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- Monetary and Macroprudential Policy Rules in a Model with House Price Booms by Kannan, Prakash/ Rabanal, Pau and Scott, Alasdair M.
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The Response of Household Expenditure to Anticipated Income Changes: Bonus Payments and the Seasonality of Consumption in Japan
1Cabinet Office, Japanese Government, firstname.lastname@example.org
2Institute for International Policy Studies, email@example.com
Citation Information: The B.E. Journal of Macroeconomics. Volume 9, Issue 1, Pages –, ISSN (Online) 1935-1690, DOI: 10.2202/1935-1690.1908, August 2009
- Published Online:
This paper exploits a notable institutional feature of salary payments in Japan, the bonus system, to examine whether households smooth consumption under large and regular income changes. Using high quality household-level data from the Japanese Family Income and Expenditure Survey (FIES), our statistical tests show that the consumption seasonality of bonus receiving households is significantly affected by the bonus payments. Although our estimate of the marginal propensity to consume from bonus income is much smaller than that from smaller and less predictable end-of-year tax refunds, it is positive and significantly different from zero, which contrasts to earlier studies on large and regular income changes.