• KDI Journal of Economic Policy
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• v.33 no.4
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• pp.1-25
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• 2011

Available evidence suggests that the average marginal propensity to consume (MPC) from the 2001 tax rebate in the US was not nearly as large as that from previous tax cuts. We examine if this phenomenon can be explained by the fact that the widespread use of credit cards has made borrowing accessible for most US households by constructing a model that simulates the dynamic effect of relaxed borrowing constraints. Our model uses Kreps-Porteus preferences which account for independent measures of relative risk aversion and the elasticity of intertemporal substitution, both of which can theoretically affect the willingness to save or spend. Our model shows that the average MPC drops substantially immediately after borrowing constraints are relaxed because few consumers have binding borrowing constraints at that time. The model also shows that consumers gradually reduce their wealth after borrowing constraints are relaxed, causing more of them to have binding constraints over time, which in turn causes the average MPC to rise gradually to a new steady state value that is slightly lower than the original value. This dynamic pattern of the MPC suggests that a greater ability to borrow with credit cards could explain the lower effectiveness of the 2001 tax rebate. In addition, the model predicts that consumers choose to hold lower amounts of liquid assets for precautionary reasons when they have a greater ability to borrow unsecured debt.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.15 no.11
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• pp.6565-6575
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• 2014

Hamilton's Markov-switching model [5] was extended to the simultaneous equations model. A framework for an instrumental variable interpretation of full information maximum likelihood (FIML) by Hausman [4] can be used to deal with the problem of simultaneous equations based on the Hamilton filter [5]. A comparison of the proposed FIML Markov-switching model with the LIML Markov-switching models [1,2,3] revealed the LIML Markov-switching models to be a special case of the proposed FIML Markov-switching model, where all but the first equation were just identified. Moreover, the proposed Markov-switching model is a general form in simultaneous equations and covers a broad class of models that could not be handled previously. Excess sensitivity of marginal propensity to consume with big shocks, such as housing bubble bursts in 2008, can be determined by applying the proposed model to Campbell and Mankiw's consumption function [6], and allowing for the possibility of structural breaks in the sensitivity of consumption growth to income growth.

• Communications for Statistical Applications and Methods
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• v.10 no.1
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• pp.89-99
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• 2003

The primary purpose of this paper is to estimate the wealth effect. We establish a linear relationships between household consumption, labor income, and stock price index. Each variable is nonstationary. And so, it contains a unit root. However, as the result of the test about cointegrating relations, the variables are cointegrated which implies the error term is stationary. The cointegrating parameter that the marginal propensity to consume out of stock price is 0.08%. The result of estimation shows the error correction is -0.62 and the significant level is also high. The error correction term indicates a rather rapid adjustment to deviations from the long run equilibrium relations.

• Journal of Labour Economics
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• v.44 no.1
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• pp.135-167
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• 2021

This paper studies how households who received Covid-19 transfers in cash used their one-time transfers. The transfers were paid in cash for welfare recipient households, which accounted for 12.9% of all households. Using a survey data, it is found that the cash transfers are mostly used for consumption expenditure, and 21.7 percent of the cash transfer used are spent on additional consumption not originally planned. The consumption response to cash transfers is greater in households that experienced job or income loss because of Covid-19.

• Journal of Families and Better Life
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• v.10 no.2
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• pp.1-18
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• 1992

The purpose of this study is to consider the socio-economic development and policy in each five-year economic development plan influences of urban households and to seek a plan of household stability and reasonable consumption expenditure on the aspect of Family economics. Data is based on the "Annual Report on the Family Income and Expenditure survey" of the National Bureau of Statistic Economic Planning Board, Republic of Korea and analyzed as follows: First, in analysis to the structure of consumption expenditure, the averaged percentage of each item to total consumption expenditure is estimated by each Economics Development Plan year. Second, in order to analyze the relative importance value of household consumption expenditure, priority correlation order is derived from comparison of characteristics of household consumption expenditures by multiple regression analysis. Third the patterns of consumption expenditure of salary and wage earner's households in all cities are estimated by the household consumption function, marginal propensity to consume, and income elasticity, according to socio-economic variable, and demographic variable. In the recent Korean economy, income level of household is increased and consumption expenditure level is largely increased because of the execution of economic development plan. But the improvement of income derives the increasment of the consumption needs and over-consumption trend is spread due to the import liberization. And above all, the reasonable household management and economic life are needed.

• 사회경제평론
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• v.31 no.2
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• pp.1-38
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• 2018

In this study we attempt to quantify the export multiplier to definitively show how exports have undergirded the Korean economy and doing so we will describe how the export multiplier effect has diminished since the global financial crisis in 2008. We also argue that a trend of disinclination in the marginal propensity to consume, one of the determinants of the multiplier, has played an important role in its contraction. In this new, alien economic environment, the kinds of policies that once buttressed the export-led growth strategy of the halcyon days require immediate revision. More policies should implemented that bolster domestic demand, especially consumption, rather than continuing efforts to facilitate supply side-based growth through export-friendly policies.

