japanese household survey data, we empirically support our theoretical predictions.
D15, E21, E50, R21
Consumption, Heterogeneity, Housing choices, Liquidity constraints, Marginal propensity to consume
We thank Kosuke Aoki, Kazuhiro Hiraki, Ryo Jinnai, Tomohide Mineyama, Kenichi Sakura, Toshitaka Sekine, and other BOJ staff members for their comments and suggestions. We would also like to thank Wakako Kaku for excellent research assistance. The data for this analysis, Japan Household Panel Survey (JHPS/KHPS) and Survey of Households Finances were provided by the Keio University Panel Data Research Center and the Financial Public Relations Central Committee, respectively. We are grateful to them for providing us with these data. The views expressed in this paper are those of the authors and do not necessarily reflect the official views of the Bank of Japan. The research described in this paper was conducted when Maiko Koga was working at the Bank of Japan.
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