Selection, patience, and the interest rate

Alex Trew; Radoslaw Stefanski

doi:10.1086/727798

Selection, patience, and the interest rate

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Abstract

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 language	English
Number of pages	33
Journal	Journal of Political Economy Macroeconomics
Volume	Ahead of print
Early online date	8 Feb 2024
DOIs	https://doi.org/10.1086/727798
Publication status	E-pub ahead of print - 8 Feb 2024

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Trew_2023_Selection_patience_and_JPEM_AAM_CCBY
Copyright © 2024 The University of Chicago. All rights reserved. This work has been made available online in accordance with the Rights Retention Strategy This accepted manuscript is distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. The final published version of this work is available at https://doi.org/10.1086/727798.
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Replication Data for: "Selection, Patience, and the Interest Rate"
Stefanski, R. (Creator), Trew, A. (Contributor), Stefanski, R. (Contributor) & Trew, A. (Contributor), Harvard Dataverse, 13 Sept 2023
DOI: 10.7910/dvn/ugwohh
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AB - 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.

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Selection, patience, and the interest rate

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Replication Data for: "Selection, Patience, and the Interest Rate"

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