Discounting and divergence of opinion

Elyès Jouini (), Jean-Michel Marin and Clotilde Napp

Journal of Economic Theory, 2010, vol. 145, issue 2, 830-859

Abstract: Agents impatience rate and their anticipations about the future of the economy, are two essential determinants of the equilibrium discount rate, as illustrated by the Ramsey formula. Heterogeneity in time preference rates and in anticipations is widely acknowledged. Our objective is to determine the equilibrium discount rate when this heterogeneity is taken into account. Among others we tackle the following questions: As an additional risk or uncertainty, can dispersion in agents' characteristics lead to lower discount rates? What is the asymptotic behavior of the discount rate in such a setting? More generally, what is the shape of the yield curve?

Keywords: Discounting; Yield; curve; Divergence; of; opinion; Gamma; discounting; Costs; and; benefits; analysis; Ramsey; formula; Discount; rate (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (36)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:145:y:2010:i:2:p:830-859

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