Kohara, Miki. <br/><br/>
Do Borrowing Constraints Matter? An Analysis of Why the Permanent Income Hypothesis Does Not Apply in Japan / 
Miki Kohara, Charles Yuji Horioka. 
 - Cambridge, Mass.  National Bureau of Economic Research  2006. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w12330 .
 - Working Paper Series (National Bureau of Economic Research)  no. w12330. .
<br/><br/> June 2006. 
<br/><br/> 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's 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. 
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