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Fiscal Policies in a Stochastic Model with Hyperbolic Discounting

Author

Listed:
  • Liutang Gong

    (Peking University and Wuhan University)

  • Heng-fu Zou

    (Peking University, Wuhan University, and the World Bank)

Abstract

In this paper, we study the effects of fiscal policies on economy in a stochastic model with hyperbolic discounting rate. With specific assumptions on the production technology, preferences, and stochastic shocks, we derive the explicit solutions to the growth rates of consumption and savings and equilibrium returns on all assets, and give the effects of fiscal policies and discounting rate on growth.

Suggested Citation

  • Liutang Gong & Heng-fu Zou, 1998. "Fiscal Policies in a Stochastic Model with Hyperbolic Discounting," CEMA Working Papers 103, China Economics and Management Academy, Central University of Finance and Economics.
    • Handle: RePEc:cuf:wpaper:103
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    References listed on IDEAS

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    Cited by:

    1. Liutang Gong & William Smith & Heng-fu Zou, 2007. "Asset Prices and Hyperbolic Discounting," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 397-414, November.

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    More about this item

    Keywords

    Fiscal policies; Hyperbolic discounting; Stochastic growth;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H0 - Public Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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