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The Rate of Time Preference of Government

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  • Harashima, Taiji

Abstract

Here, I examine the mechanism by which the rate of time preference (RTP) of government is formed and present a model of government RTP. The RTP of government has been largely neglected in the study of economics, but it is an important factor in inflation acceleration. The model presented indicates that the RTP of government is determined by the expected RTPs of the median voter and the representative household, as well as the strength of the government’s fluid intelligence. The model also indicates, however, that households actually use “beliefs” or heuristics to generate their expected RTPs of government.

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  • Harashima, Taiji, 2015. "The Rate of Time Preference of Government," MPRA Paper 65387, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:65387
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    References listed on IDEAS

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    3. Harashima, Taiji, 2015. "A Way Out of the Euro Crisis: Fiscal Transfers Are Indispensable for Sustainability in a Union with Heterogeneous Members," MPRA Paper 63025, University Library of Munich, Germany.
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    11. Taiji Harashima, 2004. "The Ultimate Source of Inflation: A Microfoundation of the Fiscal Theory of the Price Level," Macroeconomics 0409018, University Library of Munich, Germany, revised 30 Mar 2005.
    12. Barro, Robert J & Gordon, David B, 1983. "A Positive Theory of Monetary Policy in a Natural Rate Model," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 589-610, August.
    13. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    14. Harashima, Taiji, 2008. "A Microfounded Mechanism of Observed Substantial Inflation Persistence," MPRA Paper 10668, University Library of Munich, Germany.
    15. Epstein, Larry G & Hynes, J Allan, 1983. "The Rate of Time Preference and Dynamic Economic Analysis," Journal of Political Economy, University of Chicago Press, vol. 91(4), pages 611-635, August.
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    Cited by:

    1. Taiji HARASHIMA, 2016. "A Theory Of Deflation: Can Expectations Be Influenced By A Central Bank?," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 7(2), pages 98-145.

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    More about this item

    Keywords

    Time preference; Government; Inflation; Rationality; Fluid intelligence;
    All these keywords.

    JEL classification:

    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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