Short-Run Patience and Wealth Inequality

Lilia Maliar and Serguei Maliar

Studies in Nonlinear Dynamics & Econometrics, 2007, vol. 11, issue 1, 19

Abstract: The quasi-geometric (hyperbolic) literature typically assumes that agents are short-run impatient. In this paper, we deviate from this assumption by considering an economy in which a fraction of the population is short-run patient and the remaining population is short-run impatient. In a calibrated version of a neoclassical growth model with uninsurable risk and liquidity constraints, we find that the presence of few short-run patient and many short-run impatient agents leads to empirically plausible degrees of wealth inequality.

Date: 2007
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DOI: 10.2202/1558-3708.1351

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