Heterogeneous Time Preferences and Interest Rates - The Preferred Habitat Theory Revisited

The influence of heterogeneous time preferences on the term structure is investigated. Motivated by the Preferred Habitat Theory of Modigliani and Sutch, a model for intertemporal preferences accounting for preferred habitats is proposed. In a heterogeneous world, preferred habitats can explain humps in the yield curve. Agents with a long habitat prefer long term bonds to shorter instruments as the Preferred Habitat Theory predicts.

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Year of publication:	1999-03-02
Authors:	Riedel, Frank
Institutions:	EconWPA
Subject:	Term Structure \| Heterogeneity \| Preferred Habitats

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Extent:	application/pdf
Series:	Finance.
Type of publication:	Book / Working Paper
Notes:	Type of Document - Tex; prepared on IBM PC ; to print on PDF;
Classification:	F12 - Models of Trade with Imperfect Competition and Scale Economies ; E43 - Determination of Interest Rates; Term Structure Interest Rates
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005413212