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

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Author Info
Taiji Harashima (Cabinet Office of the Japanese Government)

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

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
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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Related research
Keywords: Time preference; Uncertainty; Japanese economy; Business fluctuations;

Find related papers by JEL classification:
D90 - Microeconomics - - Intertemporal Choice and Growth - - - General
O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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