Japanese public pension benefits, which were distributed quarterly through February 1990, and every other month since then, induce substantial but predictable income fluctuations. The relative magnitude of the payments combined with the delay between payments
yields a stronger test of the Life-Cycle/Permanent Income Hypothesis
than in prior studies. Applying two identification strategies to monthly
household panel data, we find that consumption significantly responds
to quarterly benefit receipt. Additional analysis suggests that our findings cannot be explained by either liquidity constraints or precautionary
savings motives. (JEL D12, D91, E21, H55)
Stephens, Melvin, and Takashi Unayama.
"The Consumption Response to Seasonal Income: Evidence from Japanese Public Pension Benefits."
American Economic Journal: Applied Economics,
Consumer Economics: Empirical Analysis
Intertemporal Consumer Choice; Life Cycle Models and Saving
Macroeconomics: Consumption; Saving; Wealth
Social Security and Public Pensions