Is Consumption in the United States and Japan Too Much or Too Little?

Yutaka Kurihara, Kei Tomimura

Department of Business Administration, Aichi University, Nagoya, Japan.
Department of Economics, Aichi University, Nagoya, Japan.

DOI: 10.4236/ib.2012.43029                

Abstract

This article reports on the results of an empirical examination of whether consumption in the United States and Japan is too much or too little relative to productivity in these countries (1993-2011). Findings reveal some clear and common characteristics of both countries for the sample period. The most typical one occurred during financial crises around 2008, which is often called the Lehman shock. In both countries, consumers had considerably reduced consumption around that period. The IT boom collapse at the beginning of the 2000s also diminished consumption in the United States. This paper examines impulse responses to trace the effect of a productivity shock to one of the innovations on the current and future value of consumption. Findings indicate that the effect of the shock of productivity on consumption is long both countries

Keywords

Consumption; IT Boom; Japan; Production; Productivity; United States

Conflicts of Interest

The authors declare no conflicts of interest.

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