Lee, Junsang (contributor); Chien, YiLi (contributor) - 2008
state with a binding constraint in order
to prevent the agent from defaulting.
For a given weight growth ^g, the cuto rule … this happens, then the
agent’s consumption share equals to the cuto divided by the growth rate of h K .
Lemma 3.1 If the … consumption share drifts downwards at the rate of the growth
rate of ht (Kt). The derivation of the risk sharing rule is found in …