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Heterogeneous time preferences and interest rates: The preferred habitat theory revisited

The influence of heterogeneous time preferences on the term structure is investigated. Motivated by the Preferred Habitat Theory of Modigliani and Sutch, a model for intertemporal preferences accounting for preferred habitats is proposed. In a heterogeneous world, preferred habitats can explain humps in the yield curve. Agents with a long habitat prefer long term bonds to shorter instruments as the Preferred Habitat Theory predicts.
Year of publication:
1999
Authors: Riedel, Frank
Institutions: Sonderforschungsbereich 373, Quantifikation und Simulation ökonomischer Prozesse, Wirtschaftswissenschaftliche Fakultät
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application/pdf
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Type of publication: Book / Working Paper
Notes:
Number 1999,23
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Persistent link: https://www.econbiz.de/10010956394
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