Money, Time Preference and External Balance [report]

Philippe Weil
1989 unpublished
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 twocountry 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,
more » ... t 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.
doi:10.3386/w2822 fatcat:3yucgcfmurb5hk6ulilino3gpu