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The Fisherian Time Preference and the Ebolution of Capital Ownership Patterns in a Global Economy

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Listed:
  • Kyoji Fukao
  • Koichi Hamada

Abstract

Conventionally economic growth theory was based on the assumption of a constant rate of time preference. Uzawa (1968) and Obstfeld (~, 1981) introduced the rate of time preference that increases with the utility level. Irving Fisher (The Theory of Interest) has a different opinion, however, that people are more time impatient at the lower level of income. This paper assumes a non-monotonic time preference schedule such that people are more patient at the middle income levels and are less patient when they are either very poor or rich. Based on a nonlinear savings function out of wealth implied by such a time-preference schedule, this paper develops a single-good, multi-country growth model of a global economy with free capital mobility. The long-run property of this System is characterized by three kinds of long-run equilibrium: the starvation (fatal attractor) equilibrium, the imperialism equilibria dominated by a nation or by a group of nations, and the co-prosperity equilibrium where the wealth and the income of countries in the system grow proportionately. Bifurcation phenomena and the global stability of the system by the Lyapunov function will be discussed. Our system has a strong resemblance to some models of ecology where species compete for their survival (May, Stability and Complexity in Model Ecosystems). Here we can properly analyze the transition of a debtor to a creditor country from a global perspective, and make a case for the pump-priming foreign aid or debt relief policy.

Suggested Citation

  • Kyoji Fukao & Koichi Hamada, 1989. "The Fisherian Time Preference and the Ebolution of Capital Ownership Patterns in a Global Economy," NBER Working Papers 3104, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3104
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    7. Fukao, Kyoji, 2004. "Strategic Aspects of International Lending and Borrowing : A Two-Country Dynamic Game Model," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 45(1), pages 47-66, June.
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    14. repec:dpr:wpaper:0231 is not listed on IDEAS
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    Cited by:

    1. Nieminen, Mika & Kuziemska-Pawlak, Kamila, 2024. "Cross-country variation in economic preferences and the asset composition of international investment positions," Journal of International Money and Finance, Elsevier, vol. 146(C).
    2. Hamada, K. & Sakuragawa, M., 1993. "Capital Flight, North-South Lending, and Stages of economic Development," Papers 682, Yale - Economic Growth Center.
    3. Wei Liang & Heng-Fu Zou, 2025. "The Stability and Instability of Power: A Nonlinear Dynamic Analysis of Power Accumulation and Collapse," Annals of Economics and Finance, Society for AEF, vol. 26(2), pages 525-572, November.
    4. Fukao Kyoji & Hamada Koichi, 1994. "International Trade and Investment under Different Rates of Time Preference," Journal of the Japanese and International Economies, Elsevier, vol. 8(1), pages 22-52, March.
    5. Ken‐Ichi Hirose & Shinsuke Ikeda, 2008. "On Decreasing Marginal Impatience," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 259-274, September.
    6. Nieminen, Mika, 2022. "Cross-country variation in patience, persistent current account imbalances and the external wealth of nations," Journal of International Money and Finance, Elsevier, vol. 121(C).
    7. Ken-ichi Hirose & Shinsuke Ikeda, 2001. "On Decreasing Impatience," ISER Discussion Paper 0536, Institute of Social and Economic Research, The University of Osaka.
    8. Sakuragawa, Masaya & Hamada, Koichi, 2001. "Capital Flight, North-South Lending and Stages of Economic Development," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(1), pages 1-24, February.
    9. Wei Liang & Heng-fu Zou, 2025. "The Stability and Instability of Total Power: A Nonlinear Dynamic Analysis of Power Accumulation and Collapse," CEMA Working Papers 763, China Economics and Management Academy, Central University of Finance and Economics.

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