# Irving Fisher's Impatience Theory of Interest

Building on the general equilibrium setup solved in the last week, this lecture looks in depth at the relationships between productivity, patience, prices, allocations, and nominal and real interest rates. The solutions to three of Fisher's famous examples are given: What happens to interest rates when people become more or less patient? What happens when they expect to receive windfall riches sometime in the future? And, what happens when wealth in an economy is redistributed from the poor to the rich?

*Source: Open Yale Courses*

LESSONS

- Why Finance?
- Utilities, Endowments, and Equilibrium
- Computing Equilibrium
- Efficiency, Assets, and Time
- Present Value Prices and the Real Rate of Interest
- Irving Fisher's Impatience Theory of Interest
- Shakespeare's Merchant of Venice and Collateral, Present Value and the Vocabulary of Finance
- How a Long-Lived Institution Figures an Annual Budget Yield
- Yield Curve Arbitrage
- Dynamic Present Value
- Financial Implications of US Social Security System
- Overlapping Generations Models of the Economy
- Will the Stock Market Decline when the Baby Boomers Retire?
- Quantifying Uncertainty and Risk
- Uncertainty and the Rational Expectations Hypothesis
- Backward Induction and Optimal Stopping Times
- Callable Bonds and the Mortgage Prepayment Option
- Modeling Mortgage Prepayments and Valuing Mortgages
- Dynamic Hedging
- Dynamic Hedging and Average Life
- Risk Aversion and CAPM
- The Mutual Fund Theorem and Covariance Pricing Theorems
- Risk, Return, and Social Security
- Leverage Cycle and the Subprime Mortgage Crisis
- Shadow Banking: Parallel and Growing?

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