This article analyzes the intertemporal consistency of preferences and the homogeneity of the intertemporal preference rate in realcycle models. The first assumption implies that preferences do not change over time; the second, that people 's preferences are the same, independent of their in come level. When these assumptions are modified slightly to make the model more realistic, it is no longer convergent or stable, and is very sensitive to initial conditions. The modifications consist of differentiating the consumption of therich and the poor, and assuming that the intertemporal preferencerate is endogenous.