Optimal Saving with Additive and Multiplicative Background Risk

We study optimal saving when incomes are certain and risk bears on consumption. A key finding is that, with CARA utility and additive uncertain consumption, or CRRA utility and multiplicative consumption, risk-averse individuals do not form precautionary saving as in the standard theory of saving under uncertainty.

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Year of publication:	2004-10-01
Authors:	Lionel, ARTIGE
Institutions:	Institut de Recherche Économique et Sociale (IRES), École des Sciences Économiques de Louvain
Subject:	Consumption \| risk-aversion \| saving \| uncertainty

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Extent:	application/pdf
Series:	Discussion Papers (IRES - Institut de Recherches Economiques et Sociales).
Type of publication:	Book / Working Paper
Language:	English
Notes:	The text is part of a series UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) Number 2004030
Classification:	D8 - Information and Uncertainty ; D9 - Intertemporal Choice and Growth
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10004985066