Japan's Consumption and Saving in International Perspective

Abstract

The postwar Japanese economy provides the world's first example of an economy showing a sustained period of double-digit growth of real gross national product (GNP). As a result of this remarkable growth, Japan was able to recover from its defeat in the Second World War and to join the upper ranks of the developed countries within a few short decades. One objective of this article is to determine the extent to which Japanese consumers were able to reap the benefits of this rapid economic growth and to analyze changes in the level and composition of consumption and saving in Japan from an international perspective. The other objective of the article is to illustrate some of the problems that arise when making international comparisons of income, consumption, and saving. The organization of the article is as follows. In Section II, I demonstrate the dangers of using market exchange rates to convert the figures for each country to a common currency when making international comparisons. In Section III, I conduct an international comparison of consumption levels and, learning a lesson from Section II, convert the figures for each country to a common currency using purchasing power parities rather than market exchange rates. In Section IV, I conduct an international comparison of the composition of consumption with particular emphasis on the Engel coefficient (the share of food in total consumption). In Section V, I conduct an international comparison of household saving, and in Section VI, I summarize my findings. Both Alan H. Gleason and I have conducted detailed analyses of the ratio of Japanese consumption levels to those of the United States,1 but the analysis in this article expands on those studies in at least two