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A More Realistic Endogenous Time Preference Model and the Slump in Japan

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  • Taiji Harashima

    (Cabinet Office of the Japanese Government)

Abstract

This paper presents a more realistic endogenous time preference model, incorporating the property that impatience decreases as consumption increases. The model overcomes a serious drawback of the existing model, which needs the assumption of increasing impatience. The new model is applied to the Japanese economy, which has been mired in a persistent slump since the early 1990s, and the hypothesis that a time preference rate shift is the main cause of the slump is explored. The estimated time preference rate clearly shows that an upward time preference shift of about 2% occurred in Japan.

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File URL: http://128.118.178.162/eps/mac/papers/0402/0402015.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0402015.

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Length: 35 pages
Date of creation: 06 Feb 2004
Date of revision: 09 Feb 2004
Handle: RePEc:wpa:wuwpma:0402015

Note: Type of Document - pdf; prepared on Windows Me; pages: 35 ; figures: 5 figures and a table included
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Web page: http://128.118.178.162

Related research

Keywords: Time preference; Uncertainty; Japanese economy; Business fluctuations;

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References

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  17. repec:cup:etheor:v:13:y:1997:i:6:p:818-49 is not listed on IDEAS
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Cited by:
  1. Harashima, Taiji, 2013. "Escaping a Liquidity Trap: Keynes’ Prescription Is Right But His Reasoning Is Wrong," MPRA Paper 48115, University Library of Munich, Germany.
  2. Harashima, Taiji, 2013. "The Phillips Curve and a Micro-foundation of Trend Inflation," MPRA Paper 51305, University Library of Munich, Germany.

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