Money, Time Preference and External Balance

12 Pages Posted: 23 Aug 2000 Last revised: 19 Sep 2010

See all articles by Philippe Weil

Philippe Weil

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: 1989

Abstract

In monetary economies, international differences in rates of time preference do not in general lead to long run trade imbalances -- in sharp contrast with Butter's 119811 results on non-monetary overlapping generation economies. This claim is documented within the context of a simple two country framework in which new immortal families enter each economy over time, with the two countries differing only in their subjective discount rates. Even if consumers are more "impatient" at home than abroad, trade is balanced in the long run in the presence of valued fiat currencies in constant supply, and the current account is indeterminate.

Suggested Citation

Weil, Philippe, Money, Time Preference and External Balance (1989). NBER Working Paper No. w2822. Available at SSRN: https://ssrn.com/abstract=235674

Philippe Weil (Contact Author)

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

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United States

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