Saving behavior in stationary equilibrium with random discounting

Edi Karni and Itzhak Zilcha

Economic Theory, 2000, vol. 15, issue 3, 564 pages

Abstract: We study the implications of random discount rates of future generations for saving behavior and capital holdings in a steady state competitive equilibrium with heterogeneous population. A well-known difficulty in deterministic economies with heterogeneous households is that in steady state only the most patient households hold capital. In this paper we state conditions under which this random discounting is sufficient for households other than the most patient ones to save. We thus provide a simple and natural way of overcoming the aforementioned difficulty.

Keywords: Dynamic equilibrium with heterogeneous households; Random discounting; Saving. (search for similar items in EconPapers)
JEL-codes: E13 E20 (search for similar items in EconPapers)
Date: 2000-04-13
Note: Received: December 28, 1998; revised version: May 19, 1999
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Citations: View citations in EconPapers (4)

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Working Paper: Saving Behaviour in Stationary Equilibrium with Random Discounting (1998)
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