Narrow Results

Using the China Household Finance Survey data in 2011, the estimation results of structural equation modeling demonstrate that the respondents with higher time preference rate have a significant higher probability of investing in stocks, which implies that the short-term households will prefer stock investment. The social insurance programs and insurance policies held by the family will have a significantly direct positive effect in promoting stock investment and also a significantly direct positive effect on the respondent’s time preference, which could further indirectly increase the family’s stock investment. These results show that the safety-net built by the Chinese government, including the social security and commercial insurance, is very likely to attract more short-term investors into the stock market. These empirical results provide new evidences to explain the extreme volatility of Chinese stock market and also testify the policy effect of building an environment for people to possess property income in China.

Water transactions are proposed as a policy tool for increasing regional drought resilience and improving allocative efficiency. However, water trading deviates considerably from classical competitive markets and alternative theoretical approaches are useful for understanding water market structure and performance. In this paper, we model a bilateral water transaction using a non-cooperative bargaining model. Then we empirically test predictions regarding time preference, outside options, and water supply risk. The econometric analysis encompasses two transaction regions: Colorado’s Front Range and New Mexico’s Middle Rio Grande Basin. We find evidence suggesting that larger cities pay lower prices in water transactions, faster growing and higher income cities pay higher prices and that prices are higher when snowpack variability is higher. Findings suggest that a stronger time preference results in a less favorable price for urban buyers and that buyer risk-aversion is a greater disadvantage in bargaining in locations with greater water supply variability.

Globalization is accompanied by increasing current account imbalances. They can undermine the positive impacts of increasing international cooperation and trade on economic growth. By applying an economic growth model that requests for long-term compensation of short-term current account deficits, we derive patterns of international trade. Model output, however, is challenged by empirical data – which is related to the Lucas Paradox. This paper demonstrates how, based on the assumption of differentiated time preferences, model results and empirical data are reconciled with each other. The method presented here yields an indirect estimate of the rates of time preference across regions. Our results suggest that the time preference rate is low in emerging Asian countries, while the USA and Europe are characterized by above world-average rates. Based on the applied model that differentiates between trade in energy resources and a composite good, simulated trade patterns of these three world regions significantly differ from each other and also from trade patterns that occur in resource exporting countries.