Distributional effects of endogenous discounting

Nigar Hashimzade, Oleg Kirsanov and Tatiana Kirsanova

Mathematical Social Sciences, 2023, vol. 122, issue C, 1-6

Abstract: This paper studies the effect of endogenous discounting on the distribution of wealth in a Bewley–Huggett economy with an exogenous borrowing constraint. We introduce the Koopmans–Uzawa–Epstein time preferences in the benchmark model of Achdou et al. (2022) and investigate the implications on saving behaviour and wealth distribution across different wealth classes. The results highlight a self-reinforcing redistribution mechanism, through which the endogenous discounting can lead to a higher equilibrium interest rate and a more unequal wealth distribution, in comparison to the benchmark model with constant discount rate.

Keywords: Heterogeneous agents; Recursive utility; Endogenous discounting; Wealth distribution; Precautionary savings (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165489623000033
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:122:y:2023:i:c:p:1-6

DOI: 10.1016/j.mathsocsci.2023.01.003

Access Statistics for this article

Mathematical Social Sciences is currently edited by J.-F. Laslier

More articles in Mathematical Social Sciences from Elsevier
Bibliographic data for series maintained by Catherine Liu ().