The saving rate in Japan: Why it has fallen and why it will remain low

Abstract

During the 1990s, Japan began experiencing demographicchanges that are larger and more rapid than in other OECD countries.These demographic changes will become even more pronouncedin future years. We are interested in understanding the role of lowerfertility rates and aging for the evolution of Japan’s saving rate. Weuse a computable general equilibrium model to analyze the responseof the national saving rate to changes in demographics and total factorproductivity. In our model aging accounts for 2 to 3 percentage points.