Effect of time preferences on indexation

Research output: Contribution to journalArticlepeer-review


Differences in the rate of time preferences of two transactors can explain why Pareto optimal contracts do not appear to be fully indexed.

Original languageEnglish
Pages (from-to)125-128
Number of pages4
JournalEconomics Letters
Issue number2
StatePublished - Dec 1989
Externally publishedYes

Bibliographical note

Funding Information:
* I would like to thank David Card for helpful comments. This research was supported by funds granted to the Foerder Institute for Economic Research by the John Rauch Fund ’ The less strict assumption that the real value of all other assets is not affected by the inflation may be made. The question of the relation between wealth, inflation, and the payment is discussed by Shave11 (1976). Here I construct the simplest model which still captures the effect of time preferences on the terms of the contract.

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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