RT Monograph
SR 00
A1 Fève, Patrick
A1 Moura, Alban
A1 Pierrard, Olivier
T1 Predetermined Interest Rates in a Analytical RBC model
YR 2018
FD 2018-09
VO 18-954
SP 10
K1 RBC model
K1 predetermined interest rates
K1 over-saving
K1 conditional and unconditional welfare
AB We solve a version of the analytical Real Business Cycle (RBC) model with a predetermined rate of return on household saving. The solution differs from that of the benchmark RBC model along two dimensions: (i) Policy functions depend on the variance of the technology shock. (ii) There is a suboptimal pattern of excess saving. We discuss the economic intuition underlying these properties. We also demonstrate that unconditional welfare can be higher in the suboptimal model with predetermined interest rates, providing a clear illustration of the pitfall with unconditional welfare comparisons.
T2 TSE Working Paper
PB TSE Working Paper
PP Toulouse
AV Published
LK https://publications.ut-capitole.fr/id/eprint/26267/
UL http://tse-fr.eu/pub/32949