Comment: Empirical Studies on Household Wealth Effects

Craig Freedman (Professor, Macquarie University, Australia)

This comment originally appeared in the "Japan-U.S. Discussion Fourm" (http://lists.nbr.org/japanforum) on May 29, 2003: posted here with the author's permission.

I would like to respond to Takahiro Miyao on asset deflation (http://www.glocom.org/debates/20030526_miyao_fres/).

I have seen two references to attempts to measure household wealth effects in Japan. One is by Maki, Atsushi (1998) Japanese Consumption Behavior and the other is by Muto, Hiromichi (1999) The Economics of Consumption Recessions. Both works are in Japanese. I have only seen references to these works and have not read them myself. However both claim, based on their empirical work, that the wealth effect for changes in housing prices are small in Japan.