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On Decreasing Marginal Impatience

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  • KEN‐ICHI HIROSE
  • SHINSUKE IKEDA

Abstract

One of the most controversial assumptions in endogenous time preference theory is that the degree of impatience is marginally increasing in wealth. We examine the implications of an empirically more relevant specification whereby time preference exhibits decreasing marginal impatience (DMI). With DMI, there are multiple steady‐state non‐satiated and satiated equilibria. In a constant interest rate economy, the non‐satiated steady‐state point is necessarily unstable. In a capital economy with decreasing returns technology, both the non‐satiated and satiated steady‐state points can be saddlepoint stable. The model is used to examine policy implications for the effects of capital taxation and government spending.

Suggested Citation

  • Ken‐Ichi Hirose & Shinsuke Ikeda, 2008. "On Decreasing Marginal Impatience," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 259-274, September.
  • Handle: RePEc:bla:jecrev:v:59:y:2008:i:3:p:259-274
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    File URL: https://doi.org/10.1111/j.1468-5876.2008.00406.x
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    Cited by:

    1. Taketo Kawagishi & Kazuo Mino, 2016. "Time Preference and Income Convergence in a Dynamic Heckscher–Ohlin Model," Review of International Economics, Wiley Blackwell, vol. 24(3), pages 592-603, August.
    2. Kazumichi Iwasa & Laixun Zhao, 2013. "Inequalities and Patience for Tomorrow," KIER Working Papers 847, Kyoto University, Institute of Economic Research.
    3. Ken-Ichi Hirose & Shinsuke Ikeda, 2013. "Time Preference and Dynamic Stability in an N-Country World Economy," ISER Discussion Paper 0887, Institute of Social and Economic Research, Osaka University.
    4. Wei-Bin ZHANG, 2012. "Habits, Saving Propensity, And Economic Growth," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 3-15.
    5. Shinsuke Ikeda, 2006. "Luxury And Wealth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 495-526, May.
    6. Ken-ichi Hirose & Shinsuke Ikeda, 2012. "Decreasing marginal impatience in a two-country world economy," Journal of Economics, Springer, vol. 105(3), pages 247-262, April.
    7. Ken-Ichi Hirose & Shinsuke Ikeda, 2013. "Decreasing Marginal Impatience and Capital Accumulation in a Two-country World Economy," ISER Discussion Paper 0882, Institute of Social and Economic Research, Osaka University.
    8. ZHANG, Wei-Bin, 2013. "Habit Formation And Preference Change In A Twosector Growth Model With Elastic Labor Supply," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(2), pages 3-20, May.
    9. Hirose, Ken-Ichi & Ikeda, Shinsuke, 2012. "Decreasing and increasing marginal impatience and the terms of trade in an interdependent world economy," Journal of Economic Dynamics and Control, Elsevier, vol. 36(10), pages 1551-1565.
    10. Borissov, Kirill, 2013. "Growth and distribution in a model with endogenous time preferences and borrowing constraints," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 117-128.
    11. Zhang Wei-Bin, 2013. "Habit Formation and Preference Change with Capital and Renewable Resources," Business Systems Research, Sciendo, vol. 4(2), pages 108-125, December.
    12. Ken-Ichi Hirose & Shinsuke Ikeda, 2015. "Decreasing Marginal Impatience and Capital Accumulation in a Two-Country World Economy," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 474-507, July.
    13. Kawagishi, Taketo, 2014. "Investment for patience in an endogenous growth model," Economic Modelling, Elsevier, vol. 42(C), pages 508-515.
    14. Wei-Bin Zhang, 2013. "Dynamic Interactions among Growth, Environmental Change, Habit Formation, and Preference Change," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 3(1), pages 3-25, December.
    15. Hirose, K. & Ikeda, Shinsuke, 2015. "Decreasing marginal impatience destabilizes multi-country economies," Economic Modelling, Elsevier, vol. 50(C), pages 237-244.
    16. Kirill Borissov, 2013. "The Existence of Equilibrium Paths in an AK-model with Endogenous Time Preferences and Borrowing Constraints," EUSP Department of Economics Working Paper Series Ec-01/13, European University at St. Petersburg, Department of Economics.
    17. Yanase, Akihiko, 2011. "Impatience, pollution, and indeterminacy," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1789-1799, October.

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