Bayer, Christian; Wälde, Klaus - Volkswirtschaftslehre-Lehrstühle, Gutenberg School of … - 2010
We analyse optimal saving of risk-averse households when labour income stochastically jumps between two states. The generalized Keynes-Ramsey rule includes a precautionary savings term. A phase diagram analysis il- lustrates consumption and wealth dynamics within and between states. There is an...