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

  • Taiji Harashima

    (Cabinet Office of the Japanese Government)

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://econwpa.repec.org/eps/mac/papers/0402/0402015.pdf
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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
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Ben-David, D. & Papell, D.H., 1996. "Slowdowns and Meltdowns: Post-War Growth Evidence from 74 Countries," Papers 9-96, Tel Aviv.
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  13. repec:cup:etheor:v:13:y:1997:i:6:p:818-49 is not listed on IDEAS
  14. Ronald McKinnon & Kenichi Ohno, 2000. "The Foreign Exchange Orgins of Japan's Economic Slump and Low Interest Liquidity Trap," Working Papers 00010, Stanford University, Department of Economics.
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  20. repec:fth:harver:1504 is not listed on IDEAS
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