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Aggregate savings under quasi-hyperbolic versus exponential discounting

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  • Kang, Minwook

Abstract

Using a measure of patience proposed by Myerson et al. (2001) and Caliendo and Findley (2014), this paper compares aggregate savings between exponential and quasi-hyperbolic discounters in two different models of economies: (1) the economy with linear technology and stochastic productivity shock and (2) a deterministic neoclassical growth model developed by Laibson (1997). This paper shows that intertemporal elasticity of substitution and growth rates have important roles in determining equilibrium savings of the two discounters.

Suggested Citation

  • Kang, Minwook, 2021. "Aggregate savings under quasi-hyperbolic versus exponential discounting," Economics Letters, Elsevier, vol. 207(C).
    • Handle: RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521002834
    DOI: 10.1016/j.econlet.2021.110006
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    References listed on IDEAS

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    1. Per Krusell & Anthony A. Smith, Jr., 2003. "Consumption--Savings Decisions with Quasi--Geometric Discounting," Econometrica, Econometric Society, vol. 71(1), pages 365-375, January.
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    More about this item

    Keywords

    Quasi-hyperbolic discounting; Exponential discounting; Consumption-savings decision; Overall (im)patience; Neoclassical growth model;
    All these keywords.

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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