Consumption growth and the intertemporal elasticity of substitution: some evidence from income quintile groups in Japan

This research empirically analysed the relations between the difference in consumer's preference and the consumption growth rate in Japan. As a result, the close relationship between the two is revealed. This study has clarified the fact that as the income bracket becomes higher, the value of intertemporal elasticity of substitution becomes smaller. This is consistent with the gap in the consumption growth rate between the income brackets, i.e. the difference in the consumer's preference parameter has played a significant role in correcting the consumption gap in the period of high economic growth in post-war Japan.