Heterogeneous Time Preferences and Interest Rates - The Preferred Habitat Theory Revisited

Frank Riedel

Finance from University Library of Munich, Germany

Abstract: The influence of heterogeneous time preferences on the term structure is investigated. Motivated by the Preferred Habitat Theory of Modigliani and Sutch, a model for intertemporal preferences accounting for preferred habitats is proposed. In a heterogeneous world, preferred habitats can explain humps in the yield curve. Agents with a long habitat prefer long term bonds to shorter instruments as the Preferred Habitat Theory predicts.

Keywords: Term Structure; Heterogeneity; Preferred Habitats (search for similar items in EconPapers)
JEL-codes: E43 F12 (search for similar items in EconPapers)
Date: 1999-03-02
Note: Type of Document - Tex; prepared on IBM PC ; to print on PDF;
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https://econwpa.ub.uni-muenchen.de/econ-wp/fin/papers/9903/9903001.pdf (application/pdf)

Related works:
Journal Article: Heterogeneous time preferences and interest rates—the preferred habitat theory revisited (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:9903001

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