Distributional effects of endogenous discounting

Hashimzade, N., Kirsanov, O. and Kirsanova, T. (2023) Distributional effects of endogenous discounting. Mathematical Social Sciences, 122, pp. 1-6. (doi: 10.1016/j.mathsocsci.2023.01.003)

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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.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Kirsanov, Dr Oleg and Kirsanova, Professor Tatiana and Hashimzade, Professor Nigar
Authors: Hashimzade, N., Kirsanov, O., and Kirsanova, T.
College/School:College of Social Sciences > Adam Smith Business School
College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Mathematical Social Sciences
ISSN (Online):1879-3118
Published Online:18 January 2023
Copyright Holders:Copyright © 2023 The Authors
First Published:First published in Mathematical Social Sciences 122: 1-6
Publisher Policy:Reproduced under a Creative Commons License

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