Selection, patience, and the interest rate

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The interest rate has been falling for centuries. A process of natural selection that leads to increasing societal patience is key to explaining this decline. Three observations support this mechanism: patience varies across individuals, is intergenerationally persistent, and is positively related to fertility. A calibrated dynamic, heterogeneous-agent model of fertility permits us to isolate the quantitative contribution of this mechanism. We find that selection alone is the key to explaining the decline of the interest rate.
Original languageEnglish
Number of pages33
JournalJournal of Political Economy Macroeconomics
VolumeAhead of print
Early online date8 Feb 2024
Publication statusE-pub ahead of print - 8 Feb 2024


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