scholarly journals Evolution of Time Preference by Natural Selection: Comment

2008 ◽  
Vol 98 (3) ◽  
pp. 1178-1188 ◽  
Author(s):  
Arthur J Robson ◽  
Balázs Szentes
Keyword(s):  
Natural Selection ◽  
Interest Rate ◽  
Utility Function ◽  
Real Interest Rate ◽  
Time Preference ◽  
Functional Form ◽  
Intergenerational Transfer ◽  
Interior Solution ◽  
Basic Insight ◽  
Interior Solutions

We reexamine Alan R. Rogers' (1994) analysis of the biological basis of the rate of time preference. Although his basic insight concerning the derivation of the utility function holds up, the functional form he uses does not generate equilibrium evolutionary behavior. Moreover, Rogers relies upon an interior solution for a particular kind of intergenerational transfer. We show such interior solutions need not generally arise. Hence Rogers most striking prediction, namely that the real interest rate should be about 2 percent per annum, does not follow. (JEL D11, D91)

scholarly journals Should the Interest Rate Really Be the Unique Motive to Save in the Ramsey Model?

2016 ◽  
Vol 8 (12) ◽  
pp. 224
Author(s):  
Atef Khelifi
Keyword(s):  
Interest Rate ◽  
Utility Function ◽  
Time Preference ◽  
Rate Of Return ◽  
Optimal Decision ◽  
Static Properties ◽  
Ramsey Model ◽  
The Interest Rate ◽  
The Individual ◽  
Capitalist Spirit

<p>By assuming that the individual derives utility from consumption only, the resulting optimal decision to save in the Ramsey model depends on the rate of return, given a certain time preference. If therefore the production function is such that this rate of return remains relatively low, the individual reacts unconsciously by refusing to save despite the capital depreciates and the household grows. We argue that it is conceptually necessary in that framework to assume a direct preference for saving (or for thriftiness) in the utility function, not only to make the individual behave as a real human being who cares about the survival of the household, but also to account reasonably for any other motives to save or accumulate than the rate of return. We show it generalizes the model in a way to recover static properties of the exogenous Solow version and to extend results of capitalist spirit models following Zou (1994).</p>

scholarly journals An Analysis of the Real Interest Rate Under Regime Shifts

1996 ◽  
Vol 78 (1) ◽  
pp. 111 ◽  
Author(s):  
Rene Garcia ◽  
Pierre Perron
Keyword(s):  
Interest Rate ◽  
Real Interest Rate ◽  
Regime Shifts ◽  
The Real
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