Saving behavior in stationary equilibrium with random discounting
AbstractWe study the implications of random discount rates of future generations for saving behavior and capital holdings in a steady state competitive equilibrium with heterogeneous population. A well-known difficulty in deterministic economies with heterogeneous households is that in steady state only the most patient households hold capital. In this paper we state conditions under which this random discounting is sufficient for households other than the most patient ones to save. We thus provide a simple and natural way of overcoming the aforementioned difficulty.
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Bibliographic InfoArticle provided by Springer in its journal Economic Theory.
Volume (Year): 15 (2000)
Issue (Month): 3 ()
Note: Received: December 28, 1998; revised version: May 19, 1999
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Web page: http://link.springer.de/link/service/journals/00199/index.htm
Other versions of this item:
- Karni, E. & Zilcha, I., 1998. "Saving Behaviour in Stationary Equilibrium with Random Discounting," Papers 29-98, Tel Aviv.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
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- Higashi, Youichiro & Hyogo, Kazuya & Takeoka, Norio, 2009. "Subjective random discounting and intertemporal choice," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1015-1053, May.
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