Selection, patience, and the interest rate
Abstract
The interest rate has been falling for centuries. A process of natural selection that leads to increasing societal patience is key to explaining this decline. Three observations support this mechanism: patience varies across individuals, is intergenerationally persistent, and is positively related to fertility. A calibrated dynamic, heterogeneous-agent model of fertility permits us to isolate the quantitative contribution of this mechanism. We find that selection alone is the key to explaining the decline of the interest rate.
Citation
Trew , A & Stefanski , R 2024 , ' Selection, patience, and the interest rate ' , Journal of Political Economy Macroeconomics , vol. Ahead of print . https://doi.org/10.1086/727798
Publication
Journal of Political Economy Macroeconomics
Status
Peer reviewed
DOI
10.1086/727798ISSN
2832-9341Type
Journal article
Collections
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