Journal of Political Economy Vol. 89 No. 4 1981
Time Preference and International Lending and Borrowing in an Overlapping-Generations Model
Abstract
Two economies, represented by Diamond-type overlapping-generations models and differing only in their pure rates of time preference, are joined together. Capital formation, balance-of-payments behavior, and welfare are compared under autarky and openness. With a positive natural rate of growth, the low-time-preference country runs a current account surplus in the steady state but not necessarily outside it. If preexisting capital is not shiftable between countries, integration in the world economy makes the high-time-preference country worse off in the short run. The ranking of stationary utility levels under autarky and openness is ambiguous.
- DOI
- 10.1086/261002
- Volume
- 89
- Issue
- 4
- Pages
- 769-797
- Language
- en
- Sources
- openalex crossref