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dc.contributor.authorStefanski, Radoslaw (Radek)
dc.contributor.authorTrew, Alex
dc.identifier.citationStefanski , R & Trew , A 2020 ' Patience breeds interest : the rise of societal patience and the fall of the risk-free interest rate ' School of Economics and Finance Discussion Paper , no. 2002 , University of St Andrews , St Andrews , pp. 1-39 .en
dc.identifier.otherPURE: 266338078
dc.identifier.otherPURE UUID: fdbcd74e-89d6-47b7-9194-f42d0f5b2733
dc.description.abstractThe risk-free rate of return has been declining in real terms over millennia. We isolate the role of time preference – or patience – in explaining this decline. Three facts support our approach: experimental evidence finds significant heterogeneity in patience; individual preference characteristics are highly intergenerationally persistent; and, longitudinal data shows that patience is positively related with fertility decisions. Together these suggest we should expect average societal levels of patience to increase over time as the composition of the population shifts towards ever more patient dynasties. We test this mechanism in a Barro-Becker model of fertility with heterogeneous dynasties. We use the present day distribution of patience to calibrate the model. We are able match – both quantitatively and qualitatively – the decline in the risk-free return over the last eight centuries.
dc.publisherUniversity of St Andrews
dc.relation.ispartofseriesSchool of Economics and Finance Discussion Paperen
dc.rightsCopyright © the authors.en
dc.subjectHeterogeneous agentsen
dc.subjectInterest ratesen
dc.subjectHG Financeen
dc.titlePatience breeds interest : the rise of societal patience and the fall of the risk-free interest rateen
dc.typeWorking or discussion paperen
dc.description.versionPublisher PDFen
dc.contributor.institutionUniversity of St Andrews. School of Economics and Financeen

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