A More Realistic Endogenous Time Preference Model and the Slump in Japan

Taiji Harashima

Macroeconomics from University Library of Munich, Germany

Abstract: This paper presents a more realistic endogenous time preference model, incorporating the property that impatience decreases as consumption increases. The model overcomes a serious drawback of the existing model, which needs the assumption of increasing impatience. The new model is applied to the Japanese economy, which has been mired in a persistent slump since the early 1990s, and the hypothesis that a time preference rate shift is the main cause of the slump is explored. The estimated time preference rate clearly shows that an upward time preference shift of about 2% occurred in Japan.

Keywords: Time preference; Uncertainty; Japanese economy; Business fluctuations (search for similar items in EconPapers)
JEL-codes: D90 E32 O53 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-02-06, Revised 2004-02-09
New Economics Papers: this item is included in nep-mic and nep-sea
Note: Type of Document - pdf; prepared on Windows Me; pages: 35 ; figures: 5 figures and a table included
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpma:0402015

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