MEASURING INTERTEMPORAL SUBSTITUTION IN CONSUMPTION: EVIDENCE FROM A VAT INCREASE IN JAPAN

• 成果类型: Article
• 署名作者: Cashin, David; Unayama, Takashi
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors; Hitotsubashi University
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00531
• 发表日期: 2016-05
• 页码: 285-297
• 关键词: tax policy; elasticity; PARTICIPATION; GROWTH

摘要

We estimate the intertemporal elasticity of substitution in consumption (IES) using a preannounced increase in Japan's consumption tax rate. Because this tax is highly comprehensive, the rate increase was announced prior to its implementation, and because other factors that affect the real interest rate were constant, the tax rate increase presents an ideal natural experiment to estimate the IES. A Japanese monthly household survey is exploited to accurately categorize nondurables, and our empirical specification addresses intratemporal substitution bias. We find that the IES is 0.21 and not significantly different from 0, but it is significantly less than 1.