NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Money, Time Preference and External Balance

Philippe Weil

NBER Working Paper No. 2822
Issued in 1989
NBER Program(s):   ME

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.

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Document Object Identifier (DOI): 10.3386/w2822

Published: European Economic Review, Vol. 33, nos. 2/3 (1989): 564-572.

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