Culture And Long-term Real Interest Rates:From The Perspective Of Patience Culture And Female Labor Participation Culture

Real interest rates are probabliy the most important variables in macro economy,which determines the intertemporal decision of almost all market players.For consumers,real interest rates determine relative prices between "now" and "future" and guide the distribution of income between consumption and saving,thus affecting the supply and accumulation of capital.For firms and enterprises,real interest rates constitute the opportunity cost of investment,guide enterprises to expand or scale back capacity,affect the relative demand between capital and labor,and thus affect the employment of the entire economy.For the government,the real interest rate determines the cost of government debt and the monetary policy space of the central bank,thus affecting the government’s capability to allocate resources and economic intervention.The equilibrium real interest rate is determined by the supply and demand of capital,which comes from households’ savings,and the demand for capital,which comes from firms’ investment.In economics,individuals’ time preference is an important parameter that determines consumption-saving behavior of residents.The higher individuals’ time preference,the more impatient they are,the more they prefer to spend now rather than save;Conversely,the lower individuals’ time preference,the more patient they are,the more they are willing to postpone spending and the more they are willing to save.In economics,the parameter which guide the decision of firm’s is the individual’s leisure preferences,this is because the leisure preferences determine the individual,especially the women’s decision between work and leisure,market work and non-market work activities(such as housework and child careing),the choice of which affect labor supply,the latter determines the marginal productivity of capital(return on investment),and then the investment demand of firms.The higher people’s leisure preference is,the more inclined they are to choose leisure or participate in non-market work,the lower the marginal productivity of capital will be,leading to lower investment demand;On the contrary,the lower people’s leisure preference,the more inclined they are to participate in market labor,the higher the marginal productivity of capital will be,leading to higher investment demand.The main conclusions of this paper can be summarized as follows:First,from a static point of view,patience culture and female labor participation culture can represent the time preference and leisure preference of a country’s households respectively.They have a profound impact on the average value of real interest rates in the long run by affecting the capital-labor ratio.The results are as follows: ?(ceteris paribus)countries with higher degree of patience culture have lower long-term real interest rates;countries with lower degree of patience culture have higher long-term real interest rates.?countries with negative female labor participation culture have lower long-term real interest rates;Countries with positive female labor participation culture have higher long-term real interest rates.Second,from a static point of view,the average value of real interest spread between a country and the United States in the long run depends on the difference between the country and the United States in the level of patience culture or female labor participation culture.The empirical results are as follows: ?the more patient a country’s culture comparing to the United States,the lower the real interest spread in the long run;the less patient a country’s culture comparing to the United States,the higher the real interest spread in the long run.?the more negative a country’s female labor participation culture comparing to the United States,the lower the real interest spread in the long run;the more positive a country’s female labor participation culture comparing to the United States,the higher the the real interest spread in the long run.Third,from a dynamic point of view,the transmission channel of population aging-decline of real interest rate,which is extensively investigated by empirical works,will actually be mediated by a country’s cultural background,which means aging-interest effect is only significant in countries with patience culture,or(and)positive female labor participation culture.