• Journal of Labour Economics
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• v.27 no.3
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• pp.1-23
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• 2004

To investigate the interdependence of the decisions on when to retire and how much consume before and after retirement, we compare the pre- (or post-) retirement consumption conditioned on the retirement decision with pre- (or post-) retirement consumption regardless of retirement decision by using the Korea Labor and Income Panel Study(KLIPS). We employ the two-stage switching regression for the econometric method to investigate the interdependence of two decisions of retirement and pre- or post retirement consumption. Then we test the existence of the interdependence in terms of the significance of the estimated selection biases which appear in the pre- (post-) retirement consumption equations for early and late retirees. In those equations, we also compare the income elasticity of the consumption of the early retirees with that of the late retirees. The empirical results show that there is negative selection bias in early retirees' consumption. These results imply that due to the early retirement decision early retirees would have consumed less than they actually have. The income elasticities of the consumption of the early retirees is smaller than that of the late retirees in pre- (or post-) retirement consumption equation. This result shows that relatively longer retirement period due 10 the early retirement affect the pre-retirement consumption. early retirees' marginal propensity to consume should be lower than that of the late retirees.

• Journal of Families and Better Life
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• v.10 no.2
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• pp.19-36
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• 1992

The purpose of this paper is to analyze empirically the tendency of household consumption expenditure according to the change of social and economical condition, and the factor which influences consumption expenditure of urban household. The data used in analysis are time-series. The data are statistic form Urban Household Economy Survey published by the Economic Planning Board, dating form the first quarter of 1970 to the fourth quarter of 1989. The income of household and consumption expenditure materials were deflated as consumer price index to exclude the influence of prices and the influence of household composition are considered to deflated as the size of the household under assumption of homogeneity. The consumption expenditure items were categorized to 12 relatively large range items. The time-series data were analyzed by using the Two Stage Least Squares and the Ordinary Least Squares. The following is the result of analysis. 1) Rather than the income increase of previous years. the average income increase for two years influences more significantly on consumption expenditure of household. In the case of influence on consumption expenditure for each item by increase in disposable income, such categories as furniture and utensils. clothing and footwear, housing, medical care, culture and recreation, and transportation and communication have significant influence. 2) Among consumption expenditure categories, the increasing factors were furniture and utensils, and clothing and footwear. And the decreasing factors were housing, medical care, culture and recreation ,and transportation and communication. The relative prices, however, had significant influence on categories such as housing, furniture and utensils, medical care , culture and recreation, and transportation and communication and all of them were the decreation factors. 3) Among with changes of social and economical conditions, miscellaneous showed the highest increase in marginal propensity to consume and foods was the lowest. Also culture and recreation and housing brought up a great change of the income elasticity of demand.

• Journal of Wetlands Research
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• v.15 no.2
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• pp.159-164
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• 2013

The 4 major rivers restoration project (4RRP) requires the government to invest a lot of money. Regional economic effect is one of the main purposes of implementing the 4RRP. This paper attempts to measure the regional economic effects, focusing on regional employment-inducing effect and regional income-inducing effect. Regional employment-inducing effect is computed by excluding indirect effect and directly investigating the amount of employment. To this end, marginal propensity to consume, household consumption, household income should be derived. We used working day data and government expenditure multiplier to measure local employment creation and income generation. As a result, the project creates 46,628 employments from 2009 to 25 August 2011 and generates 25 trillion won regional income for three years.

• Journal of the Korean Home Economics Association
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• v.32 no.2
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• pp.1-16
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• 1994

This paper analysis the structure of Housing Consumption Expenditure of urban salary and wage-earners' households from 1982 to 1992 by employing Time-series. Data was based on " Annual report on the Family Income and Expenditure Survey" of the National Bureau of Statistic Planning Board, Republic of Korea. Percentile marginal-propensity to consume(MPC) and income elasticity of consumption expenditure are estimated by their socio-economic and demographic variables. The results are as follows: 1. The proportion of the expenditure for furniture and utensils and house mending has increased with the increase of income in urban salary and wage-earners' households, while fuel light and water charges and rents paid has decreased. 2.1) Engel Function by income group; MPC associated with rents paid and fuel light and water charges is higher in the lower income group than in the rest. The income elasticity estimates in rents paid and fuel light and water charges is less than 1 in all group while larger than 1 in furniture and utensils and house mending. 2) Engel Function by occupation of household head; The highest MPC in rents paid is associated with the sales profession. The income elasticity of fuel light and water charge is found be inelastic. The groups other than the sales group show irregular MPC. 3) Engel Function by family size; MPC in house mending and fuel light and water charge is increased while is decreased in rents paid in accordance with family size. The income elasticity of rents paid and fuel light and water charge is less than 1 in all groups while that of house mending and furniture and utensils is larger than 1. 4) Engel Function by age of housegold head; MPC in rents paid is decreased according to the age of housefold head. The income elasticity of rents paid and fuel light and water charge is less than 1 in all group while it is larger than 1.