Precautionary saving and persistent current account imbalance

• 成果类型: Article
• 署名作者: Daniel, BC
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(96)01470-5
• 发表日期: 1997
• 页码: 179-193
• 关键词: current account; precautionary saving; time preference rates

摘要

The neoclassical representative agent model attributes persistent current account imbalance to differences in time preference rates. Exogenous time preference yields corner solutions in which one country owns the world's wealth. With endogenous time preference, corners are avoided, but at the cost of the intuitively unappealing assumption that wealthier agents are more impatient. This paper shows that an agent, with constant relative risk aversion utility, subject to stochastic income shocks, has a risk-adjusted rate of time preference which is increasing in wealth. Precautionary saving falls as wealth rises, allowing avoidance of corner solutions with an intuitively appealing assumption about behavior.