Intertemporal Choice of Consume, Family's Willing Rate of Interest and the Time Preference Theory of Interests

Unlike the time preference theory, this article analyzes the willing supply and willing demand for family's saving from the perspective of intertemporal utility compensation. It is shown that the deviation of present income from the optimal consumption path determines the family's saving and loaning will. The lowest interest rate family commands for every unit of saving or the highest interest rate family is willing to pay for every unit of loaning is then determined according to the utility compensation. The theory constructed on the basis of the micro fundamental analysis of the individuals may suggest a better explanation for the origin of interests