Heterogeneous time preferences and interest rates: The preferred habitat theory revisited

Frank Riedel

No 1999,23, SFB 373 Discussion Papers from Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes

Abstract: The influence of heterogeneous time preferences on the term structure is investigated. Motivated by the Preferred Habitat Theory of Modigliani and Sutch, a model for intertemporal preferences accounting for preferred habitats is proposed. In a heterogeneous world, preferred habitats can explain humps in the yield curve. Agents with a long habitat prefer long term bonds to shorter instruments as the Preferred Habitat Theory predicts.

Date: 1999
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Related works:
Journal Article: Heterogeneous time preferences and interest rates—the preferred habitat theory revisited (2004)
Working Paper: Heterogeneous Time Preferences and Interest Rates - The Preferred Habitat Theory Revisited (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb373:199923

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