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Thomas Piketty and the Rate of Time Preference

Fischer, Thomas LU (2017) In Working Papers 2017(1).
Abstract
Using a standard model where the individual consumption path is computed solving an optimal control problem, we investigate central claims of Piketty (2014) Rather than r>g (confirmed in the data) r-s>g - with s being the rate of time preference - matters. If this condition holds and the elasticity of substitution in the production function is larger than one, the capital share converges to one in the long run. Nevertheless, this does not have major impact on the distribution of wealth. The latter, however, converges to maximum inequality for heterogeneous time preferences or rates of interest (either persistent or stochastic).
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author
organization
publishing date
type
Working Paper
publication status
published
subject
keywords
wealth inequality, optimal control path, dynamic efficiency, C63, D31, E21
in
Working Papers
volume
2017
issue
1
pages
34 pages
publisher
Department of Economics, Lund University
language
English
LU publication?
yes
id
b1c4899b-d184-4841-aad4-2eb7998ac0d5
alternative location
http://swopec.hhs.se/lunewp/abs/lunewp2017_001.htm
date added to LUP
2017-02-14 15:40:17
date last changed
2018-08-15 04:00:24
@misc{b1c4899b-d184-4841-aad4-2eb7998ac0d5,
  abstract     = {Using a standard model where the individual consumption path is computed solving an optimal control problem, we investigate central claims of Piketty (2014) Rather than r>g (confirmed in the data) r-s>g - with s being the rate of time preference - matters. If this condition holds and the elasticity of substitution in the production function is larger than one, the capital share converges to one in the long run. Nevertheless, this does not have major impact on the distribution of wealth. The latter, however, converges to maximum inequality for heterogeneous time preferences or rates of interest (either persistent or stochastic).},
  author       = {Fischer, Thomas},
  keyword      = {wealth inequality,optimal control path,dynamic efficiency,C63,D31,E21},
  language     = {eng},
  month        = {01},
  note         = {Working Paper},
  number       = {1},
  pages        = {34},
  publisher    = {Department of Economics, Lund University },
  series       = {Working Papers},
  title        = {Thomas Piketty and the Rate of Time Preference},
  volume       = {2017},
  year         = {2017},
}