An Axiomatic Analysis of the Optimal Rate of Interest in the Bewley Models

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Hoseiny Seyyed Aqil; VAEZ BARZANI MOHAMMAD; BAKHSHI DASTJERDI RASOUL; PARVARDEH AFSHIN

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Paper Information

Journal: JOURNAL OF ECONOMICS AND MODELING (JOURNAL OF ECONOMICS) Year:2018 | Volume:9 | Issue:2 Page(s): 155-183

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Title

An Axiomatic Analysis of the Optimal Rate of Interest in the Bewley Models

Author(s)

Hoseiny Seyyed Aqil | VAEZ BARZANI MOHAMMAD | BAKHSHI DASTJERDI RASOUL | PARVARDEH AFSHIN | Issue Writer Certificate

Keywords

Interest RateQ2

Monetary EquilibriumQ1

OptimalityQ1

Precautionary SavingsQ1

Bewley ModelsQ1

Abstract

The main question of this study is that in an environment that we have only precautionary demand for money and assets, which rate of interest assures existence and Optimality of equilibrium. This economic environment has two essential properties: heterogeneous agents that face to idiosyncratic risk, and incomplete markets without possibility of complete insurance by means of lending for hedging this risks. In this environment, agents hold Precautionary Savings in the form of a single asset such as fiat currency, credit, and capital for self-insurancing themselves against idiosyncratic income fluctuations. Bewley Models are formed in this environment. In this paper, by using the axiomatic method, we will prove that when agents have access to the two forms of assets for self insurancing, i. e. fiat currency and credit, the necessity of decreasing the Interest Rate (more than time preference rate) for convergence of consumption and asset and the existence of Monetary Equilibrium are still true.

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APA: Copy

Hoseiny, Seyyed Aqil, VAEZ BARZANI, MOHAMMAD, BAKHSHI DASTJERDI, RASOUL, & PARVARDEH, AFSHIN. (2018). An Axiomatic Analysis of the Optimal Rate of Interest in the Bewley Models. JOURNAL OF ECONOMICS AND MODELING (JOURNAL OF ECONOMICS), 9(2 ), 155-183. SID. https://sid.ir/paper/386018/en

Vancouver: Copy

Hoseiny Seyyed Aqil, VAEZ BARZANI MOHAMMAD, BAKHSHI DASTJERDI RASOUL, PARVARDEH AFSHIN. An Axiomatic Analysis of the Optimal Rate of Interest in the Bewley Models. JOURNAL OF ECONOMICS AND MODELING (JOURNAL OF ECONOMICS)[Internet]. 2018;9(2 ):155-183. Available from: https://sid.ir/paper/386018/en

IEEE: Copy

Seyyed Aqil Hoseiny, MOHAMMAD VAEZ BARZANI, RASOUL BAKHSHI DASTJERDI, and AFSHIN PARVARDEH, “An Axiomatic Analysis of the Optimal Rate of Interest in the Bewley Models,” JOURNAL OF ECONOMICS AND MODELING (JOURNAL OF ECONOMICS), vol. 9, no. 2 , pp. 155–183, 2018, [Online]. Available: https://sid.ir/paper/386018/en

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