HETEROGENEITY IN THE DEGREE OF QUASI-GEOMETRIC DISCOUNTING: THE DISTRIBUTIONAL IMPLICATIONS

Lilia Maliar and Serguei Maliar

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper modifies the standard one-sector growth model with uninsurable idiosyncratic risk and liquidity constraints to include multiple types of quasi-geometric consumers. For a calibrated version of the model, we show that a modest difference between the quasi-geometric discounting parameters of types can lead to large differences in their marginal propensities to consume. Unlike the standard one-sector growth model, the model with heterogeneous quasi-geometric consumers can generate realistic degrees of wealth inequality.

Keywords: Time inconsistency; quasi-geometric discounting; hyperbolic discounting (search for similar items in EconPapers)
Pages: 26 pages
Date: 2003-08
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http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-28.pdf Fisrt version / Primera version, 2003 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2003-28

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