Heterogeneous patience and the term structure of real interest rates

Lengwiler, Yvan. (2005) Heterogeneous patience and the term structure of real interest rates. American economic review, Vol. 95, No. 3. pp. 890-896.

Full text not available from this repository.

Official URL: http://edoc.unibas.ch/dok/A5253753

Downloads: Statistics Overview


Heterogeneous time preference has a profound impact on the wealth distribution and therefore on equilibrium asset prices. I identify two distinct effects on interest rates: an averaging effect due to Jensen’s inequality and a general equilibrium consumption timing effect. The averaging effect decreases and the timing effect increases real interest rates, and both effects induce an inverse term structure. More fundamentally, the model shows that asset prices need to be interpreted with caution. Evidence apparently pointing to non-standard preferences may simply be the result of heterogeneity.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Finanzmärkte (Lengwiler)
UniBasel Contributors:Lengwiler, Yvan
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:American Economic Association
Note:Publication type according to Uni Basel Research Database: Journal article
Related URLs:
Identification Number:
Last Modified:22 Mar 2012 14:28
Deposited On:22 Mar 2012 14:03

Repository Staff Only: item control page