TY  - JOUR
AU  - Obstfeld,Maurice
TI  - Intertemporal Dependence, Impatience, and Dynamics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3028
PY  - 1991
Y2  - January 1991
UR  - http://www.nber.org/papers/w3028
L1  - http://www.nber.org/papers/w3028.pdf
N1  - Author contact info:
Maurice Obstfeld
Department of Economics
University of California, Berkeley
530 Evans Hall #3880
Berkeley, CA 94720-3880
Tel: 510/643-9646
Fax: 510/642-6615
E-Mail: obstfeld@econ.berkeley.edu
AB  - This paper develops simple geometric methods for analyzing dynamic behavior in models with intertemporally dependent consumer tastes. Since the preferences studied do not assume time-additivity, they allow the marginal utility of consumption on a given date to vary with consumption on other dates. Intertemporal dependence is induced by the presence of a variable individual rate of time preference. The optimal consumption responses to transitory and anticipated changes in incomes and interest rates are easily derived and are similar in important ways to the responses implied by the standard model with constant time preference. Intuitive explanations of the first-order conditions describing optimal paths are provided. 
ER  -