IS JAPAN'S HOUSEHOLD SAVING RATE REALLY HIGH?

Abstract

This paper discusses, and measures the quantitative impact of, a number of conceptual issues relating to the household saving rate data in the National Accounts of Japan. It finds that Japan's seemingly high household saving rate is biased due to the exclusion of capital transfers and real capital gains, the valuation of depreciation at historical cost rather than at replacement cost, the use of a residual measure of financial saving rather than Flow of Funds Accounts data thereon, and the treatment of expenditures on consumer durables as consumption rather than as saving, but that the biases are to a considerable extent mutually offsetting. It also finds that the Japan‐U.S. gap in household (personal) saving rates is due largely to conceptual differences and deficiencies and that household saving in Japan consists primarily of financial saving (net lending), meaning that most of it is available to finance investment in other sectors of the economy and/or abroad.

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